Peabody Energy has written $1.4bn off the value of the world’s largest coal mine, an acknowledgment of electricity generators’ permanent shift towards natural gas and wind. The open-pit North Antelope Rochelle mine in Wyoming’s Powder River Basin accounts for 12 per cent of US production, and shuttle trains laden with coal serve power plants across the country.
But cheap gas prices coupled with falling costs for renewable power and state-level mandates for clean energy have accelerated the decline of coal-fired electricity. In the first six months of 2020, Peaboyd’s production in the Powder River Basin was down 18 per cent on the year.
In the past decade more than 100 US coal-fired plants were repurposed to burn gas, according to the Energy Information Administration. US coal generating capacity at the end of 2019 was down more than a quarter from its peak in 2011.
The lockdowns and economic damage caused by the coronavirus pandemic have also reduced US electricity demand by 4 percent, with coal losing share to gas and wind, Peabody said.
“The longer the pandemic plays out, the more early retirements [of coal-fired plants] and permanent demand destruction from coal we’ll see,” said Benjamin Nelson, a coal industry analyst at Moody’s.
[The writedown is] a clear signal that Powder River Basin coal production isn’t coming back
Shannon Anderson, Powder River Basin Resource Council
St Louis-based Peabody decided to take an impairment to the value of the North Antelope Rochelle mine because lower natural gas prices were forecast to make that fuel more competitive and because of the pace of coal plant retirements and growth in renewable generation, said Mark Spurbeck, Peabody’s chief financial officer.