Coal news and updates

The world's largest private coal company is on the verge of bankruptcy, crippled by competition from cheap gas and a radical policy shift by China.

US-based Peabody Energy has missed interest payments on two sets of bonds worth $1.6bn and warned it may be forced to invoke Chapter 11 protection under US insolvency law.

"There exists substantial doubt whether we will be able to continue as a going concern," the company said in a filing to the US Securities and Exchange Commission. "There can be no assurance that we will be able to obtain additional financing on commercially reasonable terms or at all."

The company's share price crashed 45pc in early trading in New York.

Peabody dates back 133 years and generated a tenth of America's electric power just five years ago. It is the first household name to fall victim to the deepening crisis which has already forced Arch Coal and Alpha Natural Resources into bankruptcy and wiped out the industry's market capitalisation.

Foresight Energy defaulted this week and Cloud Peak Energy is hanging on by its fingertips. The price of thermal coal has dropped to $43 (pounds 30.50) a tonne from $140 at the peak of the commodity boom in 2008.

America's coal companies have been hit from all sides, facing an assault from cheap shale gas and the prospect of crippling regulatory costs from the Obama administration's Clean Power Plan - deemed a "death sentence" for the US coal industry.

The US Supreme Court has issued a temporary stay on the plan, but the Environmental Protection Agency insists this will not make any difference.

The greatest threat may prove to be the COP21 deal on climate change agreed in Paris before Christmas. It commits the world to far lower carbon emissions than previously assumed, and implies a move to carbon pricing over time that will hit coal hardest. Gas produces roughly half as much carbon dioxide as coal in power plants.

The UK plans to phase out all its coal plants within the next 10 years, and similar moves are under way in parts of the US. Duke Energy in North Carolina is to close most of its coal plants gradually and switch to gas. The big surprise is how quickly China has cut coal dependence in a bid to clean up its cities and avert a middle-class revolt.

The International Energy Agency said the country has slashed coal use for power generation from 80pc to 70pc over the past four years.

China's coal consumption fell 2.9pc in 2014 and a further 3.7pc in 2015, suggesting the once unthinkable moment of "peak coal" may have arrived. The Communist Party plans to shut 4,300 coal mines and cut annual output by 700m tonnes over the next three years.