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Naughton Power Plant

Coal is brought into PacifiCorp's Naughton Plant from the adjacent Westmoreland coal mine on May 2, 2014 in Kemmerer. Westermoreland filed for bankruptcy on Tuesday. 

The coal firm that operates the Kemmerer mine filed for bankruptcy Tuesday in Houston, the first thermal coal mine to buckle in Wyoming since the coal downturn of 2015.

The Kemmerer mine feeds Pacificorp’s Naughton coal-fired power plant, as well as trona mines to the east. The mine employed 286 workers as of June.

The Colorado-based Westmoreland noted in a press release Tuesday that the bankruptcy, a prearranged restructuring agreement, was not anticipated to impact operations or employment.

The Chapter 11 filing was not unexpected. Westmoreland had downplayed financial risks over the last year, however in May the company secured $110 million in financing from the majority of its major creditors to ease pressure ahead of a likely bankruptcy.

Westmoreland’s mine-to-mouth operations partly inured the firm from the downturn in the thermal that rapidly destabilized Wyoming’s Powder River Basin coal economy. However, its limited customer based has made it difficult for the company to adapt to a dynamic coal market, as noted in Wyoming Public Media’s reporting in April.

Under the restructuring agreement announced Tuesday, an ad hoc group of lenders is the stalking horse bidder in line to take over Westmoreland’s assets.

“Our goal is to emerge as a stronger Westmoreland,” said Michael Hutchinson, Westmoreland’s Interim Chief Executive Officer.

Lincoln County Commission Chairman Jerry Harmon said the county was braced for the news. The commissioners meet with mine management monthly and the bankruptcy was not a surprise.

The Kemmerer mine is the largest taxpayer in Lincoln County.

“I think you have to be worried,” Harmon said of the uncertainty. “This is a major deal for us. It’s one we deal with annually. Every time we make a budget we talk about it. It’s just something we try to stay abreast of.”

Coal company bankruptcies hit in a wave in late 2015 and 2016 due to the rapid decline in the market. Those companies had taken on too much debt, betting on Chinese demand that did not pan out. At the time, natural gas competition had elbowed coal out of its dominant position as an U.S. electricity provider.

Coal bankruptcies led to extreme layoffs in Wyoming’s Powder River Basin. Nearly 500 miners lost their jobs in a single day in March 2016.

Harmon said he did not anticipate layoffs from Westmoreland at this time. The county has considered that possibility and would rely on the state’s assistance should that happen.

“All we have to do is make a phone call and they’d be right there,” he said. “I have no doubt about that.”

Richard Morgan, District 22 representative for the United Mine Workers of America, said the union understood that the Kemmerer miners would keep their jobs and their current benefits during Westmoreland’s restructuring process.

What happens following restructuring is uncertain, he said.

The miners are currently bartering with the company over their contract renewal. Negotiations began in early summer. Westmoreland’s financial difficulties have slowed those negotiations, Morgan said.

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Energy Reporter

Heather Richards writes about energy and the environment. A native of the Blue Ridge Mountains in Virginia, she moved to Wyoming in 2015 to cover natural resources and government in Buffalo. Heather joined the Star Tribune later that year.

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