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Peabody eligible to 'self bond' three Wyoming coal mines

PEABODY Energy has been given approval by the environmental regulator from the state of Wyoming to "self bond" three of its mines despite the pressure on the company's balance sheet with falling coal prices.

Lou Caruana

Peabody, which has three mines in Wyoming, will receive a discount on insuring mine clean-up costs in case of bankruptcy, under the self bond system.

Peabody’s self-bonding is a form of assurance that complies with the federal and state requirements. The federal guidelines are provided under the Surface Mining Control and Reclamation Act and are administered by the states, Peabody said.

“On July 6, 2015, the Wyoming Department of Environmental Quality notified Peabody through its applicable subsidiaries that the state has completed its review of self-bonding applications related to three mine permits that were under renewal, and reaffirmed self-bonding eligibility for all three permits,” it said.

“As part of the company’s normal mining operations in the United States, Peabody has the obligation to reclaim mined lands. Peabody has an excellent record of land restoration, and the company has won a number of state, federal and international awards related to these programs.

“The company accounts for the present value of liabilities associated with final land restoration within our financial statements, and this totalled approximately $US760 million as of March 31, 2015.”

Peabody provides financial assurance for its reclamation obligations through a mix of self-bonding, commercial surety bonds, bank guarantees and letters of credit.

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