Coal company Contura Energy announced Wednesday it had reached a tentative deal with FM Coal to transfer ownership of two idling Wyoming coal mines, the latest development in a bankruptcy case that has rattled coal country for months.
The agreement hinges on approval of a federal bankruptcy court and the board of Contura. But if successful, the sale could lead to the reopening of Eagle Butte and Belle Ayr coal mines under a new owner. Eagle Specialty Materials, an affiliate of FM Coal, would operate the mines and assume full liability for the thermal coal mines, including reclamation obligations.
The pair of coal mines have been idling since July 1 when bankrupt coal operator Blackjewel filed for Chapter 11 and failed to secure necessary funding to keep the mines operational. The shutdown left hundreds of miners out of work.
If the sale closes, Contura says it will pay the newcomer to the basin $90 million in cash. It will also pay Campbell County $13.5 million for unpaid ad valorem taxes. In exchange, Eagle Specialty Materials would settle certain outstanding debts to creditors and assume the $237 million in reclamation bonds associated with the mines.
To Clark Williams-Derry, director of energy finance at the Sightline Institute, an environmental think tank, the failure of the mines’ bankrupt owner Blackjewel to secure a new owner nearly three months after the mines initial closure signals trouble for the Powder River Basin — a region where a dozen of Wyoming’s mines operate. “Contura is paying $90 million to walk away from a financial mess,” he said. “These two mines have been hot potatoes and you have to sweeten the pot with extra cash payments. This could signal trouble for the Powder River Basin.