U.S. coal producers White Stallion Energy LLC and Lighthouse Resources Inc. have filed for Chapter 11 bankruptcy protection.
The two are the latest companies to suffer as the industry struggles with the low demand as a result of the coronavirus and a shift in consumption.
The two companies, which operate coal mines in Indiana, Montana, Illinois and Wyoming, said they were forced to seek court protection after low thermal coal prices and reduced coal demand.
The U.S. coal industry was already in decline as the country and the rest of the world slowly shifted to greener sources of power. The situation was exacerbated by the pandemic.
According to the U.S. Energy Information Administration, the country consumed 30% less coal during the first half of 2020. U.S. power plants have been shifting to lower-cost alternatives such as natural gas. This has led to the retirement of dozens of coal-fired power plants.
White Stallion said in a court filing it would shut operations in several states which will result in the loss of jobs for roughly 260 employees. The company will retain some jobs to run the business through bankruptcy and to continue deliveries.
White Stallion received $10 million in COVID-19 relief from the government through its Paycheck Protection Program. The company is among hundreds of businesses that have gone bankrupt even after financial aid.
Lighthouse Resources said it had told employees of its planned layoffs. The job cuts will mostly affect its workers at its Montana coal mines. In its filing, the company said that it would continue to serve customers while in bankruptcy.
"In light of the challenging market conditions and other impacts on our business from COVID-19, we have been required to reduce costs and reorganize our business, resulting in the reduction of our workforce in Montana," Lighthouse told employees in an internal memo.
