A pandemic and weak demand push 2 coal companies into bankruptcy

By james marshallPrime Minister of E&E News, E&E News

Two coal companies filed for bankruptcy restructuring this week in the latest indication that the industry’s long-term woes have been intensified by the coronavirus pandemic.

Lighthouse Resources Inc., operator of the Decker mine in Montana, and Illinois basin producer White Stallion Energy LLC have each filed for Chapter 11 reorganization in the U.S. Bankruptcy Court for the District of Delaware.

Both companies produced thermal coal to fuel power plants. Lighthouse’s plan to export coal to Asia fell through, while White Stallion cited the utility’s shift to natural gas and renewables as the main cause of its bankruptcy filing.

Lighthouse CEO Everett King said the Utah-based company had to lay off 76 of its 167 employees.

“We are deeply saddened by this impact on individuals, families and communities. A court-supervised reorganization process is required,” King said in a statement. “We have no alternative.”

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Lighthouse said it has about $456 million in debt and White Stallion has about $104 million. Both companies plan to sell their assets.

Lighthouse bet on shipping coal through its Millennium Bulk Terminals project in Washington to Asia, where demand for coal is growing, a court has heard deposit said.

The export project was mired in legal battles as Washington regulators refused to license the terminal (thread of energyOct. 6, reprinted in County 17). The company could not afford to continue fighting for the future of the terminal.

Also, Lighthouse’s Decker mine is losing its client. The company sells 2.5 million tons of coal a year to DTE Energy Co. for $15.25 a ton. But its purchase agreement ends in 2021. DTE is in the process of closing or upgrading some of its coal-fired power plants (E&E News PMDecember 3).

Lighthouse is also involved in a joint venture at the Black Butte mine in Wyoming. This mine is not part of the bankruptcy and will continue to operate.

White Stallion will idle its six surface mines in Indiana and Illinois. It laid off all of its 260 employees before filing for bankruptcy. It plans to rehire 24 of them during the restructuring.

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The company is “facing a severe and unexpected cash crunch caused by, among other things, a sharp decline in the broader coal market, which has been exacerbated by the outbreak of the novel coronavirus,” the director wrote. exploitation of White Stallion, David Beckman, in a search deposit.

The company received a $10 million loan from the Congress-approved Pandemic Protection Program, but the drop in demand for coal was too much to overcome. Appalachian mining company Rhino Resource Partners LP also received a PPP loan before declaring bankruptcy in July (green wireJuly 23).

The pandemic and falling demand could continue to drive coal companies out of business. Peabody Energy Corp., the nation’s largest coal company, reported last month that it was a risk to get into a second Chapter 11 case.

Other companies are shifting their focus from supplying power stations to producing higher quality coal for the steel industry, a much smaller but more reliable market.

Reprinted from E&E News PM with permission from E&E News. Copyright 2020. E&E News provides essential information for energy and environmental professionals on www.eenews.net.

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