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Mine Closures

The entrance to Eagle Butte mine closed on July 2, one day after the mine's owner declared bankruptcy. While Blackjewel LLC owns and operates the mine,  the former coal company Contura Energy still holds the mine permits.

 

The unknown fate of two Blackjewel LLC mines in Wyoming has bred widespread confusion and unease in the communities at the epicenter of coal country, as the bankrupt company scrambles to secure additional emergency funding to fully resurrect its mines and bring back hundreds of its workers.

In the meantime, a skeleton crew of about 140 workers have been called back to maintain Blackjewel’s mines across the country, according to the company. A fraction of those workers have returned to perform maintenance and prevent any damage at Belle Ayr and Eagle Butte mines in Campbell County. But hundreds of Wyoming employees, as well as public officials, remain largely in the dark as the case slogs through federal bankruptcy court — especially as a state environmental council voted Wednesday to delay a key decision involving the company’s permits.

The bankruptcy court will reconvene at 11 a.m. Eastern Time on Friday, according to a court order issued Wednesday. Over the weekend, U.S. District Judge Frank Volk, who must approve any new financing proposed by the company, said he would expedite the emergency hearing if Blackjewel secured additional money before that date.

“Management — and everyone involved in Blackjewel’s Chapter 11 case — understands that every day that passes adds to the hardship our employees and their families are experiencing, and we want to emphasize the urgency with which we are approaching this situation,” said David Beckman, interim CEO of Blackjewel.

If a new financial proposal receives a green light, the coal operator plans to reopen its mines and employ at full capacity again, lawyers for the company said.

But it’s not just workers who remain in limbo. The company’s murky trajectory has left public officials unsure of how to proceed, too.

While Blackjewel owns and operates the Campbell County mines, the former coal operator Contura Energy still holds the mines’ permits. The Wyoming Environmental Quality Council voted Wednesday to stay the proceedings, or delay the vote to renew and transfer the permit until “sufficient clarity” is given by the West Virginia bankruptcy court.

“At this point, things are so up in the air I feel that we should stay and see what happens and we can come back to this when we have more clarity,” said David Bagley, who serves on the Wyoming Environmental Quality Council.

Until then, Contura Energy will continue to bear some level of responsibility for the mines’ reclamation liabilities. To Shannon Anderson, staff attorney for the Powder River Basin Resource Council, “that’s good for the state and good for the neighbors of the mines and the workers. It keeps (Contura) more financially responsible.”

The landowners group objected to the permit transfer because of controversy over land selected as collateral and Blackjewel’s environmental and labor history.

“In light of Blackjewel’s bankruptcy and how chaotically this situation evolved, we thank the EQC for staying the permit transfers at this time,” said Joyce Evans, chair of the Powder River Basin Resource Council. “We are relieved that the Eagle Butte and Belle Ayr permits will remain under Contura.”

Contura Energy acquired the Belle Ayr and Eagle Butte mines in 2016 after former owner Alpha Natural Resources filed for bankruptcy. Wyoming's Department of Environmental Quality requires coal companies to post bonds to ensure a mine is adequately reclaimed after resource extraction. Contura Energy’s $247 million in bonding obligations, approved in 2017, mean that as long as the company holds the permits, they remain on the hook for reclamation.

“Contura is the first line of defense for cleaning up those mines, and if the permits are transferred to Blackjewel, you lose that first line of defense,” said Clark Williams-Derry, director of energy finance at the Sightline Institute, an environmental think tank. “You move the cleanup liabilities out of the hands of a solvent company and into the hands of an insolvent company.”

Looking at the cost of the bankruptcy proceedings itself, Blackjewel’s clock for finding additional funding might be ticking, Williams-Derry said.

According to court documents, Blackjewel paid attorneys a total of $250,000 on June 28, days before the company filed for Chapter 11 bankruptcy. And based on the attorneys’ rates of $300 to $1,180 per hour, Blackjewel’s emergency funding will likely dry up fast.

“Just the cost of running the bankruptcy process is expensive, and if there are no financials, then (the case) could go to Chapter 7 (bankruptcy),” Williams-Derry said. “... What we’re seeing is a wake-up call here. We’ve seen that it is possible that some of these mines do not have a future that stretches out into the horizon.”

A status report on Blackjewel will be presented Aug. 13 at the Environmental Quality Council’s meeting.

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