Bob Murray has been the face and the attitude of the struggling steam coal industry for some time now. As others abandoned coal, the outspoken and hard-driving Murray doubled down, buying up coal operations and betting that the industry could withstand growing regulatory and competitive pressures.
Murray started with the purchase of a single Ohio mine in 1988 and over the years expanded his holdings to become the largest privately-owned coal company in the United States. His operation includes 13 active mines in West Virginia, Ohio, Kentucky, Illinois, Alabama, Utah and Colombia, South America.
His bid to keep coal viable included relentless criticism of the Obama administration’s anti-coal policies and enthusiastic support for Donald Trump. Murray lobbied President Trump to withdraw from the Paris Climate Accord and drop the Clean Power Plan, which he did. However, Trump rejected Murray’s proposal to eliminate wind and solar tax credits, as well as other elements of Murray’s “action plan” for coal.
Despite Trump’s help, the steam coal market suffered mightily, and Murray’s company along with it. Yesterday, Murray Energy filed for Chapter 11 bankruptcy. Murray turned over day-to-day operations to chief financial officer Robert Moore, while Murray will become chairman of the board.
The bankruptcy filing lays out the reasons for the deterioration of the steam coal market: the closure of 93,000 megawatts of coal-fired electric generating capacity; record production of inexpensive natural gas; the growth of wind, solar and other renewables; federal regulations of emissions.
As a result, coal as the energy source for electric power generation in this country has dropped from over 50 percent in 2007 to just 27 percent today. Additionally, the price for thermal coal in Europe has dropped by half in the last year. “Customers with pre-existing commitments have simply refused to accept delivery,” according to the filing.
More than 40 coal companies have filed for bankruptcy since 2008 and eight of those have come in the last year. Donald Trump campaigned in coal country with promises of bringing back the industry. His interruption of the efforts by the Obama EPA to stamp out coal through new rules has helped, but there are powerful market forces at work.
The Murray bankruptcy also has a substantial ripple effect for retired UMWA members and their families. Murray is the last major employer paying into the UMWA 1974 Pension Plan that covers approximately 87,000 retired miners and surviving spouses who get monthly pensions averaging about $600.
Without Murray’s payments, or with reduced payments under Chapter 11, the pension fund, which was already severely underfunded, will be depleted even sooner than 2022-23 as earlier projected. Congress has been considering a bailout for several years, but no bill has passed yet.
The Murray mines will continue operation during bankruptcy as part of a new company—Murray NewCo. Like many other coal companies before them, the bankruptcy will allow Murray to restructure its debt, and possibly emerge even stronger.
The coal industry still has a future, albeit diminished, because coal remains a cheap, reliable source of energy and there is still considerable global demand.
However, the symbolism of a Murray bankruptcy is significant. Bob Murray has been a highly visible fighter in the rough-and-tumble coal business. His dreaded entry into Chapter 11—a move he once called “bankruptcy sewer”—means a true believer in coal has had to check out.