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Two Wyoming coal mines close, send 700 workers home after bankruptcy filing

From the A look at Blackjewel's bankruptcy and mine closures in Wyoming's Powder River Basin series
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Eagle Butte

A truck hauls coal at the Eagle Butte mine near Gillette. The mine closed Monday after its owner, Blackjewel, filed for Bankruptcy. 

Two coal mines in Wyoming closed and sent 700 workers home Monday afternoon after their owner filed for bankruptcy, the latest blow to a region that has been battered by an economic downturn in the fossil fuel sector.

Blackjewel LLC, which operates Eagle Butte and Belle Ayr mines near Gillette, sent the workers home after a bank denied the company $20 million in financing to continue operations during bankruptcy proceedings, CEO Jeffery Hoops said.

Eagle Butte and Belle Ayr are the fourth- and sixth-largest producing coal mines in the country. The sudden closure hearkens back to March 2016, when two nearby mines laid off more than 460 workers, touching off economic shock waves that are still being felt in the Powder River Basin today.

“Really what we are concerned about are the workers that are affected, and similar to what we did in 2016, we are going to do everything we can to make sure they are taken care of, whether that’s retraining with college education or workforce services,” City of Gillette spokesman Geno Palazzari said on Monday evening.

Blackjewel owes at least $500 million in liabilities, including about $6 million owed to employees, according to court documents. Its financial problems, along with much of the coal sector, come amid increased competition from natural gas and renewables.

“The ripple effect of this bankruptcy might be felt severely (by) Wyoming taxpayers and vendors,” said Clark Williams-Derry, director of energy finance at Sightline Institute, a Seattle-based environmental think tank. “And the millions upon millions of dollars Campbell (County) is owed, they might not get.”

Hoops bought the Wyoming coal mines two years ago from Contura Energy. Another of Hoops' companies in the case, Revelation Energy LLC, operates mines in West Virginia, Kentucky and Virginia.

Hoops told the Star-Tribune that he learned at a Monday morning court hearing that United Bank of West Virginia denied the company the $20 million financing it sought to continue mining operations in the interim.

Workers were sent home from the mines on Monday afternoon by the company.

“We just advised them that the mines are out of order until further notice we are continuing to try to solve the problem,” Hoops said.

According to Hoops, workers were paid cashier checks this week.

“United Bank was really insensitive. They put (about) 700 people’s lives, (they) really turned their lives upside down,” Hoops added.

A United Bank spokesperson could not immediately be reached for comment Monday evening.

Industry in decline

Blackjewel is the sixth coal producer in Wyoming to file for bankruptcy in recent years. Bristol, Tennessee-based Alpha Natural Resources filed for bankruptcy in 2015, followed by Peabody Energy and Arch Coal in 2016. Westmoreland Coal, which operates the Kemmerer Mine in southwest Wyoming, filed for bankruptcy in October.

In May, Cloud Peak Energy declared bankruptcy. The coal giant owns the Antelope and Cordero Rojo mines in the Powder River Basin.

Even with half of Wyoming’s coal country undergoing consolidation and the other half in bankruptcy proceedings, few experts predicted that the once lucrative Powder River Basin would undergo such a rapid decline, including Rob Godby, professor and director for the University of Wyoming’s Energy Economics and Public Policies Center.

“Up until a few years ago, everyone, including me, knew that thermal electricity from coal was declining, but the Powder River Basin stood as the healthiest of the coal-producing areas,” Godby said. “People in Wyoming took that for granted.”

A decade ago, Campbell County produced over 400 million tons of coal. Last year, output sank to 283 million, according to the Wyoming Mining Association.

As the price of coal and demand for the commodity fell, a significant lender for Blackjewel recently pulled out, throwing the company’s already unsteady financial picture into further trouble, according to a company statement.

Still, Hoops' initial response to the joint filings, which was released prior to the hearing, remained optimistic.

“We are confident that this restructuring will solidify Blackjewel’s position as a significant participant in the US coal market,” he said in a statement. “(The company) will continue as a significant player in the U.S. coal industry for the foreseeable future.”

Difficult choices

The choices are numbered for smaller, debt-saddled coal companies struggling in a shrinking market. Despite an unprecedented flood of bankruptcy announcements by Wyoming’s coal sector in recent years, none of the major coal companies in the basin have shut down. Blackjewel announced it would continue producing coal during financial “restructuring.”

“All the mines (in the basin) are still producing, and yet the market is only two-thirds what it used to be,” Godby said.

In part, that’s because with closure comes mandated and costly reclamation, often more expensive than the operation of the coal mine itself.

“(The companies) are between a rock and a hard place,” he added.

But Campbell County and Blackjewel’s roughly 700 employees in Wyoming have the most at stake, according to Godby. More senior secured creditors often have first dibs on returns during the bankruptcy process.

While Blackjewel owns and operates the Campbell County mines, Contura still holds the mine permits. Due to concerns from landowners over Blackjewel’s lack of assets and its checkered environmental past, the state has yet to finalize the transfer. Blackjewel delayed applying for the transfer for months after ownership changed hands too.

From the very beginning of the ownership transfer, Blackjewel fell behind on its ad valorem taxes to the county, amassing $37 million in tax liability. This spring, the county and company signed a new financial agreement. But Monday’s announcement casts doubt on these recent conciliatory efforts.

The Powder River Basin Resource Council, a landowner’s group in Wyoming, will be keeping a close eye on the company’s responsibility to the land and its workers.

“We worry about who will continue the reclamation efforts at both mines, and whether the financial guarantees will cover the hundreds of millions of dollars in reclamation bonds,” the group’s chairwoman Joyce Evans said in a statement. “There will be serious consequences for the state but more immediately for Campbell County and its residents.”

Gov. Mark Gordon said he was committed to working with the Department of Workforce to provide workforce assistance and the Department of Environmental Quality to ensure appropriate bonding is set.

“This announcement is hardest on the individuals who work at these important mines and their families, and our most immediate concerns lay with them,” Gordon said in a statement. “We are not unprepared for this set of circumstances and are eager to do all we can for the hardworking employees of these mines.”


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Energy and Natural Resources Reporter

Camille Erickson covers the state's energy industries. She received her master's degree at Northwestern University's Medill School of Journalism. Before moving to Casper in 2019, she reported on business and labor in Minneapolis, Chicago and Washington.

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