November 2, 2017 Read More →

Armstrong Energy, Miner of Coal in Ohio and Kentucky, Files for Bankruptcy

CNN Money:

More evidence of coal’s challenges came on Tuesday as Armstrong Energy, a western Kentucky coal company, filed for bankruptcy protection.

Armstrong Energy is the first coal company to succumb to bankruptcy since Trump was elected nearly a year ago, according to the Institute for Energy Economics and Financial Analysis, an environmentally focused research group.

As part of the bankruptcy, Armstrong plans to transfer most of its assets to a new business owned by Illinois coal company Knight Hawk.

Armstrong produces thermal coal, which has seen its demand drop due to power plants switching to cheap natural gas as well as renewable energy options like solar.

Trump has sought to reverse that trend by ripping up environmental regulations and withdrawing the U.S. from the Paris climate accord. The Armstrong bankruptcy comes just a day after Trump cheered rising U.S. coal production on Twitter with the hashtag “#EndingWarOnCoal.”

Rather than Trump’s deregulation, analysts say a recent uptick in coal production has been driven by higher exports to Asia and natural gas prices that have stopped plunging.

Longer term, those who follow coal remain skeptical about Trump’s ability to fix what are largely market-driven, not regulatory, challenges.

“Him saving coal jobs was smoke and mirrors,” said Andrew Cosgrove, senior analyst on global metals & mining at Bloomberg Intelligence. “It was never going to happen because low natural gas prices are the main problem. That will continue to cap any upside for coal.”

“It’s not surprising coal continues to struggle because the decline wasn’t driven by environmental regulations that this administration wants to scrap,” said Jason Bordoff, a former Obama energy adviser who is now director of Columbia University’s Center on Global Energy Policy.

Armstrong may not be the last coal bankruptcy in the Trump era. In August, Murray Energy CEO Robert Murray pleaded with the White House to issue an emergency order protecting coal-fired power plants from being closed. Failure to do so would spark the bankruptcy of his company, Murray said.

“Our time is running out,” Murray, a Trump supporter, wrote.

More: First coal bankruptcy of Trump era

 

WSJ:

Documents filed to U.S. Bankruptcy Court in St. Louis show that Armstrong Energy’s noteholders will assume 100% of the company’s ownership upon agreeing to forgive $90 million in debt. Knight Hawk Holdings, which will take over the company’s operations, will get an undisclosed portion of equity later.

Armstrong Energy mines for coal in western Kentucky and Ohio on land that is estimated to have 445 million tons of proven and probable coal reserves, according to a June 30 report. The 600-worker company also operates three coal-processing plants and a river dock coal handling and railroad loading facility.

Founded in 2006, Armstrong Energy sells coal to six utility companies that operate power plants throughout the country’s midwestern and southern regions. Louisville Gas & Electric Company and the Tennessee Valley Authority rank as its two largest customers, according to court papers.

Recently, the company saw “reduced demand for coal and lower coal prices, precipitated by slow economic growth, an abundance of extremely low-price natural gas and increased regulatory burdens,” Alan Boyko, chief restructuring officer, said in court papers. “As U.S. natural gas production hit a record high in 2015, the abundance of inexpensive natural gas put severe pressure on the coal industry.”

Armstrong Energy joins a long list of coal-mining companies that have turned to bankruptcy, including Peabody Energy Corp. , Alpha Natural Resources Inc., Arch Coal Inc. and Patriot Coal Corp.

More ($): Coal Company Armstrong Energy Files for Chapter 11 Bankruptcy Protection

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