Peabody expects mine operations to continue ‘as usual’ across U.S. operations following bankruptcy filing
Company expects mining operations to continue 'as usual'
April 13, 2016
Steamboat Springs — Editor’s note: This story has been updated.
Peabody Energy, the world's largest coal company, filed for bankruptcy Wednesday. Here on the ground in Northwest Colorado, the question was how the news would affect Peabody's underground mining operations at Twentymile Coal Company, where the company employs about 300 people.
In an email to State Rep. Diane Mitsch Bush, Peabody's director of state government relations, Mike Blank, wrote, "I want to reinforce up front that, during this process, we expect to continue to do what we do best: mining coal, loading trains, restoring lands and maintaining our activities in a largely business-as-usual fashion across our U.S operations."
In addition, Blank wrote, "Employees will continue to receive customary wages and salaries, healthcare coverage and other benefits upon court approval, which we expect to come quickly to allow us to continue to operate in the ordinary course."
Peabody also reported in a news release Wednesday that all of its American mining operations were cash-flow positive.
Peabody has been strapped by a $6.2 billion debt it could no longer make payments on. And coal miners in Routt and Moffat counties had hoped an announced sale of Twentymile — along with mines in New Mexico — to Kentucky-based Bowie Resource Partners for $358 million would help secure their futures.
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However, Peabody also announced Wednesday the planned sale was terminated after Bowie was unable to complete the transaction. Now, Peabody officials said they have arranged $800 million of debtor-in-possession financing (subject to court approval) to help their mine operations carry on. Those funds are typically used to continue to operate the assets of a company in bankruptcy because its creditors think it's in their best interest.
Peabody President and CEO Glenn Kellow predicted his company would strengthen liquidity and reduce debt in bankruptcy and create a foundation for long-term stability.
"A company like Peabody, with safe, efficient operations, will be well-positioned to serve coal demand that will continue in the United States and around the world," Kellow said.
In spite of Peabody's interim financing and Kellow's optimism, people here are contemplating the possibility of a future without high-paying mining jobs.
"It's a wakeup call," Routt County Commissioner Tim Corrigan said of the news. "Like it or not, we need to start thinking about how we'd absorb that loss if it came to pass."
Retired 23-year Twentymile underground miner Gary Burkholder said Wednesday he has several neighbors in Yampa who work at Twentymile, but they don't talk much about the future of Peabody.
"In passing at the post office, they'd say how worried they were the sale wouldn't go through," Burkholder said.
He doesn't think most Routt County residents fully understand the positive impact the coal mine payroll has on the local economy.
"The jobs are extremely important, in this county and in Moffat County," Burkholder said. "Not only them, but the railroad (and the power plants). People don't realize how important they are until the payroll is lost."
Steamboat Today reported in 2013 that entry level miners with no experience earned about $48,000 per year. And the Colorado Mining Association reported the average pay and benefits combined were $115,354 in 2011. In 2014, Twentymile Coal Company employed about 400 people. Currently, the number is closer to 300.
Dan Foley, of Sleeping Giant Financial Services, counts a handful of Twentymile employees among his clients and said Wednesday he wanted to reassure retired miners that their pensions are secure, in spite of the bankruptcy filing.
"There are people starting to express concern about their pensions," Foley said. "I just want them to know they're going to be OK. Peabody's pension fund, "like the large majority of private corporate pension funds in America, are guaranteed by the Pension Benefit Guarantee Corp."
The Associated Press reported this week that Peabody has been confronted with the same predicament other large coal mining companies have struggled with.
"Peabody makes most of its money by selling its coal to major utilities that power the nation's electric grid." AP wrote.
And, the increasing role played by new energy technology, tightening federal regulations and an abundance of natural gas have put downward pressure on coal prices.
Before coming to Twentymile, Burkholder worked for a decade in the U.S. Steel mine (at the time) near Paonia.
United Steel was a union mine, and one year — when the miners went on strike for four months, he said — the stoppage put a dent in the economies of much larger Montrose and Grand Junction.
"There were businesses in Grand Junction that didn't have any idea the coal mine salaries were helping their businesses.," Burkholder said.