The largest private coal miner in the United States, Murray Energy, has been forced to file for bankruptcy because of the slow but steady downfall and closure of the coal industry in the United States.
This bankruptcy however was being expected for years now. Recently, it was unable to make lender payments and an agreement for forbearance was entered into by the company that gave it some time to work out a possible restructuring of its business. However the company could do nothing in that grace period and it continued to falter in paying its bills. Earlier this month the company’s credit rating was downgraded to “default” by S&P Global Ratings.
A restructuring agreement was struck between the coal company and some of its debtors who accounted for about 60 per cent of the total $1.7 billion liabilities of the company. On Tuesday, while announcing the bankruptcy, the company also said that it would be able to keep its business running through bankruptcy with the help of a $350 million credit that it has secured.
Robert Murray has been replaced as CEO of the company and would be replaced by its former Chief Financial Officer Robert Moore, Murray Energy announced Tuesday. Robert Murray will remain as the company’s chairman.
“Although a bankruptcy filing is not an easy decision, it became necessary to access liquidity and best position Murray Energy and its affiliates for the future of our employees and customers and our long term success,” said Robert Murray in a statement.
This bankruptcy highlights the pressures that the cola companies in the US are currently facing. A number of coal companies have already filed for bankruptcy. However the bankruptcy filing by Murray Energy is very important because it is one of the most powerful and well-connected coal companies in the US. The company together with its subsidiaries operates 17 active mines in Alabama, Illinois, Kentucky, Ohio, Utah, and West Virginia and employs about 7,000 people.
Hopes for the revival of the American coal industry were raised after the election of President Donald Trump in 2016. Environmental regulations on the industry were swiftly removed by the president. Trump even put at the head of the US Environmental Protection Agency a former coal lobbyist. But market forces have overwhelmed the deregulatory push. The constant lowering of energy from solar and other green energy and natural gas has kept the costlier coal out of business.
Coal is being replaced by cleaner alternatives by the power companies t a very fast pace. According to government forecasts released earlier this month, nest year less coal would be consumed by US power for the first time since President Jimmy Carter was in the White House.
According to the US Energy Information Administration, in the third quarter, it is estimated that the export of US coal had dropped to 20.9 million short tons. That is a drop of 28 per cent year on year. The trend is expected to continue with exports slipping to 17.3 million by the end of 2020, according to the agency.
(Adapted from CNN.com)