Murray Energy, the largest private coal miner in the United States, eventually filed for bankruptcy protection.
In fact, rumors of Murray Energy's bankruptcy have been reported for years. Unable to pay the lender, Murray Energy signed a grace agreement to buy time for its debt restructuring. However, the grace period expired, and the company was still unable to pay, and S&P Global Ratings downgraded the company's credit rating to "default" earlier this month.
The company said on Tuesday it had secured $350 million in credit to protect business operations during the bankruptcy filing.
Robert Murray, chairman of the company, said in a statement: "Although filing for bankruptcy is not an easy decision, the company has had to do so to ensure the long-term development of users and employees. ”
Murray Energy's bankruptcy underscores the enormous pressures on coal miners. Several coal companies have filed for bankruptcy, but Murray Energy is one of the strongest and most connected companies in the industry. Murray Energy and its subsidiaries employ 7,000 people and operate 17 active mines in Alabama, Illinois, Kentucky, Ohio, Utah and West Virginia.
President Donald Trump's election in 2016 gave hope for a renaissance in the coal industry. While the president moved swiftly to cut environmental regulations and even appointed a former coal lobbyist to lead the U.S. Environmental Protection Agency, efforts to deregulate have been overwhelmed by market forces. Coal simply can't compete with cheap natural gas, while the prices of solar, wind and other forms of renewable energy have plummeted.
Power companies are rapidly phasing out coal in favor of cleaner alternatives. According to administration forecasts released earlier this month, U.S. power plants are expected to consume less coal next year than at any time since President Carter was in the White House.
According to the U.S. Energy Information Administration, U.S. coal exports are estimated to fall to 20.9 million short tons in the third quarter, down 28 percent from the same period in 2018. The agency expects coal exports to continue to decline by the end of 2020, to 17.3 million short tons.
Coal miners will suffer losses in bankruptcy, not only in their jobs, but also in health care and pension benefits. The company was the last major company to contribute to the U.S. United Mine Workers Pension Program. If the company scraps pension requirements, the depleted funds in the pension plan will only get worse.