Meanwhile, Mass Layoffs Continue For America's Miners

Earlier this month we reported that Patriot Coal, the second-largest coal miner east of the Mississippi, had filed for bankruptcy (again) due to “challenging market conditions.” 

Summarizing, a global supply glut (which, as we’ve shown is by no means confined to coal), cheap natural gas, and efforts to curb pollution have conspired to drive prices ever lower, creating an epic downturn in the coal market, exerting enormous pressure on producers. 

The latest casualty: nearly 2,000 workers at Murray Energy (where the mascot is a bald eagle).

Murray, the third-largest producer in the US, will layoff 21% of its employees with the majority of the cuts coming in West Virginia, which is staring down a $195 million budget gap thanks to the slide in coal prices.

Interestingly, CEO and founder Robert Murray is adding businesses just as fast as he’s subtracting employees in an effort to stay afloat by driving down the cost of production.

Of course, the acquisition spree is being funded by all manner of debt including three quarters of a billion in second-lien notes. Here’s WSJ:

Murray two months ago paid $1.4 billion for a controlling stake in Illinois basin miner Foresight Energy LP. The new company controls over nine billion tons of coal reserves, and can generate nearly 90 million tons of coal production annually—enough to supply 4% of the U.S.’s yearly electricity needs.


Murray, which already has roughly $1.9 billion in debt, said it would finance the purchase with new debt, including a new $1.6 billion term loan facility and approximately $860 million in second-lien senior secured notes. In late 2013, Mr. Murray paid $3.25 billion to buy five mines from Pittsburgh-based Consol Energy Inc.

How is all of this likely to turn out? Poorly and with thousands more lost jobs and thus thousands more Americans set to be "Liesman'd" out from the BLS's official numbers so the US can perpetuate the "recovery" narrative. 

Don't believe us? Just ask Robert Murray himself:

“We have the absolute destruction of the coal industry. If you think it’s coming back, you don’t understand the business — or you’re smoking O.P. — because it’s not going to come back.”