BILLINGS, Mont. — With dozens of workers set to be laid off early next year, a southeastern Montana coal mine faces an uncertain future as an internal ownership dispute and the impending loss of a key customer leaves roughly 90 more jobs hanging in the balance.
The Decker Coal Mine near the Wyoming border was once among the largest surface mines in the U.S., producing more than 10 million tons of the fuel annually. But with production volumes down to less than a third of that amount, mine managers have announced up to 75 workers will lose their jobs in mid-January.
Mine representatives have declined to say how long Decker will stay operational. Court documents reviewed by The Associated Press suggest mining could end as soon as the end of 2013.
Union leaders for many of the mine’s 162 workers have yet to be told exactly how many jobs will be lost in January and whether more could follow, said Mike Dalpaiz, vice president of United Mine Workers of America.
“We have made requests to the employers to give us all the documents so we can make heads or tails of it and try to help out our people. As of today we have nothing,” Dalpaiz said Tuesday.
Court documents filed in a federal lawsuit reveal the mine’s fate could hinge on the outcome of an internal dispute between the mine’s co-owners — subsidiaries of Australian coal start-up Ambre Energy and Wyoming-based Cloud Peak Energy.
Decker’s contract with major customer Detroit Edison Company expires next year, according to those documents.
Cloud Peak’s attorneys said coal production will cease with the end of that contract, with any remaining workers shifted into mine reclamation duties.
However, Ambre has signaled it wants to keep mining at Decker as part of its aspiration to tap into the growing coal export market. The company, which co-owns a second mine in Wyoming with Anadarko Petroleum, in April announced a deal to supply up to 5.5 million tons of coal per year to a pair of utilities in South Korea.
The Decker mine employs about 162 miners, mill workers and office staff, according to U.S. Labor Department statistics. Most live in Sheridan, Wyo.
The town’s mayor, Dave Kinskey, said last week’s layoff announcement compounded the economic woes from a downturn in the area’s natural gas industry, as low prices cause drilling to slow.
Job service agencies in Montana and Wyoming already are gearing up to help layoff victims find new work, according to officials from the states. But Kinskey said the market pressures confronting the coal industry — including competition from cheap natural gas — could make the task difficult.
“There had been talk about expansion of the mines if we were able to get west coast ports open” to export coal to Asia, Kinskey said. “At the same time, there’s been slow down in all of the coal mining companies due to slackening demand. It’s hard to know what the future holds.”
Representatives of Ambre and Cloud Peak declined to answer questions about Decker’s future. The only explanation offered for the layoffs: They re part of the mine’s “ongoing expense management activities.”
The mine is operated by Ambre subsidiary KCP. Oversight comes from a management board that has equal representation from Ambre and Cloud Peak.
Cloud Peak’s attorneys said in the company’s July lawsuit against Ambre that the mine operated at a $21.1 million loss in 2011. It has production costs as much as four and five times greater than those of some competitors, the attorneys wrote.
Given those factors and the expiring contract, the management board’s plan for the Decker calls for coal sales to decline over time “with no further significant coal sales beyond 2013 sales to Detroit Edison.”
However, as recently as June the Decker mine’s managers filed a map with the Montana Department of Environmental Quality showing areas to be mined through 2022. Executives an Ambre subsidiary reportedly said over the summer that they wanted to ramp up production at Decker and expand its workforce by up to 50 percent.
Ambre claims in countersuit that Cloud Peak is trying to close down Decker in order to eliminate competition for its nearby Spring Creek Mine, which has increased production in recent years in part due to more coal exports to Asia.
Ambre contends Decker operated at a “significant profit” prior to 2009, and that there are tens of millions of tons of coal still in place at the mine site that could be economically extracted.
Australian press reports indicate Ambre put on hold its plans for a June public stock offering, citing poor market conditions.