Mission Coal files for bankruptcy—5th coal company in 3 years
A Tennessee coal mining company that filed for bankruptcy this week is the second coal company to go bankrupt during Donald Trump's pro-coal presidency. It's also the fifth U.S. coal industry bankruptcy in the last three years as competitors in the energy market continue to drive coal into the dust pile.
Mission Coal, an operator of three mines in West Virginia and one in Alabama, filed for Chapter 11 bankruptcy protection on Sunday listing about $175 million in debt and just $55,000 cash on hand, according to court filings. This small company joins Colorado-based Westmoreland Coal, one of the country's oldest coal companies, which filed for bankruptcy earlier this month, and Peabody Energy, Arch Coal and Alpha Natural Resources, which all have ended up in bankruptcy courts since 2015.
Competition from other energy sources—super-cheap natural gas in particular—has been the main culprit. Obama-era "clean coal" regulations scuttled earlier this year by the Trump administration has played just a small role in the industry's collapse, experts say.
"Coal plants have been losing market share just on competitiveness alone, to natural gas, for quite some time--even before the EPA regulations came down that accelerated the shutdown of even more plants," Greg Reed, director of the Center for Energy and the GRID Institute at the University of Pittsburgh, told CBS MoneyWatch recently.
The total stock market value of the country's four largest coal producers has plunged to $6.3 billion today from $33 billion in 2011. About 62,000 coal miners have lost their jobs during that time. Further job losses will come: More than a quarter of the U.S.' current fleet of coal plants is projected to shut down over the next 12 years, according to one analysis.
The White House, which has been drafting a plan to prop up the coal industry on national security grounds, has recently abandoned its efforts, according to reports. The fate of Mission Coal helps explain the challenges.
The company was born in January of this year, consolidating the operations of several other bankrupt coal businesses that were teetering, including Seneca Coal Resources and Seminole Coal Resources. Over the course of its short life, Mission Coal spent about $28 million upgrading its facilities, but was unable to generate enough cash to pay its obligations, according to court filings.
Mission Coal had planned to produce 6.5 million short tons of coal this year, but had delivered just one-third of that amount as of September due to "adverse mining conditions, combined with rail and port disruptions," it said in court papers. The company has retained the investment bank Jefferies, law firm Kirkland & Ellis and restructuring specialist Zolfo Cooper Management as advisers for the bankruptcy.
Mission's Alabama mine is slated to close during the bankruptcy proceedings, while one mine in West Virginia would continue to operate. Mission owes around $100 million to its bankers and $72 million to a group of more than 50 creditors, including nearly $10 million in pension and health benefits to the United Mine Workers of America, an obligation it is seeking to shed, and nearly $2 million to Alabama Power.
About 800 workers and as many retirees would be affected by the bankruptcy, said a spokesman for the mine workers union.
"Once again, a company is going into court seeking to shed its debts and restructure itself on the backs of its workers and retirees," the union said in a statement. "Neither the miners nor the retirees did anything to cause this bankruptcy, but they will be expected to give up the most nevertheless."
A hearing is scheduled for Nov. 7.