https://www.miningweekly.com

Illinois granted ‘superpriority’ claims to Peabody’s self-bonding obligations

23rd August 2016

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

Font size: - +

VANCOUVER (miningweekly.com) – The US state of Illinois has reached a ‘superpriority’ settlement agreement with major coal producer Peabody Energy relating to the company’s self-bonding obligations in the state.

This is the fourth superpriority settlement agreement, following agreements with Wyoming, New Mexico and Indiana that were approved by the bankruptcy court on August 17.

Self-bonding enables a company to operate mines without putting up sums of money or collateral for future site restoration.

The superpriority agreements provide the relevant state authorities with the ability to receive cash first in priority as additional assurance for Peabody's performance before distribution to any lender or other pre-petition creditor, up to the full amount of the company's $200-million bonding accommodation facility.

Illinois and the three other states are entitled to a percentage of the company's $200-million bonding accommodation facility based on their proportion of self-bonding relative to the company's total obligation as of April 12, when it filed for Chapter 11 bankruptcy protection.

The motion for the Illinois agreement is expected to be heard by the court on September 15. Peabody has three surface and underground operations in Illinois that employ about 500 workers. These operations injected more than $715-million into the region in direct and indirect economic benefits last year, according to the company.

Peabody's $800-million debtor-in-possession financing facility, which includes the bonding accommodation facility, provides financing for up to 18 months during the Chapter 11 process.

According to the company, land restoration is an essential part of the coal mining process. Over the past decade, Peabody has spent about $185-million to restore nearly 20 000 ha. As of June 30, the company had about $1.14-billion of self-bonding and $320-million of surety bonds supporting reclamation activities outstanding.

COMPLIANCE CONCERNS
Meanwhile, the US Department of the Interior’s Office of Surface Mining Reclamation and Enforcement last week issued an unprecedented advisory regarding financial assurance practices in the coal mining industry, in response to the significant market shifts facing major coal companies and associated financial difficulties that could affect their ability to carry out obligations for reclamation of the lands disturbed by their surface mining operations.

The policy advisory suggests that guidance be issued to state agencies in terms of regulated surface coal mining and the restricted use of self-bonding. It also provides recommendations for surety requirements, cash or collateral bonds to ensure that coal companies have adequate financial resources to properly restore lands disturbed by surface mining activity.

Edited by Samantha Herbst
Creamer Media Deputy Editor

Comments

The functionality you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION