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Not even bankruptcy is stemming the U.S. coal glut.
Production at coal miners that declared bankruptcy in the past four years rose 3 percent on average, through the third quarter, an analysis of four companies by Bloomberg Intelligence shows.
Mines formerly owned by James River Coal Co. posted a gain of 31 percent. Stockpiles held by utilities ended 2015 at a six-year high, data from the Energy Information Administration show.
Some of the failed companies have restructured debt. Others have sold mines at bargain prices to former rivals.
The glut — at least 100 million tons, according to Bloomberg Intelligence — threatens to depress prices for years, prolonging a global rout in an industry that has already eliminated more than 26,000 jobs, 29 percent of the workforce, since 2012. More companies and jobs may be at risk.
"Some people think that if a company goes bankrupt, everything just stops," James Stevenson, director of North American coal at industry consultant IHS Inc. in Houston said by phone. "That's just not the case. What we've seen in recent years is that it's a slow process."
Alpha Natural Resources Inc., Walter Energy Inc., Patriot Coal Corp., James River and Arch Coal Inc. have sought bankruptcy protection since April 2014.
Since Alpha filed Aug. 3, it reduced output by just 4.4 million tons, or less than 10 percent of the 60.7 million tons it said it sold in 2015, a Bloomberg Intelligence analysis of government data shows.
Revelation Energy, owned by industry veteran Jeff Hoops, has raised production at a former James River mine by 68,000 tons through the third quarter, according to the report.
Buyers are cherry-picking the best operations, according to Ted O'Brien, chief executive officer of Doyle Trading Consultants in New York. Lesser-quality mines are languishing.
Output at Walter Energy is down 7.9 percent since it filed for reorganization while some former Patriot assets have declined by 27 percent, according to the Bloomberg Intelligence analysis.
Still, the cuts aren't enough to keep pace with demand that is shrinking due in part to supplies of lower priced natural gas from shale that's displacing coal at power plants, according to Seth Schwartz, president of Energy Ventures Analysis, an Arlington, Va.-based consulting firm.
"Data from past restructurings show that steps taken in bankruptcy sometimes even boost production by attracting new owners or improving the returns from individual mines," Bloomberg Intelligence analysts William Foiles and Andrew Cosgrove said in a report. "Bankruptcies, therefore, may not deliver a speedy drop in coal supply."
The Bloomberg Intelligence report covered Alpha, Walter, James River and Patriot.
Companies made bad bets by taking on debt to grow amid slowing demand in China, tougher regulations and cheap gas, said Ted O'Brien, chief executive officer of Doyle Trading Consultants in New York.
Among new owners that scooped up mines in bankruptcy auctions and increased output is Blackhawk Mining, a Lexington, Ky.-based producer that counts German utility RWE as an investor.
The company boosted production at a Patriot mine in West Virginia by about 187,000 tons since its first bankruptcy in 2012, data compiled by Bloomberg show. Blackhawk has raised production at three other former Patriot mines and three former James River operations.
In its Jan. 11 bankruptcy filing, Arch said it plans to sell 120 million tons of coal in 2016, down 7.7 percent from 2015, and then return to 130 million tons by 2017. Alpha is also optimistic, expecting to sell about 61 million tons in 2020, just 4.5 percent less than what it plans to ship this year, filings show.
On Jan. 25, Alpha said it would fire 886 workers at its West Virginia operations, citing oversupply. The company declined to comment for this story.
Telephone messages for Arch weren't immediately returned. Walter said any reduction at its mines was due to the glut as well.
The oversupply means 2016 will be just as painful as the previous 12 months for an industry that's lost 240 million tons worth of demand in the last seven years, according to Mark Levin, an analyst at BB&T Capital Markets in Richmond, Va. Coal companies need to slash 100 million tons of production to balance demand, he said.
Cuts so far just haven't moved "the needle enough," and more are needed, according to Bloomberg Intelligence.
Central Appalachia coal has fallen 3.7 percent in the past year to $43.13 a ton on the New York Mercantile Exchange. Illinois Basin has dropped 32 percent to $22.75 a ton on Nymex. Powder River Basin coal has lost 13 percent to $10 a ton on ICE Futures Europe trading.
"It's a bunch of zombie coal mines," Schwartz said. "I'd give the bankruptcies a mixed review on taking supply out of the market."