Moody's; Powder River Basin Coal Output Will Keep Dropping; Expect More Closures, Less Thermal Coal
Coal production is expected to drop "significantly" next year in the Powder River Basin and could spell mine closures in the region in the early 2020s, according to a new report from Moody's Investors Service. The financial services company said the region, which includes parts of Montana and Wyoming and produces more than 40% of all U.S. coal, is particularly affected by shifts toward renewable energy and social opposition to exports in the Pacific Midwest. The region remains "distressed," with multiple companies exiting the PRB after filing for bankruptcy protection, Moody's said.
"All of the rated coal companies that produce PRB coal are now focusing on metallurgical coal production in other basins, which eases their credit exposure from producing in the declining PRB area in Montana and Wyoming," analysts wrote.
The firm said that both Peabody Energy Corp. and Arch Coal Inc. have "throttled back production" and that it did not expect Tennessee-based Contura Energy Inc. to reenter the region's market. Earlier this month, Contura announced it was closing a transaction with Eagle Specialty Materials LLC over the Eagle Butte and Belle Ayr thermal coal mines, both located in the basin.
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Last month, a separate Moody's report also touched on the impact of transportation costs for producers in the PRB. In that analysis, Moody's forecast that utilities' demand for coal would fall more than 50% over the next 10 years, which would cut revenue for U.S. railroads by nearly $5 billion by 2030 (Energywire, Sept. 6).
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https://www.eenews.net/energywire/2019/10/29/stories/1061394701
