The current slump in coal prices has seen US mining giant Peabody Energy file for bankruptcy protection.
The world’s biggest coal miner made the announcement yesterday, but has assured its Australian operations will not be affected and will continue as usual.
“Taking a major step to strengthen liquidity and reduce debt amid an unprecedented industry downturn, Peabody Energy Corporation today voluntarily filed petitions under Chapter 11 for the majority of its U.S. entities in the United States Bankruptcy Court for the Eastern District of Missouri,” a statement from the company said.
“Through this process, the company intends to reduce its overall debt level, lower fixed charges, improve operating cash flow and position the company for long-term success, while continuing to operate under the protection of the court process.”
All of the company’s mines and offices are continuing to operate in the ordinary course of business and are expected to continue doing so for the duration of the process.
“This was a difficult decision, but it is the right path forward for Peabody. We begin today to build a highly successful global leader for tomorrow,” said Peabody President and Chief Executive Officer Glenn Kellow.
“Through today’s action, we will seek an in-court solution to Peabody’s substantial debt burden amid a historically challenged industry backdrop. This process enables us to strengthen liquidity and reduce debt, build upon the significant operational achievements we’ve made in recent years and lay the foundation for long-term stability and success in the future.”
Chapter 11 bankruptcy proceedings in the United States allow a company to restructure to keep its business afloat and pay creditors over time.
According to the company’s 2015 financial report, Peadbody Energy made a US$2 billion loss last year.
Coal prices have plunged drastically in the past five years because of oversupply and lower demand from China.