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Birth of the basin: Belle Ayr mine started a decades-long boom for PRB coal

Michael Hopper was a fresh-faced 20-year-old new to Wyoming’s wide-open spaces and next-cowboy-up, blue-collar philosophy when he rolled into Gillette in 1972.

He packed his two-wheel-drive GTO muscle car with what it could hold and drove more than 1,200 miles from his home in Indianapolis, Indiana, to open a new coal mine for American Metal Climax.

He was part of the company’s first 10-man crew to work the Belle Ayr mine south of Gillette in Campbell County.

It was a huge gamble for the company, commonly known as AMAX, and its president and CEO at the time, Michael’s father Hollie Hopper. The science and research that began several years before said it was a good bet, but theirs was the first significant investment into large-scale thermal coal mining in the area.

Michael said both he and his father never could have foreseen then how the new Belle Ayr mine, and later its sister Eagle Butte mine that opened in 1976, would start a decades-long coal boom that would evolve into a Powder River Basin that now has 12 active mines that produced nearly 300 million tons of coal in 2018, and as much as 446 million tons at its peak a decade ago.

Two early lessons

Michael didn’t know it at the time, but he, his father and that first 10-man crew had started a phenomenon that not only would prove lucrative for coal companies, but also generate billions of dollars of revenue for federal, state and local governments and eventually fuel 50% of the nation’s annual electricity consumption.

Now pushing 70, Michael is retired from a long career working at the Belle Ayr and Eagle Butte mines and said his father deserves a lot of the credit for opening up the PRB to coal mining on a scale not seen before in the United States.

“He was smart, real smart,” he said. “Before deciding to open the mine, he was looking at the formations out here, drilled a bunch of core samples and was so amazed at the seams he found here. Back east, they’re about 10 feet (thick), but here they’re 110 feet.”

While that study and testing confirmed Hollie Hopper’s belief in the coal producing potential here, things were set in motion decades earlier with another company called Ayrshire Collieries Corp.

Ayrshire had experienced rapid growth with its coal production and sales from the 1940s through 1960s, explains author and historian Mary Kelley in her book “Coal in Campbell County.”

“One of the best things (company chairman Pierre) Goodrich did in his years at Ayrshire was to have Ayrshire obtain as many coal reserves as possible, including 50,000 acres in Wyoming,” she wrote.

When Ayrshire was sold to AMAX in 1968, the Indiana-based company not only gained Ayrshire’s existing coal mines, but those intriguing Wyoming reserves, Kelley said.

“There was some doubt about whether the western mines would amount to much, but AMAX’s Belle Ayr and Eagle Butte mines carried AMAX economically through the late 1970s and early 1980s.”

Michael said it didn’t take long for him to learn two important lessons his first year in Wyoming.

No. 1 was that not only was the Belle Ayr mine a good gamble, “it was as close to a sure thing as we could’ve ever hoped for. It had just great coal, low sulfur and just really nice coal.”

The second lesson was that while he loved his GTO, it was immediately clear the sports car was totally impractical to navigate to and from the mine along miles of dirt roads and during what can at times be harsh Cowboy State winters.

“I learned quickly that wasn’t the way to work in Wyoming,” he said.

‘It breaks my heart’

As proud as Michael Hopper is of his family’s role in establishing the Belle Ayr and Eagle Butte mines and their place as PRB fixtures, he said he’s been equally saddened they now also are the first of the major mines to close.

That happened July 1 when their current owner, Blackjewel LLC, filed for Chapter 11 bankruptcy reorganization in the morning, the abruptly shut down its 32 operations across the United States. Suddenly, nearly 600 Belle Ayr and Eagle Butte employees were out of work, along with about 1,100 others in Kentucky, Virginia and West Virginia.

What’s followed has been a whirlwind of court filings, a coup by Blackjewel creditors to oust former President and CEO Jeff Hoops, and revelations showing the company owes millions to its vendors and is more than $120 million behind in paying state, federal and local taxes. The sudden lockout of the mines also left Blackjewel’s Appalacia workers holding worthless paychecks that bounced when the company’s bank nixed $20 million in emergency funding to continue operations through bankruptcy.

That the mines closed has been painful enough, Michael said. But the way employees have been put out en masse without notice or a timetable for potentially returning to work is something he has a hard time digesting.

“All I can say is thank God dad didn’t live to see this,” he said. “It would’ve broken his heart and it breaks my heart now. … I’m sick, just sick. These are good mines, two of the best mines out here, and it was just bad management that led to all this.”

Even two weeks into the lockout and as hundreds of Campbell County coal workers have accelerated their searches for other jobs, Michael said it sometimes feels like he’s dreaming and waiting to wake up.

“I remember when I first heard the news (of the mines being closed). Somebody texted me about it and I said, ‘No way!,’” he said. “I almost cried. I couldn’t believe it and I still can’t believe it.”

‘This is a first’

That near disbelief is something Blackjewel employees share these days, said Steve Gulley.

Perhaps as much as Hopper, Gulley can appreciate the Belle Ayr and Eagle Butte mines. He was one of the nearly 600 Wyoming workers locked out by Blackjewel on July 1, possibly ending a 43-year career that began in 1976. Like many seasoned coal miners in the PRB, Gulley said he’s seen boom and bust cycles before, but nothing like these mines shutting down in the middle of a shift without warning.

“I didn’t quite expect the doors to shut at all, really, knowing the capabilities of the mine and what they have for leases. And, they were making a profit,” he said. “We didn’t expect them to just up and lock the doors.”

