Mine Closure

Craig Wakefield, an employee at Belle Ayr for 10 1/2 years, listens to officials talk July 2 during a public meeting at the Campbell County Courthouse regarding the current closures of two Blackjewel mines.

Bankrupt coal operator Blackjewel called the sale of its two idling Wyoming coal mines “dead,” according to a statement made by a key creditor in court documents Tuesday.

The announcement casts another layer of doubt over the chance Campbell County’s Eagle Butte and Belle Ayr coal mines — the nation’s fourth and sixth largest by production — will reopen in the foreseeable future.

Blackjewel filed a motion Thursday to separate the sale of its two Wyoming coal mines to coal company Contura Energy from the sale of its Pax Surface Mine in West Virginia to the same company. But in response to the motion, Riverstone Credit Partners, a senior creditor owed millions of dollars, said the company’s motion to revise the sale terms violated the original settlement reached with lenders.

Although a federal bankruptcy judge approved the sale of three Blackjewel mines to Contura on Aug. 7, the deal has not been finalized. The sale hinges on the final approval of the federal government, after it objected to outstanding royalties and leasing terms of the Wyoming mines.

The potential sale stirred up hope among hundreds of out-of-work coal miners. During a bankruptcy hearing this month, Contura said it planned to “reinstate immediately” 500 jobs at Eagle Butte and Belle Ayr mines, if the sale was finalized.

But according to Riverstone, the deal may be foundering.

“With the sale of the western mines blocked, (Blackjewel) and Contura have abandoned both the successful and back-up bids for the combined western and Pax mines and entered into a new purchase and sale agreement for the Pax mine only,” counsel for Riverstone stated in court documents.

What’s more, the sale may be held up over “Contura’s insistence on shortening the existing mine plans at the western mines,” Tuesday’s court document’s revealed.

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Contura did not immediately return requests for comment.

Nearly two months ago, Blackjewel filed for bankruptcy, lost a key creditor and closed 32 mines across the country. About 1,700 workers found themselves out of work indefinitely nationwide.

At the time of filing for bankruptcy, Blackjewel owed Riverstone $38 million. During the insolvent company’s frantic search for interim debtor-in-possession funding to keep the mines operating, Blackjewel accepted another $3 million from the senior lender.

Contura, which still holds the permits to Belle Ayr and Eagle Butte, initially offered $20.6 million on July 26 to assume ownership of three Blackjewel mines. In doing so, the company effectively became a stalking horse bidder in the sale, setting a base price for the mines.

But at a three-day auction launched by Blackjewel attorneys on Aug. 1, Riverstone submitted a credit bid of $20 million for the same mines, challenging Contura’s proposal.

The bid from Contura ultimately climbed to nearly $34 million by the auction’s close. A vast majority of the sale would go directly to Riverstone.

It’s been a volatile time for the mines in the Powder River Basin. In June, Peabody and Arch Coal announced a massive deal that would bring the nation’s two biggest coal mines — Black Thunder and North Antelope Rochelle — under a single complex. Bankrupt coal company Cloud Peak Energy received approval this month to sell its Antelope and Cordero Rojo mines to Navajo Transitional Energy Company.

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