In the United States, demand for coal is decreasing for a number of reasons — coal customer difficulty in complying with rule changes and regulatory mandates such as the Clean Water Act and the EPA’s Clean Power Plan; shale gas becoming a more abundant, cheaper alternative fuel; and increased competition from renewable energy sources like solar and wind. As a result, coal producers are retrenching, decreasing supply by closing mines, conserving cash through cost-cutting initiatives and reducing capital expenditures. Globally, coal demand is increasing, fueled by the burgeoning economies in India, China and Southeast Asia. As a result, exporting coal has become a more viable strategy for some domestic coal producers.
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With many coal companies retrenching — closing mines, instituting major cost-cutting initiatives and reducing capital expenditure — there are many potential dispute sources. Within the coal companies, there are internal labor disputes and health and welfare benefits disputes. Externally, there are disputes with railroads and end users like electric utilities and steel companies. Since external entities are interrelated and interdependent, contract disputes usually arise over non-performance issues. FTI Consulting Energy professionals have spent part of their career at coal companies, railroads, utilities and regulatory agencies. Our experts combine a clear understanding of the industry and regulatory environment with the methodological framework and analytical tools necessary to deliver powerful solutions, timely responses and expert testimony that minimize economic damages for clients.
Client investigations may be precipitated by an inquiry from regulatory agencies such as the Federal Energy Regulatory Commission (“FERC”) and the Surface Transportation Board or by any parties in a transportation contract. The purpose of many investigations is to corroborate issues such as transportation rate reasonableness and revenue adequacy, fair trade practices or service deterioration. Many FTI Consulting Energy professionals have spent part of their career working for coal companies, railroads, utilities or regulatory agencies. This provides us with a full understanding of how government regulations are initiated and implemented, as well as how commercial contract disputes are adjudicated. Our experience translates into comprehensive and successful investigations on behalf of our clients.
The coal industry is one of the most heavily regulated at both the federal and state levels. Existing regulations and pending legislation have one thing in common: They are subject to change. Coal companies need to influence that change to the greatest extent possible. Because many FTI Consulting Energy professionals have spent part of their career working for regulatory agencies, where they have authored some of the regulations governing the coal industry, we have unique insight into the policymaking process. We can very quickly assess the economic impact that proposed regulations and legislation may have on our clients, evaluate what potential compliance difficulties may exist, and determine what modifications to the regulations and legislation are necessary to benefit our clients the most.
Navigating around and through the public policy challenges facing the coal industry requires communications and public affairs strategies that are reasoned, focused and based on depth of experience. The professionals within the Strategic Communications segment at FTI Consulting have worked on Capitol Hill, in pivotal positions at the EPA, in state government, for various utilities dealing with coal issues, and with the media reporting on the coal industry. We understand the fundamentals of the industry, the environmental implications, the market participants and the politics.
Within the mining industry, there have been a significant number of restructurings triggered by the reduction in demand for coal. FTI Consulting has teams of experts who previously worked for coal companies and who understand their capital structure. We have the methodological framework and are well-versed in the financial analytics that support a coal company’s survival. Because of our industry experience, we have worked on every major coal company restructuring that has occurred in the past five years.
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Today, coal companies need to analyze their operations from top to bottom and evaluate profitability by mine, equipment needed and deployed, and corporate overhead reductions, as well as current and future health and welfare benefits impacts. Companies need to look for every opportunity to become a leaner, more efficient operator. Because FTI Consulting Mining team members are intimately involved with mining issues in the United States, Canada, Australia and South Africa, our experience and expertise are unrivaled. Our professionals previously have run mining complexes, have extensive financial and operations expertise, and have had close relationships with most of the applicable mining stakeholder groups.
The success of a restructuring, merger, acquisition, carveout, spin-off or divestiture may depend on how quickly management voids can be filled once the transaction is completed. The seasoned professionals with C-level experience at FTI Consulting are prepared to fill the void when client companies face leadership, financial or operational challenges. In a moment’s notice, our experienced and credentialed senior executives assume C-level roles, providing the leadership and strategic decision-making ability to maintain momentum, establish corporate priorities, build morale and provide critical continuity. Our C-level executives serve in the following roles: chief executive officer, chief operating officer, chief financial officer, chief restructuring officer, controller and treasurer.