The President of the United States, Donald Trump, recently campaigned towards resparking back the coal industry. Unfortunately for the local coal companies, today’s economic forces outweigh any bold statements from Trump aimed at gaining support from some of the hardest workers in the country that risk their personal health and lives to harness and supply energy to tens of millions of people across the nation.
The U.S. based coal companies are constantly reporting disappointing financial results, while leading firms are filing for bankruptcy. This downward trend is mainly due to the fact that the trading value of natural coal has fallen down to 38% after its recent high in October 2018 and is currently down to 2016 prices.
Moreover, Missouri-based private coal company Peabody Energy reported larger earnings per share (EPS) loss for the September quarter than analysts had forecasted i.e $0.57 vs. $0.41, as compared to last year’s positive EPS of $0.63. The company’s revenue also witnessed a dramatic drop, down to $1.4 billion, which is downward dip of 21% year-over-year. While the price declines hurt the results, on the other hand, sales volume also fell to almost 9%, or 44.8 million tons. In this regard, numerous analysts have also projected a $(1.07) per share loss for 2020, making the outlook bleak for the near future.
On the 1st of July, Blackjewel also filed for bankruptcy, which inadvertently impacted approximately 600 worker jobs. While the news seems disastrous, the mines were eventually bought by another company and mining resumed in October.
The U.S. Energy Information Administration’s (EIA) data uncovers that in between the time span of 2010 and the first quarter of 2019, “U.S. power companies announced the retirement of more than 546 coal-fired power units, totalling around 102 gigawatts (GW) of generating capacity.”
Adding to the ongoing despair, the EIA has found that the coal-fired units retirement after 2015 have generally been targeted towards larger and younger units. The U.S. coal units that had retired in 2018 maintained an average capacity of 350 megawatts (MW) with an average age of 46 years. In comparison to 2015, the retired units had an average capacity of 129 MW and average age of 56 years.
If this trend continues with its ongoing trajectory, future retirements will continue to have a large impact on coal miners, even if there are fewer plants shutting down.