Westmoreland Coal Company filed for Chapter 11 bankruptcy Tuesday. It operates in five states, including Wyoming, with a large mine near Kemmerer employing around 280 people. The company’s debt has skyrocketed in recent years, and it’s lost nearly all of its share price value.
Westmoreland Coal Company typically relies on one major, nearby power plant per mine in a business model called mine-to-mouth. But in recent years, those plants have moved away from increasingly uneconomic coal.
The company has refinanced some loans and is looking to restructure its longer-term liabilities, but Sierra Club’s Peter Morgan said things aren’t promising.
"There’s a profoundly dark cloud hanging over Westmoreland.” He said, "It really remains to be seen whether any bank or other lender would be willing to take that gamble on putting more money into a company that doesn’t seem to have a viable business model.”
In its news release, Westmoreland announced its pursuing the sale of assets in northern Appalachia. Another option would be to change its business model to a more traditional one, where coal is delivered via rail. But Morgan said it’s likely too hard to get the infrastructure for that now.
“They would have to build all of that which they’d have to get the permits for, they’d have to spend the money on, and that’s just going to make the coal coming from those mines even less economic than it currently is,” he said.
Westmoreland said it doesn’t anticipate any layoffs from the restructuring process. The company is also looking to continue its reclamation bonding program. Beyond that, thanks to refinanced loans, business will continue as usual.
