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Challenges to coal industry persist

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The coal industry remains in a period of distress due to strict governmental regulations, oversupply in the global coal market, increased competition from natural gas, and low coal demand and prices, among other factors.

This management analysis has led Arch Coal to warn that a significant financial restructuring will be required for the publicly traded company to operate as a going concern over the long term. Underscoring the immediacy of action is a reported net loss of $2 billion for the quarter ending Sept. 30.

Arch Coal operates coal mines in Colorado, Wyoming, Illinois, West Virginia, Kentucky, Virginia and Maryland. It is the owner of West Elk Mine, the only local mine operating at full capacity. It employs about 350 coal miners.

A filing with the Securities and Exchange Commission warns that it may be necessary to file a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code to restructure debt obligations.

On a positive note, Arch delivered an exceptionally strong operational performance during the quarter, according to John W. Eaves, Arch's chairman and chief executive officer. "Our results reflect the actions we have taken to respond to the challenging market environment, including reducing costs and enhancing efficiency across the company. Thanks to the efforts of our skilled employees, we increased cash margins in each of our three operating regions and continued to build on our industry-leading safety and environmental stewardship records. Despite these efforts, however, the difficult conditions impacting the coal industry persist, and we expect they will continue throughout 2016."

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