Patriot Coal files for bankruptcy, in talks to sell all assets
Coal trains lead up to the Patriot Coal site in Kanawha County, West Virginia.
US miner Patriot Coal Corp. became Tuesday the latest victim of falling prices and demand for the commodity and filed for bankruptcy protection for the second time in less than three years.
The West Virginia-based company, which has eight active mining complexes in northern and central Appalachia, also said it was engaged in negotiations for the sale of substantially all of its operating assets to a potential buyer.
"In light of the challenging market conditions, and after a comprehensive review of our alternatives, the board and management team have determined that this process represents the best path forward for Patriot and its stakeholders," chief executive officer Bob Bennett said in a statement.
Secured lenders have agreed to back Patriot’s continued operations with a $100 million bankruptcy loan
Secured lenders have agreed to back Patriot’s continued operations with a $100 million bankruptcy loan, the company added.
Thermal coal prices are currently down to six-year lows of around $63 a tonne, far from the $150 per tonne the commodity was fetching in 2011.
Analysts estimate around a fifth of the thermal coal industry is losing money based on current prices — a position that is usually unsustainable in commodity markets.
“When you are that far into the cost curve, the downside is pretty limited,” Tom Price, commodities strategist at Morgan Stanley, said in a March note. “Price buoyancy is already indicating that this is the case.”
And while there is talk of supply cuts and rising Indian demand, China continues to be the main factor to tip the seaborne thermal coal market one side of the other.
Late last year, Beijing introduced a series of measures to help protect its domestic coal mines from competition and reduce pollution at the same time.