After recording close to $3 billion in losses, the future of the Australian arm of the now bankrupt Peabody Energy looks precarious.
The miner has 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.
It follows parent company Peabody Energy’s announcement of Chapter 11 bankruptcy earlier this year.
The miner blamed the weak coal market, stating “industry pressures in recent years including a dramatic drop in the price of metallurgical coal, weakness in the Chinese economy, overproduction of domestic shale gas and ongoing regulatory challenges” were drivers for the filing.
However, it did not include its Australian assets in the filing, stating they were to continue to operate as normal.
This now looks in doubt following Peabody Energy Australia‘s (PEA) filing with ASIC, as the ABC reports the company’s auditor – Ernst & Young – has doubts of PEA’s capability to continue operations.
The business made a $2.7 billion net loss for the year to December, which includes a write-down of $1.8 billion, tax bill of $43 million, and a $12.9 million charge for discontinued operations.
Its viability is further put in doubt by its parent company’s collapse, which may drive demands for repayment from US creditors.
“The Intercompany Loan Facility may not be sufficient to accommodate some or all of the possible cash outflows for items such as accelerated repayment of leases and additional cash-backing for bank guarantees or other security should it be required,” it stated.
Despite this current financial dilemma, Peabody Australia still plans to ramp up its Wambo underground operations, and has put in an application to the Department of Planning and Environment to increase its underground coal production rate and operational life span.