August 3, 2020 Read More →

History of Murray Energy’s long, fast fall into bankruptcy

Mining Technology:

At the beginning of the 2010s, Murray Energy was one of the US’s most productive and financially successful coal miners. The self-described largest privately held coal miner in the country owned a portfolio of 15 operations and made billion-dollar investments in Foresight Energy, in 2010, and Consol Coal, in 2013, as it looked to extend its influence over the US coal industry.

However, the miner was not immune to a broader decline in US coal over the course of the decade, with falling production and the rise of both cheap natural gas and efficient renewable power posing an existential threat to the country’s domestic coal production. By the end of the decade, this external pressure, combined with the miner’s own financial struggles, had reduced the company to filing for bankruptcy, and allegations of manipulating figures from creditors eager to see the miner pay its dues. How did the company fall so far so fast, and what can other miners learn from its fate?

Almost immediately after Trump’s election, Murray began to struggle financially, despite CEO Robert Murray’s close relationship with Trump and strong support for his policies. In February, the miner became embroiled in a legal struggle after the Dayton Power and Light Company, an electricity supplier based in Ohio, wanted to close its Murray-operated coal-fired power plants and transition to clean energy sources, a move which threatened Murray’s production in the region and its reputation nationwide.

Then in November, Murray failed to acquire struggling energy company Bowie Resource Partners, with the proposed purchase falling apart after just ten days. Murray failed to raise just $510m in junk bonds for the purchase of Bowie, itself a company worth just $454m, and whose assets were considered potentially “worthless” by the Institute for Energy Economics and Financial Analysis (IEEFA). 

[J.P. Casey]

More: External pressures and internal struggles: what the fall of Murray Energy tell us about American coal mining

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