Peabody Energy is one of the country’s largest coal companies, supplying power plants and steel mills around the world.
But in the past few years the company’s fortunes have plummeted, and environmental leaders don’t believe Peabody’s promises that, when the time comes, it will be able to pay more than $250 million to clean up its Illinois Basin mines.
Under federal law, mining companies must set aside money to pay for reclamation once mining stops. This is generally done through insurance policies known as surety bonds. But the government also allows companies in good financial shape to “self-bond,” promising that their own assets will be able to cover the cost of reclamation.
A decade ago, Peabody Energy would have been considered a robust company, and there were few concerns about its self-bonding arrangements.
Today it’s a different story. And industry experts doubt that the plan Peabody executives described on an earnings call earlier this month will do much to turn the tide, given the rapid retreat of coal-fired power and the slowing of China’s economythat’s a major factor in worldwide coal demand.
“The risk is that Peabody’s responsibility to clean up from its mining operations will be washed away in a bankruptcy proceeding, and Illinois taxpayers will be left holding the financial bag,” said Howard Learner, executive director of the Environmental Law & Policy Center (ELPC). “That’s unacceptable.”