Former Massey Energy executive found guilty of conspiracy

According to The Atlantic: the former Massey Energy executive, Don Blankenship,  was found guilty of conspiracy, but acquitted of securities fraud and making false statements related to the Upper Big Branch mine disaster in 2010.

Patriot fasing out of coal, but Alpha and Arch not

Of the three largest producers of MTR coal, Alpha Natural Resources, Arch Coal, and Patriot Coal, Patriot has already committed to phase out its MTR operations. But Arch and Alpha have maintained a pipeline of new MTR mining permits, even as the financial, regulatory, and reputational risks associated with MTR coal mining have become increasingly acute.

In 2013, top U.S. and European banks exited relationships with producers of MTR coal. As of April 2014, BNP Paribas, JPMorgan Chase, and Wells Fargo had terminated relationships with two of the largest mountaintop removal coal producers, Alpha Natural Resources (9.4 million tons of MTR coal produced in 2013) and Arch Coal (4.6 million tons in 2013). Unfortunately, as these banks exited MTR financing, Barclays scaled up its MTR financing, closing USD550 million in loan and bond transactions in 2013.

Federal court protects streams from surface mining

Regulatory and legal risks associated with MTR production have grown in the past 12 months, with a February 2014 federal court decision striking down a Bush-era rule that had gutted protections for streams impacted by surface mining. As the first case study highlights, Alpha Natural Resources’s exposure to citizen lawsuits related to water pollution from its MTR mines more than doubled in 2013, as the company reached a record-setting USD227.5 million enforcement settlement with the U.S. Environmental Protection Agency and Department of Justice over water contamination from its mines.

Bankruptcies

The financial condition of many MTR-producing coal companies continued to deteriorate in 2013. Patriot Coal's 2012 bankruptcy was followed by bankruptcy filings at Essar Energy's Trinity Coal subsidiary in February 2013, and at James River Coal in April 2014. Ironically, the CEO of the #2 producer of MTR coal, Patriot Coal, has emerged as a voice against MTR, remarking that his company's agreement to exit MTR was ultimately good for business, as the second case study explains.

2013 was a painful year to lend to several MTR coal producers. Three European banks, Credit Agricole, ING Capital, and Natixis faced the especially daunting challenge of recovering USD104 million in outstanding loans from their client Trinity Coal in bankruptcy court. After being acquired by the Indian conglomerate Essar Group in 2010 for USD600 million, Trinity, which operates MTR mines in Kentucky and West Virginia, was hit hard by slumping coal markets and failed to make required payments to its suppliers and creditors, prompting over 50 lawsuits against the company.

According to the three banks, Trinity defaulted on over USD104 million in credit obligations to them in 2011. After the company reportedly failed to negotiate with the banks, they filed an involuntary bankruptcy petition against it in February 2013. A year later, Trinity's parent company agreed to a USD150 million capital infusion for Trinity as part of a bankruptcy settlement, through which Trinity's unsecured creditors were expected to receive 0.15 to 0.25 on the dollar.

Trinity isn't alone among MTR producers facing acute financial distress. In February 2014, James River Coal, which reported net losses of USD138.9 million in 2012 and was expected to lose USD126.8 million in 2013 according to Bloomberg estimates, renegotiated its revolving credit line with GE Capital and UBS to give it time to explore "strategic alternatives" including a sale of all or part of the company. At the same time, James River forged ahead with a legal battle to secure a permit for a new mountaintop removal mine in Kentucky in the face of legal challenges over the mine's potential impacts on human health and the environment. James River later declared bankruptcy in April 2014.

In contrast to James River, the CEO of Patriot Coal, which agreed to phase out its MTR operations as part of a 2012 bankruptcy settlement, recently expressed a much dimmer view of the viability of new MTR operations. In December 2013, he said that his company's exit from MTR was good for business, helped Patriot avoid growing regulatory, permitting, and litigation risks associated with the practice, and that it is "increasingly unlikely that any producer is going to invest a lot of money in building out a large-scale surface mine in Central Appalachia." Nevertheless, James River appears determined to prove him wrong with their planned MTR mine.

Lawsuit Patriot Coal over selenium discharges

Patriot Coal faced a wave of citizen lawsuits over selenium discharges from its MTR mines and saw its seleniumrelated cleanup cost estimates rise to approximately USD449 million just prior to its bankruptcy filing in 2012.

On-going financing of destructive operations.