Published: August 17, 2016 |

[Click image to enlarge]

Peabody Energy’s creditors have approved a plan that involves a major scaling back of production at its Australian assets and the closure of its Burton mine in central Queensland later this year.

The Burton mine is operated by Thiess which refused to comment yesterday, but it is believed 247 jobs could be lost when the mine closes.

In a five-year plan endorsed by the creditors on Wednesday night in the US, Peabody said the metallurgical and thermal sectors were core business but it “anticipates a smaller but more profitable platform focused on high-quality products and/or top-tier assets to capitalize on higher growth in Asia’’.

In Australia, Peabody forecasts that coal sales will decrease from 36 million tonnes in 2016 to 28 million in 2021 and it also intends to sell, suspend or divest non-strategic assets.

It also wants to restructure or mitigate take-or-pay agreements to improve cash flows.

The US-based coal giant filed for Chapter 11 bankruptcy protection in April and in its latest results said it had reduced its losses $US233.8 million in the quarter ended June 30 and is forecasting revenue of $US4.4 billion this year.

“We are pleased to advance a realistic plan that recognizes both the challenges and opportunities related to the company and industry,” Peabody chief executive Glenn Kellow said.

“The business plan contemplates a reduction of metallurgical coal volumes over the five-year life of the business plan, assuming a strong Australian currency and no major uplift in product pricing.

“As described in the business plan, future plans are dependent on factors including industry conditions and the success of Project Excellence improvement initiatives.

“In addition, in the ordinary course of business, the company continues to review and optimize the asset portfolio. ‘’

In the first half of 2016, Peabody sold its undeveloped tenements and more recently said it would follow through on placing the Burton Mine in care and maintenance.

It forecast that in Asia Pacific, metallurgical coal demand would increase by 50 to 55 million tonnes between 2016 and 2021, driven by China and India.

Seaborne thermal demand is expected to rise by 50 to 60 million tonnes as some 375 gigawatts of new generation capacity is added, primarily in the Asia-Pacific region.

Mr. Kellow noted that Peabody has opportunities to not only survive but to thrive for the long-term benefit of its many stakeholders, despite operating in an industry with unprecedented challenges of late.

“We are pleased to advance a realistic plan that recognizes both the challenges and opportunities related to the company and industry,” said Kellow.

“As Peabody focuses on emerging stronger from the Chapter 11 process, we look to capitalize on our strengths, build upon our positive operating performance, reduce our overall debt and fixed charges, and pursue additional improvements for long-term success. Peabody has a strong asset base and skilled workforce intent on creating maximum value in an essential industry.”

Source: (August 11, 2016) The Courier-Mail

To stop by Peabody’s website, CLICK HERE

Be in-the-know when you’re on-the-go!