Peabody Energy, the world’s largest privately owned coal producer, has filed for bankruptcy protection in the US following a collapse in commodity prices.

The move was blamed by financial analysts partly on a mistimed and debt-fuelled expansion into Australia, but others saw it as a sign that the most carbon-intensive fossil fuel was threatened by tightening environmental regulation.

Coal is increasingly being replaced as a fuel for generating electricity by gas-fired plants or wind farms in some countries. Britain has promised to phase out such coal use by 2025 although China and India continue to build new plants.

The price of key types of coal has plunged by 75% since a peak in 2011 and Peabody’s filing to the US bankruptcy court in St Louis, Missouri, is one of the largest corporate failures in the wider commodity sector.

“This was a difficult decision, but it is the right path forward for Peabody,” said the company’s chief executive, Glenn Kellow, who hopes that the company will eventually be able to re-emerge as a going concern.

“This process enables us to strengthen liquidity and reduce debt, build upon the significant operational achievements we’ve made in recent years and lay the foundation for long-term stability and success in the future,” he added.

The company, formed originally in 1883 by Francis Peabody, now has 8,000 employees and customers in 25 countries. It was worth nearly $20bn a few years ago, but its fortunes have changed dramatically.

The position of Peabody was made worse by borrowing heavily to execute a $5bn buyout alongside Arcelor Mittal of Australia’s Macarthur five years ago.

At that period coal prices were flying high on the back of strong demand from China, but a downturn followed and then accelerated over the last 18 months forcing coal and oil companies out of business.

While Chinese demand has slumped alongside slower economic growth, coal companies have also been hit in their US homelands by competition from low-cost shale gas plus the introduction of tougher environmental regulations.

“The outlook for coal players remains bleak,” Sandra Chow, a Singapore-based credit analyst who tracks coal producers at CreditSights Inc, told Bloomburg. “Any recovery remains a long way from here.”

But there was little sympathy among environmentalists who have long been antagonised by what they saw as aggressive proselytising of a carbon-heavy fuel at a time of global warming.

The company was even rapped over the knuckles by the New York stock exchange regulator for misleading the public over climate change risks posed to its coal business.

The company has always insisted it has been involved in positive climate change initiatives for the last two decades, but Gregory Boyce, who stood down as Peabody chief executive last year, said before he left that the biggest problem the world faced was unaffordable fuel. “The greatest problem we confront is not an environmental crisis predicted by flawed computer models but a human crisis that is fully within our power to solve.”

In reaction to the bankruptcy filing, Richard Black, director of the London-based Energy and Climate Intelligence Unit (ECIU), said no one should underestimate the importance of mounting pressure by governments to curb all kinds of polluters.

“Be in no doubt; this is very big news. The coal industry around the world has been under sustained pressure for a number of years now due to a range of factors, including a glut of coal pushing prices down and the increased availability of natural gas,” he said.

“But environmental pressures are the biggest factor. In many countries, air pollution is now a major concern, governments are becoming more and more concerned about the climate impacts of coal; and now the biggest private company of all has succumbed.

“Phasing out coal in favour of cleaner forms of energy, like natural gas or renewables, is a process which is accelerating around the world. US companies are going bankrupt, European countries including the UK are phasing it out, and our research also shows that talk of a coal renaissance in Asian countries is likely to be a red herring.”

Bill McKibben, co-founder of the green campaign group 350.org, was particularly critical of the negative role allegedly played by Peabody in climate change debates: “This is a company that wilfully and deliberately sought to delay, dismantle or destruct climate action. Perhaps if they had spent more time and money diversifying their business rather than on lobbying against climate action and sowing the seeds of doubt about the science, they might not have joined the long, and ever growing, list of bankrupt global coal companies.”