AMAX owned the PRB mines into the 1990s, Kelley recounts in her book. In 1993, parts of the company merged with Cyprus Minerals Co., then in 1999, Cyprus AMAX coal was bought by RAG International. Foundation bought out RAG in 2007 and Alpha Natural Resources acquired Foundation in 2009. When Alpha emerged from bankruptcy in 2016, the Belle Ayr and Eagle Butte mines were spun off into a new company, Contura Coal West. Blackjewel took over the mines in 2017.

In his time at Belle Ayr, Gulley has been through mergers, hostile takeovers, bankruptcies and numerous changes of mine ownership. Through them all until now, the mines continued operating.

“I have gone through at lot. This will be the second round of bankruptcies and numerous hostile takeovers and mining changes,” he said. “I thought I had seen it all. This is a first.”

Aside from not being allowed to do a job he loves and has done for more than four decades, Gulley said he’s most upset about how the shutdown has disrupted a close-knit group of workers who consider themselves extended family.

“These guys out here are some of the best world-class people you’ll find,” he said. “It’s pretty tremendous how much like a family we are. This is going to change that a lot. You hope a lot of them will (return whenever the mines reopen), but there are a lot of people out there looking for other jobs and it’s a bad time for them.

“A lot of people can’t sit back and wait and a lot of other places are hiring. How many will show back up? It will probably be a limited amount. Right now, a lot of other companies are jumping on this as an opportunity to hire some good, skilled people, and you can’t blame them. It’s smart business.”

Even with the disruption and uncertainty about whether Blackjewel can secure financing to reopen the mines and continue through a Chapter 11 reorganization, Gulley said he wants to get back to work and that he tries not to pass judgment on others.

Former CEO Hoops and Blackjewel have a reputation and track record of not paying bills, leaving vendors unpaid and piling up dozens of violations at Blackjewel’s Appalacia operations. He’s also been the focus of anger for many of the company’s workers since the bankruptcy and lockout.

While all that may be true, there’s nothing anyone can do about it now that will bring people back to work, Gulley said.

“I’ve got mixed feelings on that one,” he said about the raw emotions many Blackjewel employees are venting about Hoops. “I’m not going to throw that stone. I’m just going to say that his management practices leave a lot to be desired. ... If this person did that and put all these people out of work, then shame on him is all I have to say on that.”

Wild West in the basin

Gulley’s beginning with AMAX and the Belle Ayr mine also came at another interesting and important time in the company’s history. He was hired after a showdown between AMAX and the United Mine Workers of America.

When the mine opened in 1972, AMAX workers at mines in other states were all part of the union, and Belle Ayr started that way as well. But when the union negotiated a new contract with the company in late 1974 and early 1975, the Wyoming mine elected not to participate in the group negotiation.

What followed was a messy and at times dangerous standoff that eventually saw the mine break the union. Today, none of the Wyoming Powder River Basin coal mines are union shops.

In what seems much like a modern Wild West showdown, 51 Belle Ayr union workers went on strike at 12:01 a.m. on Jan. 12, 1975, according to the Jan. 16, 1975, edition of the News-Record.

Because Wyoming is a right-to-work state, the strike didn’t have the intended effect to stop operations, Michael Hopper said. While a similar strike at AMAX’s eastern mines was successful, there was nothing to stop the company in Wyoming from simply hiring more people and putting them to work.

“The union wanted to add all the western mines into its same contract back east just to pump up the numbers,” he said. “AMAX said no, so they went on strike. Well, they have a right to picket, but they couldn’t stop us from working.”

But that didn’t mean the union didn’t try to make life as miserable as possible for Belle Ayr, he said. That included vandalizing an electric substation and scattering roofing nails on the dirt road heading in and out of the mine.

Michael recalled how throughout the strike, he and other workers would meet at the Husky truck stop in Gillette (now the Flying J) then were escorted by law enforcement to work about 18 miles southeast of the city.

“The Highway Patrol met us and they took us in all the way to Belle Ayr,” he said, adding that the nails were inconvenient, but “AMAX bought us new tires, so it wasn’t so bad.”

After the showdown with the union, the company opened Eagle Butte mine just north of Gillette in 1976 and what followed was what Kelley describes as “a decade of huge growth with little concern for cost control or operating efficiency.”

The mines at that time were basically printing money, she said, which carried them into the early 1980s. But as the Powder River Basin began to flesh out with more competition, that business model had to change.

“That approach did not work into the 1980s, when a dozen competitive mines were developed in the Powder River Basin,” she wrote.

Future unclear

For many in Gillette, Blackjewel may as well be spelled “BKJL,” as it’s spoken with the same rancor as other unsavory four-letter words.

Blackjewel’s reorganization team has said it’s committed to finding the financing it needs to reopen the mines and put people back to work. As the shutdown lingers, it becomes more problematic whether enough people will be willing to return, said both Michael and Gulley.

Michael said that even in a declining market for coal and a shift in the nation’s energy generation portfolio that’s seen PRB coal drop from supplying 50% of the nation’s annual electricity consumption to about 25% now, the Belle Ayr and Eagle Butte mines can still be profitable for a responsible company.

After what’s transpired the past couple of weeks, he doesn’t think Blackjewel is that company. What’s best for everyone now would be for a third party to buy the mines and operate them properly.

“I hope somebody else buys the mines. I don’t want to see these same guys run it even if they can get them open again,” Michael said. “I wish somebody new would come in here.

“It’s especially personal to watch this go on,” he added. “I just about died when it happened, and I feel the same for all those people put out of work. Some of them were making $40 a hour and there’s no way to make that somewhere else here.”

Like many Campbell County coal workers, Michael and Gulley have left their share of sweat and blood in the PRB over the decades. It’s why they say seeing them shut down the way these two were feels almost like a death in the family. It’s also why they say it will take more than a bankruptcy and lockout to break their spirits.

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