The roller coaster hundreds of out-of-work Powder River Basin miners have been riding for nearly 90 days came to another peak Wednesday afternoon when Contura Energy Corp. announced it found a new owner for a pair of sidelined Campbell County coal mines.
Contura says it has an agreement that will allow Eagle Specialty Materials LLC, an affiliate of Alabama-based FM Coal LLC, to take over ownership and operate the Belle Ayr and Eagle Butte coal mines, which have been shuttered since July 1.
Under the agreement, Contura will pay Eagle Specialty Materials $90 million to take over the mines. Contura also will pay Campbell County $13.5 million of the $15.1 million it was assessed in back ad valorem taxes, according to a Contura press release announcing the deal. Eagle will pay the county the other $1.6 million through a royalty on tons produced when the mines reopen.
That’s on top of Contura’s $33.75 million bid to buy the mines from bankrupt Blackjewel LLC, along with the Pax Surface Mine in West Virginia.
Eagle also will make a “specified cash payment” to Blackjewel, which wasn’t given, and assume Contura’s $237 million worth of reclamation obligations for the Powder River Basin mines. It also will pay off other Blackjewel debts related to its bankruptcy, including unpaid royalties, taxes and Abandoned Mine Land fees.
The deal is subject to completing agreements with other private and government interested parties and approval by the U.S. Bankruptcy Court, but if it goes through, Eagle Specialty Materials reportedly plans to operate the mines on a long-term basis.
By agreeing to pay FM Coal such a large amount to take over the mines and assume the reclamation debt shows Contura wants to wash its hands of its involvement with Eagle Butte and Belle Ayr once and for all, said Rob Godby, director of the Center for Energy Economics and Public Policy at the University of Wyoming College of Business.
“What this does is make it very clear that for $100 million-plus, Contura is buying their way out of any obligation for reclamation,” he said. “Basically, this is paying the other guy to take things over.”
He also said it could be a strategic business move by Contura to try and prop up its stock, which has plummeted by about 50% since July 1 because of the company’s association with Blackjewel. Contura originally owned the mines before turning them over to Blackjewel in December 2017. Contura was still on the hook for the reclamation of the mines because the state of Wyoming declined to transfer its permit to Blackjewel.
Contura has been seeking a deal with the federal government over unpaid royalties and coal leases since it was approved as the winning bidder for the mines, which were sold by Blackjewel LLC through a bankruptcy auction. That approval was given by the court Aug. 6.
Contura’s agreement with Eagle will potentially allow it to reopen the mines and begin mining and selling coal.
“We’ve been clear that operating long-term in the PRB was not in Contura’s strategic plans and that the best possible outcome for all interested parties would be for another responsible operator to step up that was interested in doing just that,” said David Stetson, Contura’s chairman and chief executive officer in a statement announcing the deal.
“We are extremely pleased that this deal outlines a path to relieve Contura from any go-forward liabilities related to these assets, while also providing long-term employment opportunities for hard-working miners and ongoing revenue to local, state and federal governments,” he said.
Workers not sold
When the mines were closed by Blackjewel, nearly 600 Wyoming coal miners were abruptly put out of work, along with about 1,100 workers at dozens of other operations in Appalachia.
While the news may be promising on the surface, more than 10 weeks of unemployment and the overall bankruptcy process has left many Wyoming coal miners at bit jaded. Over the past 81 days, they’ve been teased several times about possibly being recalled, are still owed back wages and other payments to their 401(k) and health savings accounts that were never made and had their health insurance terminated.
Also, as of Thursday, many are no longer officially employed by the mines. Sept. 19 is the deadline Blackjewel for miners to say either they’d be willing to return if or when the mines were to reopen. Those who havent said yes have, in effect, resigned, the company said.
Melissa Peterson-Worden worked in Blackjewel’s warehouse and has spent much of her time since the mines were shut down advocating for and helping other locked out miners. She had held out hope of returning to the mines, but finally accepted another job, which was offered the day before Contura’s announcement about FM Coal.
Even so, she said employees have been lied to and manipulated by both Blackjewel and Contura so much, many are now skeptical about whether FM Coal will be a good company to work for.
“It’s great if this can put people back to work,” she said. “But I’m mad, I’ll admit it. We’ve been promised so many things. Actually, they weren’t even promises, (Blackjewel and Contura) pretty much just openly lied to us.”
She said workers are skeptical.
“At this point, we believe they’re all wolves,” she said. “We’re just not sure when they’re going to eat us.”
Plenty of potential
It wasn’t immediately clear how many of the former Blackjewel workers may be called back to work for Eagle Specialty Materials or when that could happen.
If it does, Peterson-Worden said she hopes it does in a way that brings a community-minded company to the Powder River Basin while sparking renewed efforts at the county level to diversify and not have a repeat of the social carnage caused by Blackjewel’s messy bankruptcy.
“Consider Cloud Peak (Energy),” she said. Prior to its bankruptcy filing May 10, “it was blatantly involved in our community. We could see them in our community. That’s what I would like to see from this company. I would like them to understand the ramifications of what Contura and Blackjewel put their miners through.”
That mirrors thoughts of a pair of Campbell County commissioners.
While the county still won’t reclaim about $23.6 million of the $37.1 million of unpaid production taxes owed by both Contura and Blackjewel, the deal with FM Coal and Eagle Specialty Materials is good news for Gillette and the PRB, said Commissioner Mark Christensen.
“At the end of the day, some people are going to get to go back to work, and that’s wonderful,” he said.
Wednesday afternoon’s announcement also comes a day removed from an FM Coal official, Mike Costello, meeting with commissioners about its plans to reopen the mines and operate them for the long haul, Christensen said. The meeting went well and he said he believes the company genuinely wants to make a go of it mining coal in the PRB.
“I will say that the gentleman with FM met with us and said he had a deal with the feds and the state and was trying to come up with something with the county,” he said. “He feels confident in their ability to make money, and if they can that’s good.”
After years of dealing with Contura Energy and Blackjewel, he said the most welcome news is the potential to not have to do business with either company again.
“Those people are the biggest dirtballs ever,” Christensen said about Contura Energy. “That’s because on their way out, they can’t help but screw us over one more time.”
He was referring to the $1.6 million difference in production taxes it won’t pay as part of the agreement. The difference will be made up by Eagle Specialty Materials, which will pay a royalty on tons produced until it’s paid.
He also said that Contura has “screwed over” Campbell County, the state of Wyoming and its employees as much as Blackjewel has.
“I’m glad to (potentially) be done with Contura,” Christensen said. “I have very little respect for that group, because they decided to play victim here, but they knew who (former Blackjewel CEO) Jeff Hoops was when they got into bed with him.”
While he doesn’t know much about FM Coal overall, which is based in Alabama, Commission Chairman Rusty Bell said he was encouraged by Tuesday’s meeting with Costello.
He said the county wants a company that’s committed to being a good community partner, something Contura and Blackjewel weren’t.
“Really, what I want to know is a couple of things,” Bell said. “I wanted to know whether they wanted to be a part of our community or not. Contura did not want to be part of our community. Heck, they didn’t even want to meet with us. Blackjewel was the same. They just wanted to soak us and take it all out of here.”
He said Costello told commissioners that the employees “are the most critical to them,” Bell said. It also wants to not only make whole any financial losses for employees who return, but for all Wyoming Blackjewel employees.