Coal industry hopes for revival

Industry hoarding cash as it prepares for a comeback.

At least five of America’s coal producers went bankrupt in 2019. Prices for the fossil fuel have plunged 40% since a 2018 peak. And some of the nation’s largest miners are retrenching and slashing their dividends.

But don’t be mistaken: The fight against climate change hasn’t killed off Coal Country yet.

Instead of pouring money into dividends and buybacks, the nation’s largest coal producers say they’re hoarding cash to weather what they see as an impermanent storm. Overall, the industry returned more than $1 billion to investors last year before retrenching. The goal this year: Be ready to start mining again and paying dividends at the first sign of a market revival. They’re betting that prices will bottom out in the first half of 2020 before rising in the second half as production declines and global consumption gains.

That’s spurred a new “mantra” at Peabody Energy Corp., according to Chief Executive Officer Glenn Kellow. It is “to live within our means,” he said during his Feb. 5 earnings call.

A year ago, Peabody announced its biggest dividend ever, and said it would return to shareholders all of its free cash flow. On Feb. 5, the message was very different: The nation’s leading coal producer said it was suspending its dividend, halting buybacks and cutting capital expenditures.

Hope has been in short supply for coal miners. The industry has been battered as much of the world forsakes the fuel to fight climate change, and as low natural gas prices squeezes its economics. Coal once accounted for more than half of all U.S. power generation. Today it’s less than 25%.

The decline underscores the limitations of President Donald Trump’s pro-fossil fuel policies. While the White House has rolled back environmental regulations