Cloud Peak Energy says it wants to change the way it insures its coal mine clean up costs in part, because of regulatory uncertainty.
According to financial documents, the company has around $630 million in outstanding future reclamation obligations. Around $200 million of that is self-bonded, which means the company has promised that it is good for the clean up but hasn't actually had to set aside money to guarantee it will get done.
But that could change. In a quarterly earnings call today, Cloud Peak CEO Colin Marshall said the company is working on purchasing third-party guarantees to replace those self-bonded reclamation obligations. Doing so would come at an additional cost at a time when companies are struggling with low coal prices and falling demand.
"As we weather through this, obviously our finances are going to get weaker before they get stronger so we saw this opportunity to be proactive and we'd rather do it now rather than we get a phone call saying we've got a problem," Marshall said.
The potential problem would be Cloud Peak no longer passing the test of financial strength required to self-bond. That hasn't happened, but as the health of Wyoming's coal industry has deteriorated overall, self-bonding has become an issue. Companies like Arch Coal, Alpha Natural Resources, and Peabody Energy have filed for bankruptcy with hundreds of millions of dollars of self-bonded clean up costs still on their books.
Regulators from the Wyoming of Environmental Quality have said they're looking internally at the self-bonding program.
