The lasting impact of the COVID-19 pandemic on the U.S. coal sector became clearer last week, with declining demand and potential contract disputes for the broader mining community on the horizon.

Last week, the U.S. EIA forecast domestic coal production would fall 22% year over year to 537 million tons in 2020 due to declining demand for coal in the electric power sector, lower demand for U.S. exports, and mines idled by COVID-19.

It projected a 19% decrease in total utility coal consumption this year, while it expects higher demand for exports due to an economic slowdown in Europe.

Coal plants will consume about 20% less power from coal amid an overall 3% decline in electric power generation in 2020, based on the agency's estimate.

Coal miners will soon face a tougher year due to the economic slowdown caused by the coronavirus pandemic, with companies already borrowing money from their available financial facilities, cutting production and implementing other measures to secure liquidity amid a potential global recession.

"I don't think we're ready to say that this is the death blow for any of our rated companies that remain, but for some of the unrated companies, I really do wonder," a lead coal analyst from Moody's Investors Service said. "Companies that were small to start with, probably didn't have a lot of liquidity, do they get through this? It's an open question."

Adding to the complications the broader mining sector could face in the months ahead, attorneys told S&P Global Market Intelligence that the economic fallout of the COVID-19 pandemic may trigger unprecedented levels of force majeure disputes between suppliers and their customers.

U.S. mine safety officials said last week that they could not identify mines closed for COVID-19 related causes nor offer figures on the number of cases of the disease reported by mine employees.

U.S. Department of Labor spokesperson Laura McGinnis said the agency does not actively collect data on the reasons for mine status changes and does not have access to comprehensive data on COVID-19 cases reported by mining employees. However, there have been multiple cases in the U.S. of miners testing positive for the novel coronavirus.

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Consol Energy Inc. and partnership CONSOL Coal Resources LP withdrew their 2020 operational and financial guidance amid "ongoing uncertainty" due to the coronavirus pandemic.

The Pennsylvania-based coal producer had projected 2020 coal sales of 24.5 million to 26.5 million tons and noted that it had secured coal sales contracts accounting for 95% and 43% of the midpoint of expected coal sales in 2020 and 2021, respectively.

Consol Coal Resources had forecast coal sales volumes of 6.1 million to 6.6 million tons, adjusted EBITDA of $67 million to $80 million, and capital expenditures of $25 million to $30 million.

The unsecured creditors of Murray Energy Corp. turned down the miner's bidding procedures for a bankruptcy court auction of the company's Oak Grove operation.

"By the Oak Grove bid procedures motion, the debtors are proposing a sale of substantially all of the Oak Grove assets to the stalking horse bidder via a credit bid and debt exchange that cannot possibly lead to higher or better offers," the unsecured creditors wrote.

The coal producer was seeking to sell the operation along with Maple Eagle complex in West Virginia under a restructuring support agreement with its principal creditors.

In late earnings news, Coal miner Foresight Energy LP swung to a net loss of $235.8 million in the fourth quarter of 2019, compared to a net income of $16.9 million, in the year-ago period. This translated into a full-year net loss of $320.4 million, widening from a net loss of $61.6 million in 2018.

Revenue during the quarter fell to $162.4 million from $298.9 million a year ago, as coal sales dropped to $161.1 million from $297 million.

Full-year revenue declined to $841.5 million from $1.10 billion year on year, as coal sales dropped to $834.4 million from $1.10 billion due to lower coal sales volumes and prices.

Upcoming events

CoalProTec2020: The conference originally scheduled for April 20-22 was rescheduled to Nov. 9-10.

International Brown Coal Mining Congress: The event slated for April 20-22 in Poland was postponed.

Eurocoke Summit 2020: The gathering scheduled for April 27-29 in Amsterdam was postponed.