Peabody Energy, the world's largest privately-owned coal miner, has filed for bankruptcy protection in the US after a sharp fall in coal prices left it unable to repay its debts. The firm said the move was aimed at reducing debt and that all its mines and offices would continue to operate.
This was a difficult decision, but it is the right path forward for Peabody, said chief executive Glenn Kellow. Peabody's debt problems stem from its takeover of Australian rival Macarthur.
The firm paid about 5bn Australian dollars (£2.5bn) to buy the coalminer in 2011, but lower coal prices amid falling demand means it has struggled to repay its resulting debts.
The move is the latest in a series of bankruptcies in the industry, with miners hit by a combination of low energy prices, tougher environmental regulations and a shift to natural gas.
The factors affecting the global coal industry in recent years have been unprecedented, Peabody said in its Chapter 11 bankruptcy filing.
Industry pressures in recent years include a dramatic drop in the price of metallurgical coal, weakness in the Chinese economy, overproduction of domestic shale gas and ongoing regulatory challenges.”
Chapter 11 refers to a section of the US Bankruptcy Code. It protects a company from its creditors, giving it time to reorganize its debts or sell parts of the business.
Peabody's Chapter 11 bankruptcy filing ranks among the largest in the commodities sector since energy and metals prices began to fall in the middle of 2014. Prices were hit as demand in emerging markets such as China and Brazil began to slow.
Producers accounting for 45% of coal output have filed for bankruptcy in the current industry downturn, according to 2014 US government figures.
Peabody has about 8,000 employees and customers in 25 countries, according to its website.