Western Kentucky coal producer Armstrong Energy has filed for bankruptcy protection, citing the “macroeconomic hurdles” that stand in the way of President Trump’s vision of reviving the coal industry.
Armstrong’s Chapter 11 petition came on the same day Trump celebrated rising U.S. coal production on Twitter with the hashtag “#EndingWarOnCoal.”
The company said Wednesday it would use the bankruptcy process to implement a restructuring agreement under which its assets to be transferred to a new entity to be jointly owned by Knight Hawk, another Illinois Basin coal producer, and the company’s secured bondholders.
“Over the past several years, the debtors and other coal producers in the United States have encountered a series of macroeconomic hurdles, including reduced demand for coal and lower coal prices, precipitated by slow economic growth, an abundance of extremely low-priced natural gas, and increased regulatory burdens,” Amstrong said in court papers.
“These macroeconomic factors, coupled with the debtors’ substantial debt obligations and operational costs, strained the debtors’ ability to sustain the weight of their capital structure and devote the necessary capital to maintain and grow their business,” it added.
Armstrong Energy is the first coal company to file bankruptcy since Trump was elected nearly a year ago. Both Arch Coal and Peabody filed Chapter 11 in 2016.
As CNN reports, the demand for Armstrong’s thermal coal has dropped due to power plants switching to cheap natural gas as well as renewable energy options like solar. At the end of 2016, U.S. coal volumes and Illinois Basin thermal coal prices had both declined by more than 25% from 2012 levels.
Analysts say the recent uptick in coal production has been driven by higher exports to Asia and natural gas prices that have stopped plunging.
“[Trump] saving coal jobs was smoke and mirrors,” Andrew Cosgrove, senior analyst on global metals & mining at Bloomberg Intelligence, told CNN. “It was never going to happen because low natural gas prices are the main problem. That will continue to cap any upside for coal.”
Armstrong officials said mining operations and shipments would continue during the bankruptcy process.