What the Grand Cache Coal Bankruptcy Reveals About the Coal Industry

What the Grand Cache Coal Bankruptcy Reveals About the Coal Industry

The company had originally planned to reopen in the early months of 2017, but its bankruptcy has put those plans on hold. It recently sent town residents a letter saying that it was going into receivership. This would allow the company to restructure itself. It could, according to the source, reopen this summer after its assets are put up for sale.

With 500 union workers, the coal company was Grand Cache’s largest employer. With the company out of the picture for the time being, a medium-security prison will now hold that title.

The state of the coal industry

For some time, the coal industry worldwide has been in dire straights for many reasons. A few include the uptick in renewable energy sources, low-cost natural gas and other regulations that protect the public’s health, noted Climate Nexus. 

According to the U.S. Energy Information Administration, the amount of coal short tons in the U.S. dropped by 17 percent between 2015 and 2016. The source also noted that coal has been in an eight-year decline in the U.S. for similar reasons that Climate Nexus mentioned. EIA further attributed this drop to warmer temperatures during this time that caused a decrease in electricity demand, decreased international coal orders and the stoppage of a few coal-fired generators. 

The future of the coal industry 

There’s a lot of uncertainty surrounding the industry as a whole with coal companies filing for bankruptcies more frequently. S&P Global Market Intelligence reported that 44 percent of American-produced coal is from companies that have filed for bankruptcy.

Not long ago, Goldman Sachs, according to another S&P Global Market Intelligence source, noted that market watchers should keep a close eye on what the financial company called “peak coal.”

“The industry does not require new investment given the ability of existing assets to satisfy flat demand, so prices will remain under pressure as the deflationary cycle continues,” Goldman Sachs stated.

President Donald Trump has vowed to turn the industry around, which could be great news for a number of towns that rely on coal companies to survive. However, that may or may not help towns in other countries, such as Grand Cache, which rely heavily on the industry to survive.