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Top 12 coal producers' value drops $2.11B; judge reopens Alpha bankruptcy case

The first full week of the new year got off to a rocky start for the U.S. coal sector with an S&P Global Market Intelligence analysis showing that the market value of the 12 largest publicly traded coal producers had fallen 16.6% from September 2018.

The dozen companies' value was down $2.11 billion as of Jan. 8 compared with Sept. 27, 2018. Natural Resource Partners LP, the only one to post an increase, grew 31.1% to $477.6 million during the period, while the value of bankrupt Westmoreland Coal Co. and struggling Cloud Peak Energy Inc. fell 88% and 83.9%, respectively.

Coal consumption among industrial, commercial and institutional customers is also down, echoing the decline in demand for thermal coal, and the trend is likely to continue. While nations such as China have larger commercial and industrial uses for coal, the volumes in the U.S. are small, and it can be more work for entities to store and separate the coal before burning it in industrial boilers than the fuel yields in benefits, said Joe Aldina, director of an analytics and forecasting unit of S&P Global Platts.

This week, a federal judge said he will reopen Alpha Natural Resources Inc.'s bankruptcy case following allegations that the management consulting firm that worked with the company through its proceedings had a conflict of interest in the case. Several attorneys specializing in bankruptcies told S&P Global Market Intelligence that reopening the case opens the door for additional procedural motions but does not reflect on the merits of the claims.

Ohio-based coal producers may have cause to celebrate after state regulatory staff testified that American Electric Power Co. Inc. did not demonstrate a need to build a proposed 900 MW of renewable energy capacity. If the commission rules the additional capacity is necessary, the power company's subsidiary Ohio Power Co., which conducts business as AEP Ohio, could charge customers for its generation rather than using the competitive retail market. The proposal has received push back from the coal sector, a solar company and a group of manufacturers.

In Arizona, Navajo Transitional Energy Co., a coal producer owned by the Navajo Nation, is negotiating with Peabody Energy Corp. to purchase its Kayenta mine, which delivers coal to the Navajo Generating Station, an operation the company also wants to purchase.

In Kentucky, Gov. Matt Bevin rallied in support of a coal-fired unit in the Bluegrass State. He warned the Tennessee Valley Authority that it would be making a "huge mistake" in retiring the last unit at its coal-fired Paradise power plant in a letter to company executives.

"In Kentucky we respect and value our coal-fired power plants and we strongly oppose any efforts to prematurely retire any of our fleet," Bevin said. "We have strong support, both in the Legislature and in the Executive Branch, for continuing to operate coal plants to power our burgeoning manufacturing economy."

One the federal level, six Democratic coal-state lawmakers recently filed a bill intended to protect coal miners' pensions and health care benefits while also extending the excise tax that benefits miners suffering from black lung disease. The United Mine Workers of America 1974 Pension Plan will be insolvent by 2022, if not sooner, without action, said Phil Smith, spokesman for the union.

On the railroad front, U.S. coal shipments remained stable from 2017 to 2018 despite surges in the export market and a lag in domestic utilities' coal consumption. Carloads through Dec. 29, 2018, declined 0.3% year over year to 4.4 million tons.

Upcoming events

Energy forum: The United States Energy Association will hold its State of the Energy Forum at 9 a.m. on Jan. 24 at the National Press Club in Washington, D.C.

Carbon capture discussion: The Atlantic Council and the Global CCS Institute will host a discussion on the institute's report "The Global Status of CCS" from 3-6 p.m. on Jan. 28 at the Atlantic Council's headquarters in Washington, D.C.

West Virginia Coal Association: The 42nd annual West Virginia Mining Symposium will take place Jan. 29-30 in Charleston, W.Va.

Coaltrans USA: The 19th Coaltrans USA conference will be held Jan. 31-Feb. 1 in Miami.

S&P Global Platts and S&P Global Market Intelligence are both owned by S&P Global Inc.