By Martin Baccardax

November 16, 2021 - Peabody Energy Corp.  (BTU)  shares slumped lower Monday after world leaders agreed to a phasedown coal production following climate talks at the COP26 summit in Glasgow.

The weekend agreement, which for the first time acknowledged that fossil fuels were the main cause of climate change, had called for a "phase out" of coal-fired power production. 

However, following an 11th-hour move, lead by China and India, the language was reduced to a "phase down" of coal use, allowing fossil fuel dependent countries a longer runway in terms of reducing their reliance on the world's dirtiest form of power.

The final text, which included no timescale, only commits the signees into “accelerating efforts towards the phaseout of unabated coal power and inefficient fossil fuel subsidies” in order to keep the broader COP26 ambitions of keeping global temperatures from rising by more than 1.5 degrees Celsius alive. 

“Did I appreciate we had to adjust one thing tonight in a very unusual way? No.," said UN Climate Envoy John Kerry. "But if we hadn’t done that we wouldn’t have a deal. I’ll take phase it down and take the fight into next year.”

Peabody Energy shares were marked 9.3% lower in early trading Monday to change hands at $10.50 each.  

Peabody, one of the world's biggest publicly-traded "pure play" coal companies, sold around 133 million tones of thermal and metallurgical coal last year.

The group reported a third quarter loss of 60 cents per share last month, on sales of $679 million based on 33.7 million tons of coal. 

Still, despite the COP26 agreement, China coal demand will hit an all-time high this year, and analysts at BMO Capital Markets see "strong 2022 results due to higher prices and higher volumes" for Peabody as it re-starts its Shoal Creek mine in the coming weeks and ramps up production in the first quarter of next year. 

China's monthly coal output, in fact, hit the highest levels since March 2015 last month, with the world's biggest producer producing 357.1 million tons, taking the 10-month total to 3.3 billion.