Vale SA’s (VALE) coal production for 3Q16 rose 54.0% QoQ to reach 2.3 million tons, mainly due to the ramp-up of the Moatize II plant after its startup in August 2016.
Bituminous coal inventories with power plants in the United States fell to 60.3 million tons, or 87 days of burn, at the end of July 2016. This compares to 66.6 million tons, or 86 days of burn, at the end of June 2016.
For the week ended September 23, the EIA reported that natural gas inventory came in at 3,600 billion cubic feet compared to 3,551 Bcf one week earlier.
Low natural gas prices over the past few months have hurt coal producers (KOL)—especially those with operations in the East and Midwest parts of the US.
The EIA’s current report for May 2016, published on August 26, specified that the electricity output in the United States came in at 317.7 million megawatt-hours in May.
Among major coal mining companies, Peabody Energy has the highest debt on its books. As of June 30, it had ~$7.80 billion in the form of long-term debt.
Of all the major coal mining companies, Alliance Resource Partners’ cost of sales per ton fell the most in 2Q16. It reported a 14% decline on a YoY basis.
Analysts expect Peabody Energy to report $55 million as EBITDA for 2Q16 and 5.1% as EBITDA margin. Lower EBITDA implies lower income from the company’s ongoing operations.
Peabody Energy (BTUUQ) reported about $1.3 billion as consolidated revenue for 2Q15. Analysts estimate that Peabody Energy will report about $1.1 billion in 2Q16.
Analysts expect Westmoreland Coal to report EBITDA of $62.1 million and an EBITDA margin of 17.6%. This implies higher income from its ongoing operations.
Of the major coal (KOL) mining companies, Westmoreland Coal (WLB) is the only company to witness a rise in adjusted net income on a YoY (year-over-year) basis.
According to Westmoreland Coal’s (WLB) company filings, the acquisition of San Juan Coal in January 2016 helped WLB to report higher adjusted EBITDA in 1Q16.
The majority of coal mining companies witnessed negative coal pricing growth on a YoY basis. However, Arch Coal (ACIIQ) saw a marginal increase in average coal sales price per ton sold on a YoY basis.
Uncertainty surrounding the recovery of coal prices and the enactment of environmental regulations such as the Clean Power Plan impacted coal stocks in 1Q16.
According to Peabody’s news release on its Chapter 11 filing, the bankruptcy court approved all of the first-day motions related to its Chapter 11 restructuring on April 14, 2016.
During the restructuring process, Peabody Energy hopes to continue its normal course of business with cash generated from ongoing operations, existing liquidity, and new financing.
Westmoreland Coal (WLB) reported an ~11% increase in average cost of coal sold per ton compared to fiscal 2014. The average cost per ton of coal sold came in at $21.50 compared to $19.30 during fiscal 2014.
According to Peabody Energy’s filings, the proceeds from the transaction with Bowie Resource Partners are crucial for it to meet future financial covenants.
On February 29, Peabody Energy announced in a press release that it wouldn’t be able to file its 10K on time. It has about $6.3 billion in debt on its books.
Peabody Energy’s adjusted EBITDA for 4Q15 came in at $53 million—compared to analysts’ estimates of $116 million. The value fell by nearly 75% on a YoY basis.
According to EIA projections, the Clean Power Plan will not have a significant impact on the quantity of coal produced or coal prices in the short term, until implementation of the plan.
On February 9, 2016, the U.S. Supreme Court issued a stay of the EPA’s Clean Power Plan. As a result, the EPA can’t implement the rule until all legal challenges are resolved.
The Clean Air Act is a national air pollution control policy that regulates the emission of hazardous pollutants from stationary and mobile sources in the United States.
Land ownership in the US can be broadly divided into the following categories: federally owned land, state-owned land, privately owned land, and Native American land.
Peabody Energy (BTU), Arch Coal (ACIIQ), Cloud Peak Energy (CLD), and Alpha Natural Resources (ANRZQ) are the top four coal-producing (KOL) companies in the Unites States.
Increased environmental scrutiny in power generation and steel production has an indirect impact on coal mining companies like Arch Coal. Power producers have been impacted the most by the Clean Air Act.
On January 11, 2016, Arch Coal (ACIIQ) filed for Chapter 11 bankruptcy. Although its bankruptcy was widely anticipated, stocks of major coal mining companies took a hard fall after the news.
