By John W. Miller and Matt Jarzemsky 

Coal's slow collapse pushed the largest U.S. miner to declare bankruptcy Wednesday, marking the end of an era for big publicly traded companies that have fueled American industry for more than a century.

The bankruptcy of St. Louis-based Peabody Energy Corp. came after similar filings by Arch Coal Inc., Alpha Natural Resources Inc., Patriot Coal Corp. and Walter Energy Inc., all of which have recently sought chapter 11 protection.

Those companies have lost a combined $30 billion in stock-market value since 2010, and the coal sector has shed 31,000 jobs since 2009, according to the Mine Safety and Health Administration.

No large publicly listed U.S. coal miner has been spared by the forces crushing the coal industry, which include the decline in steel production, the conversion of coal-fired power plants to natural gas, which has become a cheap and abundant thanks to the shale boom, and new environmental regulations.

But despite miners' struggles, coal has continued to fuel roughly one-third of the U.S. electric grid. Americans will get 33% of their electricity from gas in 2016, and 32% from coal, according to the Energy Information Administration. As recently as 2008, coal fueled half of U.S. power consumption. Coal prices have fallen by more than 60% since 2011, and 15% in the past 12 months.

Peabody Chief Executive Glenn Kellow called the current market "historically challenged" and said the bankruptcy filing was "an in-court solution to Peabody's substantial debt burden."

Peabody's move sets the stage for a potentially bitter fight among creditors for its assets, which include massive open-pit complexes in Wyoming and Australia and underground mines in Illinois.

America may never again see a coal company as big as Peabody. Founded in 1883 by Francis Peabody with $100, a wagon and two mules, according to the company's corporate history, Peabody grew into a juggernaut, producing coal for customers in 25 countries and employing 7,600 people.

But its decline has been precipitous. In 2011, Peabody's value on the stock market briefly touched $20 billion. It is now worth $38 million. Many of its mines are still profitable, but not profitable enough to take care of the debt it has run up.

About half of U.S. coal is now being produced by bankrupt companies, which will be broken up to compensate private creditors. "The producer of 2020 is going to look different than the producer of 2010," says James Stevenson of IHS Energy. "We're going back to a model of predominantly private ownership."

The industry's setbacks have been damaging well beyond Wall Street, especially in the coal strongholds of Wyoming and Appalachia, wiping out tens of thousands of jobs and denting tax revenues.

Peabody estimates its future cleanup costs and other environmental obligations at $723 million, a concern for environmental activists. The miner shouldn't be allowed to "walk away from the billions of dollars in damages to landscapes, wildlife, and crucial water supplies that are part of coal's legacy," said Theo Spencer of the Natural Resources Defense Council.

Coal isn't the only commodity getting hammered by the weaker global economy. Prices for copper, steel, aluminum and other industrial goods have fallen steeply this decade as demand has weakened around the world, especially in China.

Peabody's move raises the default rate for U.S. metals and mining companies in the last 12 months to 29% from 25%, according to a report released Wednesday by Fitch Ratings.

Peabody expects a bankruptcy-court fight between lenders and bondholders over which of its mines secured lenders can lay claim to, according to people familiar with the matter.

Bondholders including Elliott Management Corp. and Aurelius Capital Management LP are expected to argue that Peabody's debt agreements significantly reduce lenders' claims on mines and other assets, leaving more value for bondholders, the people said.

The firms are known for investing in distressed debt and a willingness to engage in legal battles to protect their investments. Elliott and Aurelius, which were founded respectively by billionaire Paul Singer and former Elliott Management portfolio manager Mark Brodsky, are poised to make big profits on a decade-plus legal fight with Argentina over defaulted sovereign bonds.

Many of the creditors expected to vie for control of Peabody's assets bought their debt at steep discounts, according to people familiar with the matter.

The company's bonds and loans have tumbled in recent years along with coal prices. A $1 billion series of bonds Peabody sold just in March 2015 recently traded for 7 cents on the dollar, according to MarketAxess.

Peabody said Wednesday it had obtained $800 million in emergency financing, arranged by Citigroup Inc., and has enough cash to keep running mines and delivering coal to customers. Citigroup didn't respond to requests for comment. Peabody last month said it had delayed interest-rate payments on two loans and warned it may not have sufficient liquidity to sustain operations, warning of a possible chapter 11 filing.

Peabody has now lost money in nine straight quarters and in 2015 posted a $2 billion deficit. The company also been weighed down by its ill-timed acquisition of Australia's Macarthur Coal Ltd. for $5.1 billion in 2011. Prices have been declining ever since.

As of the end of 2015, Peabody carried its assets worth about $11 billion, and liabilities over $10 billion. That includes $4.3 billion of secured loans and bonds and $4.5 billion of unsecured bonds.

Peabody executives insist they believe the company's mines have a future. They cite the Environmental Protection Agency's estimates that as much as 802 million tons of coal will be burned in the U.S. in 2050, roughly the same as last year. Coal use is expected to decline to 680 million tons this year.

Peabody filed for chapter 11 protection for most of its U.S. entities in the bankruptcy court for the Eastern District of Missouri. All mines and offices are continuing to operate during this process, the company said, adding that none of its Australian operations is included in the filings.

The coal producer said it has also dropped plans to sell mines in New Mexico and Colorado.

Because many of Peabody's mines are still individually profitable, the filing "feels mostly like a balance-sheet restructuring exercise more than an eliminating mines exercise", said Mark Levin, a BB&T Capital Markets managing director. However, he said that didn't eliminate the possibility that Peabody may take the opportunity to shed less profitable mines.

--Alex MacDonald contributed to this article.

Write to John W. Miller at john.miller@wsj.com and Matt Jarzemsky at matthew.jarzemsky@wsj.com

(END) Dow Jones Newswires

April 13, 2016 19:56 ET (23:56 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.