Navajo Transitional Energy Co. received court approval to purchase three coal mines in the Powder River Basin owned by bankrupt operator Cloud Peak Energy.
The Navajo Nation coal company will soon take over Wyoming’s Antelope and Cordero Rojo mines — the third and fifth-largest coal mines in the country.
“Despite solid performance at the mines themselves, (Cloud Peak) was unable to sustain the finance costs associated with this debt,” Navajo Nation said in release. “By making the purchase through the bankruptcy process, (Navajo Transitional Energy Company) has acquired the assets free and clear of this debt burden.”
The Casper Star Tribune reported that the two Wyoming mines produced nearly 36 million tons of coal in 2018 but struggled to keep up with financial obligations in a tightening coal market. The publicly traded company filed for bankruptcy in May.
Nonetheless, the thermal coal mines have hummed along and continued to produce coal throughout the bankruptcy process, employing some 800 Wyoming miners. The company reported hiring dozens of out-of-work miners from the neighboring Belle Ayr and Eagle Butte coal mines in July too.
The Spring Creek mine in Montana was also included in the sale of Cloud Peak’s assets to Navajo Transitional Energy Company.
Although the sale received approval from the judge, it has yet to close. According to court documents, the Navajo Nation coal company was the sole bidder with secured surety bonding, a form of insurance for reclamation liabilities.
The Navajo Nation coal company conducted an assessment of the economic viability of the three mines before making the purchase, government affairs director Steve Grey told the Star-Tribune on Monday afternoon.
“When the Navajo Nation created (the coal company), they asked us to continue to grow,” Grey said. “We saw that (this sale) was in line with our goals.”
The new acquisition would bring in an additional $1 billion in revenue, according to the company.
“This purchase is both exciting and historic. Indian tribes have long had a deep connection to the earth, and for the first time, a tribal company will now lead thoughtful and diligent energy development on a national level,” Tim McLaughlin, management committee chair at the Navajo Nation company, said in the statement. “Since NTEC was created, we have shown that we can not only improve operations, become financially successful and support job growth but also balance economic development and environmental protection.”
The company owns a coal mine on the Navajo Nation just south of Farmington, New Mexico. It contracts the operation of the coal facilities out to North American Coal Company. The mine provides coal to the neighboring Four Corners Power Plant, which is set to retire in 2031.
According to court documents, The Navajo Nation coal company will make a $15.7 million cash payment for the three mines, in addition to a $40 million second lien promissory note and payment of royalties for coal produced over the next five years. At the time of filing, Cloud Peak owed $8 million in royalties to the federal government and $8 million to Campbell County in ad valorem taxes, among other debts, according to court documents.
The Navajo Nation coal company will assume $78 million in pre- and post-petition taxes in addition to that $16 million.
Source : me.smenet.org