Peabody Energy has outlined a new business plan after it was given a last minute financial lifeline.
The global coal company’s future, particularly in Australia, has been in doubt since it announced Chapter 11 bankruptcy in April.
This issue was compounded when Peabody lodged losses of $2.7 billion with ASIC, up from a $1.2 billion loss in 2014, highlighting continued weakness in the coal miner and the wider market.
However, a new business plan, which has been approved by the company’s debtor-in-possession financing lenders may keep the miner afloat.
Commenting on the changes, Peabody CEO Glenn Kellow said the rejigging of the business would create “opportunities to not only survive but to thrive for the long-term benefit of its many stakeholders, despite operating in an industry with unprecedented challenges of late”.
“We are pleased to advance a realistic plan that recognises both the challenges and opportunities related to the company and industry,” Kellow said.
“As Peabody focuses on emerging stronger from the Chapter 11 process, we look to capitalise on our strengths, build upon our positive operating performance, reduce our overall debt and fixed charges, and pursue additional improvements for long-term success. Peabody has a strong asset base and skilled workforce intent on creating maximum value in an essential industry.”
Regarding its Australia assets, the miner said its new business plan “reinforces that both metallurgical and thermal sectors are core to Peabody”.
While the miner did not state whether it would consider divestment or closure of any of its existing mines – bar the previously announced Burton coal mine being placed in care and maintenance – Peabody Energy did say it “anticipates a smaller but more profitable platform focused on high-quality products and/or top-tier assets to capitalise on higher growth in Asia”.
It went on to state a potential reduction of metallurgical coal volumes over the next five years is likely, adding, “the company continues to review and optimise the asset portfolio”.
“Peabody clearly has much work to do prior to emerging from Chapter 11 and, longer-term, to create significant value,” Kellow said.
“We are highly confident that we have the assets, the team and the operational successes to build upon as we create a stronger Peabody.”