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Peabody bankruptcy could threaten Australian jobs: CFMEU

Thursday, 14 Apr 2016 07:16:27 | Sue Lannin

Peabody has 2,305 workers in Australia, and up to 3,500 including contractors.

The mining union has warned that jobs could go in Australia after the world's biggest coal miner, Peabody Energy, sought bankruptcy protection in the US.

Key points:

  • Peabody Energy has $US11 billion in assets and $US10.1 billion in debt
  • Peabody's Australian subsidiary not in bankruptcy protection, but owes $3.8 billion more than assets worth
  • Australian mines employ 2,305 people directly, plus another 1,200 contractors

Peabody Energy filed for Chapter 11 bankruptcy protection in the US as it struggles to repay $US10.1 billion in debt because of the plunge in coal prices.

Peabody said its 10 Australian mines in Queensland and New South Wales are not affected by the move and the Federal Resources Minister, Josh Frydenberg, told AM he is confident that local workers would not lose their jobs.

"I spoke to the president of Peabody and they informed me that they will not be reducing their Australian workforce," Mr Frydenberg said.

"They have funding to continue with their Australian operations and they see their work in Australia as being core to their operations, particularly the proximity their Australian mines have to key demand in Asia."

Peabody Energy said its Australian subsidiary employs 2,305 workers, evenly split between Queensland and New South Wales, but Mr Frydenberg said it is closer to 3,500 when contractors are included.

However, the national president of the Construction, Forestry, Mining and Energy Union Tony Maher said he is worried the bankruptcy of the US parent could see some of Peabody's Australian mines sold off.

"There is a risk with those financial figures of them being sold," he told AM.

Mr Maher added that Peabody Energy's commitments to Mr Frydenberg that it would not cut Australian jobs were basically worthless.

"No company can give those guarantees," he said.

Mr Frydenberg conceded that Peabody Energy could sell some of its Australia mines during the bankruptcy process.

"Potentially that is absolutely the case, but that is not what they said to me," he said.

Peabody Australia owes more than its assets are worth

Chapter 11 bankruptcy protection gives Peabody Energy more time to pay off debts to creditors, such as the $US4.3 million it owes mining explosives maker Dyno Nobel.

Banks, machinery firms and US government departments are among Peabody Energy's top 50 creditors.

Peabody has also disputed the pension obligations it owes and said the amount was undetermined.

The company also owes $US444,176 in royalties.

The bankruptcy filings said that Peabody Energy had total assets of $US11 billion and total liabilities of $US10.1 billion as of December 2015.

Peabody Energy was saddled with debt after it took over Queensland miner Macarthur Coal in 2011 at the height of the mining boom.

Its Australian subsidiary, Peabody Australia Holdco, is also debt laden according to its financial accounts for 2014 lodged with corporate regulator, the Australian Securities and Investments Commission.

In addition to the parent's $US10.1 in debt, Peabody Australia owed $10.5 billion at the end of 2014 while its total assets were worth just $7 billion.

That means it owed $3.8 billion more than its assets were worth in December 2014. The firm also posted a loss for the year of $1.2 billion.

Peabody collapse may leave 'inadequate' money for mine rehab

Lawyer David Barnden from not-for-profit legal firm Environmental Justice Australia has gone through the financial accounts.

"It's clear that Peabody in Australia is in a lot of financial difficulty," he observed.

"In its accounts, Peabody relies on the holding company being a subsidiary of the parent company as a way of guaranteeing that its a going concern."

The accounts said that Peabody Energy would continue to provide financial support to Peabody Australia as long as it remained a wholly owned subsidiary of the parent.

In a sign of the debt woes facing the local operation, Peabody Energy also announced last night it will lend $US250 million to its Australian subsidiaries.

Environmental campaign group Lock The Gate Alliance's Rick Humphries said the move to US bankruptcy protection casts doubt on Peabody's future ability to pay for mine site rehabilitation.

"If the mother ship goes belly up, and assuming somehow the Australian ops continue to operate, then the provisions on Peabody's balance sheet for rehab will evaporate, leaving existing inadequate financial assurances in Queensland and New South Wales as the only mechanism to cover rehab – which they won't," he said in a statement.

However, the Minerals Council of Australia said there are few if any implications for the Australian coal industry from the bankruptcy filing and Peabody's Australian mines will continue as normal.

AustraliaPlus


 

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