On July 31, Bloomberg reported two consecutive negative pieces of news about the coal mining industry. On Thursday, Brazil’s Vale and Japan’s Sumitomo Corporation decided to sell their jointly owned Australian thermal coal mine, Isaac Plains—valued at approximately US$631 million—for a mere US$1. They had acquired a 50% stake in the mine in 2012 for A$430 million (about US$310 million). Once hailed as Australia’s “most exciting” large-scale coal mine, Isaac Plains boasts reserves as high as 30 million tons.

A source told Bloomberg that Alpha Natural Resources (ANR), one of the largest coking coal producers in the U.S., and the major coal mining company Walter Energy have agreed to sell their jointly owned Australian coking coal mine for A$1 (about US$0.73). The source also said that ANR, whose valuation once reached as high as $7.3 billion in 2008, could file for bankruptcy protection as early as August 3. Walter Energy, meanwhile, has just recently filed for bankruptcy.

After a decade-long boom in commodities, the price of thermal coal—used to produce steel—has plummeted to a ten-year low, triggering a wave of closures at coal mines large and small around the world. Some mining companies have either gone bankrupt and shut down, been forced to sell off assets, or had to write down the value of their holdings. As a result, the two coal mines mentioned above—each worth hundreds of millions—have been sold off at astonishingly low prices. Sumitomo Corporation also announced that it has decided to write down its investment in the Australian coal mining sector by 11 million U.S. dollars.

Roger Downey, the executive in charge of fertilizer and coal operations at Vale, also said on Thursday: “The outlook for the coal industry is quite bleak. We believe that Australia’s coal mines remain in a red-alert zone. This situation must change. It’s a rather unfavorable and challenging market.”

In fact, the grim situation in the coal mining sector is just one reflection of the broader downturn in the commodity markets. Other commodity assets have also been sold off by mining companies. Recently, Glencore Xstrata sold its Cosmos nickel mine for A$24.5 million. Back in 2008, Xstrata had paid A$3.1 billion to acquire a controlling stake in the mine from Jubilee Mines.

Rio Tinto, the world’s second-largest mining company, is one of the miners most severely affected by asset impairment, with approximately 34% of its assets hit by the sharp decline in commodity prices. Following closely behind is Anglo American Plc, whose assets have been impacted by 23%.

In a research report released on June 22, Jon Bergtheil, an analyst at Citi Research, noted that since 2007, 90% of mining M&A assets have already been written down.

Jon Bergtheil At the time, it was reported that following the collapse in prices of bulk commodities such as aluminum, iron ore, and nickel, Global mining giants have written down the total value of their acquired assets by $85 billion over the past eight years. This has prompted the market to question the capital allocation strategies of mining companies.