Arch Coal bankruptcy: The end of an era

Longview, WA - Arch Coal, Inc., the second largest coal supplier in the United States, announced today that it would be filing for bankruptcy protection after suffering several quarters of losses and being unable to restructure its debt. The company has been a major player in coal regions across the U.S., including Appalachia and the Powder River Basin. In the Northwest, the announcement significantly reduces the likelihood that several Arch Coal projects across Montana and Washington State will move forward, including the Otter Creek mine and Tongue River Railroad in Montana, as well as the proposed Millennium Bulk Terminals coal export terminal in Longview, Washington.

Due to plummeting profitability of domestic coal production, the company had planned to open a massive new coal mine at Otter Creek and then transport it using the Tongue River Railroad, for eventual export to Asia through the proposed Millennium coal terminal in Washington State. Today’s bankruptcy announcement puts these plans in jeopardy and underscores Arch Coal’s dwindling business prospects.  

Arch Coal has experienced a dramatic decline in the five years since it purchased an interest in the Millennium coal terminal.  Arch’s stock price topped out at over $360 a share on a split adjusted basis, in early 2011.  Since then, it has plummeted to under $1 share before today’s bankruptcy announcement, which will likely result in the equity holders getting nothing. The bankruptcy filing is directly attributable to the Company’s spending spree during the market peak for coal prices, which resulted in it incurring over $5 billion in long-term debt, most of which is due over the next 2-4 years, as well as more than $500 million in losses in the past year. Arch has continued to dramatically increase pay for its executives to reward them for failed strategies, while failing to adapt to new public health concerns about coal pollution and the public's increasing demand for clean energy.