Funds set aside for reclamation of coal mines in New South Wales and Queensland are caught up in a $US202 million ($288 million) claim lobbed against struggling miner Peabody Energy.
An American insurance company that provided Peabody with cash for its rehabiliation, infrastructure and operational obligations has demanded the mining company repay the funds, in a move that appears to be driven by the insurer's concerns that Peabody's financial state is fast deteriorating amid a downturn in coal prices.
Peabody engaged Argonaut Insurance in 2017 to provide $US202 million of surety funds as part of efforts to liberate cashflows at a time when Peabody was emerging from Chapter 11 bankruptcy.
Argonaut claims that 2017 agreement gave it the right to demand repayment within 30 days if Peabody's financial position was believed to be "deteriorating".
Peabody reported a $US1.67 billion ($2.36 billion) half-year loss in August, and Argonaut demanded repayment of the surety in a letter sent to Peabody on August 28.
Peabody has only repaid a portion of the $US202 million demanded by Argonaut, prompting the insurer to file a claim against Peabody in a Missouri court late last week.
The court documents reveal the $US202 million is comprised of 18 individual bonds, of which ten bonds worth a cumulative $US48.75 million ($69.5 million) relate to Peabody's Australian coal mines.
The Queensland government was named as the obligee - effectively the holder - of almost $US14 million of those bonds, while the NSW minister for natural resources was named as the obligee of $US13.38 million.
Argonaut said the bonds were "predominantly reclamation type bonds'', suggesting they were likely surety for the eventual rehabiliation of Peabody's mines.
Read the full article published in the Australian Financial Review 02 November 2020