U.S. Coal Corp. Digging Up Used Mines
August 29, 2014
As if $75 million in debt wasn't bad enough, the mining company U.S. Coal Corp. has just found that an area in eastern Kentucky they were hoping to extract coal from had already been mined, back in the 1930's and 1940's. It's not unusual for miners to come across forgotten mines, but for a company struggling as bad as U.S. Coal Corp. it was the last thing it needed.
U.S. Coal Chief Executive John Collins told the Wall Street Journal that the "find" was one more thing that would add to the company's financial headaches. Currently the coal-mining industry is struggling to sell resources since natural gas is still so cheap.
U.S. Coal is not alone in being stymied by barren mines. Many parts of Kentucky and West Virginia have been mined for over a hundred years and in the late 1800's and early 1900's record keeping wasn't as exact as it is today. Though estimates still put the amount of coal reserves in the central Appalachia region at 50.7 million tons, it isn't nearly enough to stem the financial difficulties faced by miners like U.S. Coal Corp.
Founded in 2006, U.S. Coal Corp. had the ambition of being a publicly traded company but continued financial losses have forced the company to file for an involuntary Chapter 11 bankruptcy and lay off many workers. Roughly 290 miners remain on staff and though the company managed to sell $187.6 million in coal last year, U.S. Coal Corp. still ended up losing roughly $6 million overall.
With the bulk of its money going towards high interest rates on its debt, the company has been unable to spend on exploration and reinvesting in the business. In 2012 it spent $15.3 million on debt interest and only $9.4 million on improving operations.
Other coal companies have also been forced into filing bankruptcy including Patriot Coal Corp., Trinity Coal Corp., and IBCS Mining Inc.