The largest privately owned U.S. coal mining company is seeking bankruptcy protection, despite a flurry of regulatory breaks that its CEO pushed for — and received — from the Trump administration.
Ohio-based Murray Energy filed for Chapter 11 bankruptcy reorganization Tuesday joining Bloomberg News reported.as utilities switch away from coal to cheaper and less-polluting renewable energy or natural gas. The company seeks to restructure nearly $3 billion in debt and obtained some $350 million in new loans to continue operating during the bankruptcy proceeding,
The filing marks a significant political failure for President Trump, who had sought to end what he called a "war on coal" by Democrats as a key part of his campaign and early presidency. Murray Energy was the country's fourth largest coal producer in 2018, accounting for 6% of total production, according to the Energy Information Administration. Other major producers that have sought bankruptcy protection this year includeMining in West Virginia and in Wyoming.
Murray Energy's move was necessary to access cash and best position it for long-term success, said former CEO Robert Murray. The company's operations span Alabama, Illinois, Indiana, Kentucky, Pennsylvania, Utah and West Virginia, as well as Colombia, South America.
Government preference for gas and renewable energy to replace coal-fired power generation, combined with a recent severe reduction in coal exports, delivered a one-two punch that an over-extended Murray Energy could not withstand, said Cecil Roberts, president of United Mine Workers of America.
"Now comes the part where workers and their families pay the price for corporate decision-making and governmental actions," Roberts said in a prepared statement. "But that does not mean we will sit idly by and let the company and the court dictate what happens to our members and our retirees. We have high-powered legal, financial and communications teams in place that will fight to protect our members' interests in the bankruptcy court."
West Virginia Senate President Mitch Carmichael said the bankruptcy filing was surprising even with the evident struggles in the coal business, adding that he's concerned about pensions and worker protections for Murray Energy's nearly 7,000 employees. U.S. Sen. Joe Manchin, a West Virginia Democrat, said on Twitter that Murray Energy must continue meeting its obligations to pay into pension plans for union miners.
The coal giant had signaled that it wasn't immune to the industry's downturn earlier this month when it announced it missed loan and interest payments to its lenders. Brian Lego, a research assistant professor at West Virginia University, said the bankruptcy of such a large company is a heavy blow to an already beleaguered sector.
"It doesn't bode well as far as the overall state of the industry is concerned," he said.
As CEO, Murray was averse to filing bankruptcy and in recent years he criticized other coal operators that chose to streamline. In a 2016 interview with the Associated Press, Murray lamented the number of bankruptcies in the coal industry and how his competitors were able to shed debt and re-enter the market.
"They come out of bankruptcy, all streamlined, and they don't close the mines. That's the key, they don't close a single mine," Murray said at the time. "So now you've got these companies all streamlined down, dumping their obligations, competing in the same market as me."
Murray, who on Tuesday was replaced as CEO by his nephew Robert Moore, has tied his fortunes to Mr. Trump. He hosted a fundraiser for Mr. Trump in July, which had been expected to raise $2.5 million. He has flexed his influence at the local level as well, donating thousands of dollars to the 2020 campaign of West Virginia Gov. Jim Justice and successfully pushing for a tax cut on steam coal in the economically depressed Mountain State.
Murray, who has called climate change an "environmental hoax," is also a proponent of Mr. Trump's regulatory actions aimed at scaling back environmental protections put in place during Barack Obama's presidency. In the first weeks of the new president's tenure, Murray presented incoming Cabinet members and other administration figures with a written wish list of environmental regulations he hoped to see knocked down to ease what he depicted as a regulatory burden on the sagging coal industry.
Mr. Trump's own gusto for "clean" and "beautiful" coal and coal miners helped to make Appalachian coal country one of his most fervent bases of support as he racked up big wins in West Virginia, Ohio, Kentucky and other states.
In March 2017, he surrounded himself with coal miners at the White House to sign an executive order pledging to kill off President Obama's legacy effort against climate change, a measure that would have pushed dirty coal-burning plants out of the national power grid.
"We are putting our great coal miners back to work," Mr. Trump said to thunderous applause and cheers at a 2018 rally in West Virginia, where the president also attended a big-money GOP fund-raiser hosted by Murray.
"The coal industry is back!" Mr. Trump declared.
The president put Andrew Wheeler, a lobbyist for Murray Energy, in charge of the Environmental Protection Agency. Along with targeting the Obama-era Clean Power Plan, the administration moved ahead on proposals to reduce environmental protections on coal ash, mercury emissions from coal plants, and other smokestack pollutants.
But it was market competition from cheaper natural gas and renewables that was hitting the U.S. coal industry the hardest, driving U.S. coal consumption under Mr. Trump to its lowest levels since the Carter administration.
Mr. Trump has lessened his call-outs for coal as the industry continues its decline despite his administration's support.
Power companies announced the retirement of more than 546 coal-fired power units over the last decade, as coal-fired power plants faced economic pressure due to stagnant growth in electricity demand and increased competition from natural gas and renewables, according to the EIA.
"Murray Energy's bankruptcy filing is another sign of the significant stress on the coal industry today," said Benjamin Nelson, a Moody's vice president and lead U.S. coal analyst. "While the demand for thermal coal has been declining for about a decade, healthy export prices helped the industry generate stronger cash flows in 2017 and 2018. A sharp reduction in export prices shines light on poor underlying demand fundamentals for thermal coal in the domestic market."
Tyson Slocum, energy program director for Public Citizen, said there is little anyone can do to save coal.
"Even when coal companies get exactly the corporate welfare and license to pollute that they want, they still go bankrupt because renewable energy has been outcompeting coal in the market," he said in a statement. "Instead of propping up the failing coal industry with taxpayer-funded bailouts, we should support the workers in transition and shut these mines down."