It is not only the falling prices that are forcing mining companies out of business, but also cheaper and ‘greener’ alternative sources of energy, African Mining Brief gathers.
In the ongoing tragedy befalling mining companies, Arch Coal, regarded as one of the largest US coal miners, filed for bankruptcy on 11 January. This has been attributed to competition from cheap natural gas from fracking operations.
In a measure to dig out of the debt hole, the St. Loius, Missouri-based Arch, reported that it had struck a deal with lenders to reduce $4.5bn in debt from its balance sheet.
Despite the problem, in a press release the company insisted that it “expects our mining operations and customer shipment to continue uninterrupted”, in accordance with the US Chapter 11 of the bankruptcy code proceeds.
High output from shale-based reserves and the collapse of oil prices globally have contributed to the fall of gas prices. Power companies have resorted to using gas which is considered cheaper and “greener”.
The company has become the latest amongst twenty four coal companies that have either filed for bankruptcy protection or decided to shut down.