Business as usual for Peabody Energy

Peabody Energy

Australia’s fifth biggest coal miner Peabody Energy maintains “it’s business as usual” in New South Wales and Queensland, despite posting a $2.7 billion net loss for 2015 and receiving a warning from auditor Ernst & Young.

A spokesperson for Peabody Energy in Australia told the ABC the company was committed to Australia as a core region despite its US parent filing for Chapter 11 bankruptcy, which allows a company to restructure and pay creditors over time.

The firm’s directors, however, did note “reasonable grounds exist” to believe that Peabody Australia could pay its debt.

Peabody Australia, which employs around 3500 staff and contractors in Australia, has been lent an additional $US250 million by its US parent.

The company has been hit by the slump in coal prices amid oversupply and the economic slowdown in China.

Thermal coal, used for electricity, has plunged from above $US120 a tonne in 2011 to around $US53 a tonne last Friday. Coking coal, used to make steel, has slumped from more than $US300 in 2011 to around $US87 a tonne.

Despite the net loss for 2015, Peabody said the company had a strong year in 2015.

“The majority of the losses incurred in the 2015 accounts relate to impairment write downs, which are broadly consistent with the approaches applied by other mining companies in response to the reduction in commodity prices right across the industry,” the spokesperson said.

“Peabody Australia is not part of the Chapter 11 bankruptcy protection process and we plan to operate as usual.”

The write down of Peabody’s mines was worth $1.8 billion.

Peabody Australia made a before tax profit of $204 million for 2015, which the spokesperson said was the equal highest gross profit since 2012.

In 2014, Peabody made a net loss of more than $1.2 billion from revenue of $2.9 billion and before tax profit of $153 million.

However, the company warned in its 2015 financial accounts lodged with the corporate regulator, ASIC, that it faced financial risks because of the bankruptcy of its US parent.