When the sale of two Wyoming coal mines between bankrupt coal operator Blackjewel and Eagle Specialty Materials closed last month, coal communities in the Powder River Basin breathed a sigh of relief. Though Wyoming miners started trickling back to work at the Eagle Butte and Belle Ayr coal mines this month under new ownership, the bankruptcy case involving their former employer Blackjewel has continued to sputter along in federal court.
It’s likely far from over.
In the latest development in the bankruptcy case that’s stretched well into its fifth month, the U.S. Interior Department submitted a motion to federal bankruptcy court Tuesday stating Blackjewel owes nearly $886,000 in royalty payments and fees for coal produced after the company filed for Chapter 11 bankruptcy.
This outstanding payment is in addition to the approximately $50 million in unpaid royalties, rent and other charges Blackjewel owed the federal government at the time the company filed for bankruptcy on July 1.
When Blackjewel filed for bankruptcy this summer, attempts to line up needed debtor-in-possession funding, or interim loans, to continue operating its 32 mines across the country flopped.
The company shuttered its mining operations, including the two Wyoming facilities employing about 600 workers. Though the mines partially reopened this summer, coal production tanked.
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According to the U.S. Mining, Safety and Health Administration, coal production dropped 82 percent at Eagle Butte mine and 91 percent at Belle Ayr mine in the third quarter compared to last year during that same time period. Coal was still being mined and shipped out during the bankruptcy debacle.
The bankruptcy court authorized the sale to Eagle Specialty Materials on Oct. 2, on the condition the federal government consented. Eagle Specialty Materials LLC, an affiliate of Alabama-based coal company FM Coal, incorporated in September and obtained a license to mine as a contract operator in Wyoming.
As of a Nov. 12 court filing, the government has been “continuing to negotiate, in good faith, with (Eagle Specialty Materials) and the Debtors,” according to court documents.
As a lessor, Blackjewel is obligated to continue paying its due in federal taxes.
It’s not only the federal government that benefits from timely payments of royalties from mineral extraction. About 48 percent of the $886,000 in royalties eventually would flow back to Wyoming.
The federal government outlined the potential consequences of defaulting on lease payments, sending an ominous warning to the company.
“Failure to make such payments, or to cure any other defaults under the Leases, can (lead) to the cancellation of Leases by the (Department of Interior) pursuant to judicial proceedings,” Tuesday’s filing stated.