NEW YORK Creditors of
Trinity Coal Corp. have filed for involuntary Chapter 11
The filing against parent Essar
Group by Trinity Coal creditors, including Credit Agricole SA,
Natixis SA and ING Capital LLC, is aimed at safeguarding $104.2
million in claims, according to documents filed in U.S.
Bankruptcy Court in Kentucky.
Groupwhose Essar Minerals Ltd. subsidiary acquired Scott
Depot, W.Va.-based Trinity Coal in 2010 for $600 million (
amm.com, March 5, 2010)did not respond to
requests for comment.
Coal analysts expect several
other small coal producers to enter bankruptcy due to weak
international demand, squeezed profit margins and uncertainty
in the global economy.
"I foresee more bankruptcies
this year," CRT Capital Group LLC metals, mining and coal
analyst Kuni Chen told AMM sister publication
U.S. coal producer Patriot Coal
Corp. filed for Chapter 11 bankruptcy protection last July in
order to reorganize (
amm.com, July 10). It obtained $802 million of
debtor-in-possession financing July 11, which will be used to
support the business during the reorganization process.
St. Louis-based Patriot said the
protection of a court-supervised reorganization process,
including the ability to access new financing, will provide it
with additional time to address its financial challenges.
U.S. metallurgical coal
producers sell the majority of their output to Asia and Europe,
where demand has softened. Market participants had hoped for a
pickup in demand in the first quarter of 2013, but that has
failed to appear.
Demand from Europe is expected
to remain low as producers scale back production to meet weak
demand from consumers that have reduced their buying activity
due to economic and political uncertainty.
China is one of the only markets
in Asia that shows promise. Steel production there is expected
to grow by 4 to 5 percent, which could add 15 million tonnes to
metallurgical coal demand, but that would still not be enough
to take up the supply generated by U.S. producers.
A version of this article was first published in AMM sister
publication Steel First.