Workers at Peabody’s Metropolitan Colliery at Helensburgh face more uncertainty about their future after the company revealed it is facing a struggle to survive.
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The US-owned miner has told the regulators that it may have to file for bankruptcy protection if it cannot find a solution to satisfy its lenders.
Peabody blamed low coal prices and poor market conditions for its poor outlook, and revealed that company’s auditor expressed doubts that Peabody may be able to continue as a going concern.
Peabody chief financial officer Amy Schwetz wrote to all employees about the troubles.
Her note said the auditors had expressed “their view that our current financial path – absent significant improvements, asset sales and/or other favorable changes – may not be sustainable over the course of the year”.
This could cause lenders to call in debt payments sooner, employees were told, causing the bankruptcy warning.
“We recognize these events may cause uncertainty or contribute to speculation,” the note to employees said.
“We will continue to provide updates as appropriate.”
While Peabody seeks more time to fix arrangements with lenders, a spokeswoman said it was business as usual at its six Queensland coal mines and Helensburgh.
“Peabody continues to have a great asset base, US operations that have all been cash-flow positive, a strong metallurgical and thermal coal platform in Australia,” she said.
“The effects of our financial activities are unrelated to our operations and jobs, which are unaffected by today’s disclosures and continue in business-as-usual fashion.”
The mine has already seen significant workforce cuts as Peabody seeks to “reposition itself on the cost curve”.
It has been a grim 12 months for the Illawarra’s mining industry.
Last September Wollongong Coal laid off hundreds as it shut its Russell Vale colliery. Peabody cut about 90 jobs mid-last year. And South32 has recently announced 300 jobs would go from its Illawarra operations as it cuts costs and consolidates operations.
Peabody’s filing to the US Securities and exchange Commission did not pull punches. “As a result of these [market] factors, as well as the continued uncertainty around global coal fundamentals, the stagnated economic growth of certain major coal-importing nations, and the potential for significant additional regulatory requirements imposed on coal producers, among others, there exists substantial doubt whether we will be able to continue as a going concern,” it said.
