Bankruptcy of Coal Companies Won’t Cut Oversupply in America

by San Antonio Attorney

According to Bloomberg report, the excess of coal amounting to an estimated 100 million tons will continue to decrease coal prices for many years to come.

This will produce a lingering worldwide disturbance in a trade that has already eradicated more than 26,000 jobs equal to 29 percent of the roster of occupations since 2012. This places both employers and employees at risk.

Coal companies such as Alpha Natural Resources, Patriot Coal, Walter Energy, Arch Coal and James River have filed bankruptcy protection despite its sold infrastructure last April 2014.

When Alpha filed for bankruptcy protection last August 3, it produced a lesser output at merely 4.4 million tons or even less than 10 percent of the 10 million tons sold last year, according to a Bloomberg Intelligence Analysis report.

Another coal company, Revelation Energy, has increased its production at a previous James River mine through 68,000 tons in the third quarter. Buyers are taking advantage of the coal mines offer of a reduced cost and are now handpicking the best operations, according to a chief executive officer of Doyle Trading Consultants.

The overall output of Walter Energy was significantly reduced to 7.9 percent as it filed for reorganization. Some Patriot assets have dwindled down to 27 percent, according to Bloomberg Intelligence Analysis.

These cuts are not enough to keep up with the shrinking demand due to plummeting prices of natural gas obtained from shale, which is displacing coal in power plants, as said by the president of Energy Ventures Analysis.

This year will be detrimental to the coal industry due to its oversupply and its succeeding losses of over 240 million tons for the past seven years. Coal companies have to subsidize through reducing 100 million tons of production in order to equate demand, according to Mark Levin, an analyst at BB&T Capital Markets.

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