- Write by:
-
Thursday, February 27, 2020 - 11:52:14 AM
-
725 Visit
-
Print
Mining News Pro - The US Federal Trade Commission (FTC) has rejected Peabody Energy and Arch Coal’s plans to combine their operations in Wyoming and Colorado, saying it would limit competition and raise prices.
According to Mining News Pro - The joint venture, announced by the country’s two largest coal miners last year, would run seven mines in the Powder River Basin (PRB), where Peabody and Arch Coal accounted for over 65% of all the coal mined there in 2018.
The FTC has requested an administrative trial and, in the meantime, a temporary restraining order and preliminary injunction for the deal, which could generate $120 million in annual cost savings for the companies over a decade.
“Whatever the product, the antitrust laws protect customers from mergers that lead to higher prices,” Ian Conner, director of the FTC’s Bureau of Competition, said in the statement. “This joint venture would eliminate the substantial head-to-head competition between the two largest coal miners in the United States, and that loss of competition would likely raise coal prices to power-generating utilities that provide electricity to millions of Americans.”
Peabody and Arch Coal replied they intend to challenge the FTC’s decision in the coming months, adding they will continue to pursue the JV.
“We have provided tremendous amounts of evidence to the FTC during an extensive review, fully demonstrating that coal … faces intense competition from natural gas and other alternate fuels,” Peabody chief executive officer, Glenn Kellow, said in a separate statement.
The two companies believe coal prices will bottom out in the first half of 2020 before rising in the second half as production declines and global consumption gains.
The International Energy Agency is anticipating a steady increase in demand for the fossil fuel in the next five years, as growing demand for electricity in developing countries outpaces a shift to cleaner sources of electricity in industrialized nations.
Weak fundamentals
Moody’s lead coal analyst, Benjamin Nelson, said that regardless of whether or not the venture can go ahead, business conditions for coal producers in the PRB will remain extremely challenging.
Nelson cited among the reasons for the bleak outlook an “ongoing secular decline in the demand for thermal coal, low natural gas prices encouraging switching in the near-to-medium term and far fewer opportunities to export coal compared to other coal basins in part due to social opposition in the Pacific Northwest.”
US government data released in early February show that production in the country’s top coal- region fell almost 14% in the last three months of 2019 to the lowest in over two decades.
The weak quarter capped a tumultuous year of mine shutdowns and bankruptcies in the Basin, including Blackhawk Mining, Blackjewel, Cambrian Holding Co., Cloud Peak Energy and New Trinity Coal. Two other miners, Mission Coal and Westmoreland Coal, went bust in October 2018.
Short Link:
https://www.miningnews.ir/En/News/493689
Copper futures in New York rallied to a record high after a short squeeze that’s prompted a scramble to divert metal in ...
Australian-based Atlantic Lithium Ltd., which is developing Ghana’s first lithium mine, has taken a step toward raising ...
Oxford Economics Australia has released data showing mine maintenance spending may be hitting its peak. But what does it ...
Iron ore futures fell to their lowest in more than two weeks, pressured by an inventory accumulation at Chinese ports ...
Nutrien, the world’s biggest fertilizer producer, beat first-quarter profit estimates on Wednesday, on strong demand for ...
Coal India Ltd., the world’s largest producer of the commodity, reported a 26% increase in fourth-quarter profit, driven ...
BHP Group can’t cherry pick Anglo American assets without paying a hefty premium, Anglo investors told Reuters, ...
Copper slipped after initially extending gains above $10,200 a ton as traders turned their attention to demand ...
When former boss Mark Cutifani left Anglo American Plc in mid-April 2022, things had rarely looked better for the ...
No comments have been posted yet ...