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An aerial view of North Antelope-Rochelle mine, owned by Peabody Energy in the Southern Powder River Basin in Wyoming. North Antelope-Rochelle is part of the larger Black Thunder mine, which opened in 1977 and for many years was the largest single coal operation in the world. It is also the first coal mine in the world to transport one billion tons of coal. (Photo © Greenpeace / Tim Aubry)

4 Things to Know About the Peabody Energy Bankruptcy

Peabody Energy, the largest private sector coal mining company in the world, just declared bankruptcy—this is a big deal.

Kelly Mitchell

 by Greenpeace

For 133 years, Peabody has been the bedrock of the U.S. coal mining industry. While coal CEOs have tried to downplay the emerging clean energy economy and the power of grassroots activists globally, the fall of a coal titan speaks for itself.

Here’s what you need to know.

Why did Peabody declare bankruptcy?

There two big reasons. First, the entire U.S. coal industry is in free-fall, and second, Peabody executives made some fairly terrible business decisions.

Peabody is the latest in a long string of coal bankruptcies. In the last couple of years, more than 50 coal companies have declared bankruptcy. And in the last six months, two once-giant coal miners — Alpha Natural Resources and Arch Coal — added their names to the list.

It turns out, people are just not as into coal as they used to be.

Grassroots activists throughout the United States have halted the construction of more than 150 new coal-fired power plants since the early 2000s, and more recently started hastening the retirement of hundreds of existing plants. And globally, concerns about air pollution, water use, and climate change have slowed coal’s rise in places like China and India.

In response to these developments, a rational actor might have started developing a thoughtful exit strategy to ensure workers got paid and mines were cleaned up. Instead, Peabody took out loans for $5 billion to buy new mines in Australia, leased a couple billion tons of coal from the U.S. government, and hired an expensive PR firm to try convince the world that coal was a solution to poverty.

Now, those debtors are asking for payment, and Peabody can’t foot the bill. So, bankruptcy!

What does this mean? Does Peabody stop mining?

Like Arch and Alpha, Peabody will be able to continue mining throughout bankruptcy proceedings. Chapter 11 bankruptcy is a tool for businesses to try to re-emerge as viable companies after past mistakes. It’s not quite the “end” of Peabody.

What will happen in bankruptcy court?

Here’s where things could get quite ugly.

In bankruptcy court, a judge looks at all the debts owed by Peabody — to Wall Street bondholders who financed its risky mine acquisitions, to the U.S. government who sold it coal, to miners who are counting on benefits — and decides who gets paid and who gets screwed so Peabody can emerge as a financially healthy company on paper.

If Peabody’s bankruptcy goes the way of other coal companies, workers and taxpayers will be the ones to foot the bill. Even worse, coal companies have requested multi-million dollar bonus packages to retain the talented executives who drove them into bankruptcy, while petitioning to jettison all pension obligations to miners.  

Watchdog groups and community organizations will try to intervene in these proceedings to ensure CEO Glenn Kellow isn’t the only one walking away with a paycheck. The U.S. government also has an opportunity to step in and demand taxpayers get a fair share as well, though it’s been unwilling to do so in previous coal company bankruptcy proceedings.

We’ll likely also learn some details about Peabody political and legal spending as bankruptcy documents emerge.

What will happen after bankruptcy court?

Peabody can certainly try to get rid of as much debt as possible or sell some unprofitable mines, but at the end of the day, it can’t change the fundamentals. A bankruptcy court can’t suddenly create a robust global coal market. Peabody was the largest private sector coal mining company in the world — in many ways Peabody is the U.S. coal industry. Its fall from grace is a big deal.

We are witnessing an irreversible and structural shift away from coal globally. We also need to ensure this is good news for all — and that means that state and federal governments need to step in and build a real transition plan that takes care of workers and communities.

Peabody will emerge from bankruptcy a smaller, weaker, less important, and possibly no less evil company. For too long this company has punched above its weight in the political sphere. Maybe this is the moment where we can all agree it shouldn’t have influence over decision makers anymore.

Coal is on the decline, and now is our chance to keep ALL fossil fuels in the ground. Send a message to President Obama today!

© 2021 Greenpeace

Kelly Mitchell

Kelly Mitchell is the Energy Campaign Director for Greenpeace, based in Chicago. Since 2006, she has worked with activists and organizations across the country to confront corporate polluters and transform U.S. energy policy. She currently leads Greenpeace's campaign for an economy powered by 100 percent renewable energy, pushing some of the largest companies in the world to embrace wind and solar and working alongside communities to develop a just and democratic energy system.

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