Peabody Energy Corporation (NYSE:BTU): The Future Looks Bleak

Boston, MA 04/16/2014 (wallstreetpr) – In the face of increasing regulatory pressure in the coal industry, Peabody Energy Corporation (NYSE:BTU) and its peers are facing limited business options domestically and internationally. The company is regarded as the largest private coal producer in the world with $4.6 billion in market cap.

The company has 28 coal mining operations in the U.S. and Australia, and it holds a majority stake in 27 of the mining operations. Peabody produces thermal and metallurgical coal. Although coal prices are under pressure, the company’s low-cost operations in Australia have been a blessing in that it can wither the price challenge. Moreover, the improvement in the demand for thermal coal is expected to help the company post good results in the first quarter. However, that might be the far good news goes for this coal giant.

The company’s future is at stake given that regulatory measures have tightened against coal usage around the world due to the climate change. Coal is reported to be the dirtiest source of energy, and its use is being limited or even stopped in some countries on that basis.

The continued attack on coal has resulted in reduced market for the commodity and producers and also faced with increasing production costs as higher taxes are levied on coal mining operations. In this situation, Peabody Energy Corporation (NYSE:BTU) is running out of options on how to keep the business up and running in the long run.

Coal cornered

In efforts to find new markets for its coal, Peabody Energy Corporation (NYSE:BTU) recently launched public relations campaigns aimed at winning business in developing nations where energy supply is a challenge. The company is trying to tout coal as capable of addressing energy poverty to spur development in the poor nations. However, those media campaigns are already drawing widespread condemnation from coal energy critics, and it seems very little might come out of publicity campaigns.

Double trouble

As for Peabody Energy Corporation (NYSE:BTU) and its peers in the coal industry, each day in business seems to generate more heat than energy. The restriction on coal energy usage, the low prices of the commodity and the high costs of product are worrying the industry. On that basis, investors should tread carefully in handling coal stocks.

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Published by Christine Lawrence

Christine Lawrence is a financial analyst. She loves analyzing socioeconomic trends in the background of financial moves. She has overall seven years of experience in Auditing, Finance and Writing.

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