Peabody Energy’s move to lay off 170 workers from its flagship North Antelope Rochelle mine near Wright was part of a systematic mine-by-mine review of the beleaguered coal producer’s operations.
During a 2020 first-quarter earnings call and reporting an overall net income loss of more than $129 million, Peabody President and CEO Glenn Kellow said the unprecedented challenges his industry is facing requires an unprecedented response.
He also said that being an “essential” industry during the COVID-19 pandemic doesn’t insulate the company from its financial pressures.
Essential or not, “each operation will only continue to operate when it is safe and economic to do so,” Kellow said.
And while he didn’t specifically say Peabody is looking for buyers, Kellow said that intense review of the company’s mines could mean identifying some assets to sell.
At a time when the company has suspended payouts to shareholders and has seen its stock fall nearly 90% over the past year and natural gas prices dropping to a 21-year low, “We must take aggressive and decisive action,” Kellow said. That could included suspending operations that can’t support themselves.
In addition to the layoffs at NARM, Peabody has laid off about 80 other coal miners in Indiana and Illinois in the first quarter of the year. It also has eliminated about 105 global corporate and support jobs, he said. Over the past six months, the company has reduced its global corporate and support staff by a third.
In the Powder River Basin, Peabody produced 23.5 million tons of coal, down from the 25.3 million tons produced in the first quarter of last year. While the $11.36 per ton realized for its PRB coal was the same as last year, it cost nearly 4% more to produce it.
The company also has suspended any of its projections for the rest of 2020, citing the uncertain market and impacts of the global pandemic.
Kellow also touched on a proposed joint venture between Peabody and Arch Coal Inc. that would merge their Western coal operations. The FTC rejected the joint venture in a decision announced in February, and Kellow said the companies continue to challenge that. Court hearings are scheduled to begin in late June with a ruling expected shortly after.
Peabody also this month borrowed $300 million under its $565 million revolving credit to “enhance the company’s flexibility.” Kellow was direct about the challenges facing coal and Peabody.
“Overall, it’s a time of significant change” for the industry, he said.