Of the dozen coal mines peppered throughout Wyoming’s mineral-laden Powder River Basin, a majority have undergone changes in ownership throughout the years, often as a result of companies sliding in and out of bankruptcy.
This year was no exception.
A handful of new coal operators have descended on the basin to vie for control of five of the basin’s thermal coal mines.
One such interested buyer, Navajo Transitional Energy Company (NTEC) is on track to assume ownership of bankrupt coal operator Cloud Peak Energy’s three mines with coal reserves ranging from 8,400 to 9,400 BTU.
The Navajo Nation-based company said it hopes to close the sale in early October. But the investment has faced mounting criticism from Diné communities. Many fear the investment is too risky for the tribal enterprise, especially during a time when demand for Powder River Basin coal wanes.
But the company has been steadfast in its belief that the purchase will generate millions of dollars in revenue for the Navajo Nation. To prove its point, the company assessed the financial viability of the three thermal coal mines in a study published Thursday. The purchase of the three mines is a “prudent” decision, the study concluded.
Prepared by Energy Ventures Analysis, a consulting firm, the analysis concluded the basin will continue to pump out coal at a healthy annual rate of at least 250 million tons of coal for decades to come. Two of the mines fall within Wyoming’s borders and produced a combined 35.8 million tons of coal last year, according to the Wyoming Mining Association.
Recent shifts in the basin, like the partial closure of the Blackjewel coal mines and merging of Peabody Energy and Arch Coal facilities under one roof, make it an optimal time for NTEC to enter the basin, the study stated. And international coal exports from the Montana-based Spring Creek Mine could generate substantial profit for the company too.
“As a Navajo owned company, we are expanding our reach internationally,” Clark Moseley, the CEO of the company, said in a statement. “The demand for clean high-quality coal will continue for the foreseeable years making the Cloud Peak asset acquisition a sound investment for NTEC and the country as we will help fuel a reliable, cost effective and environmentally conscious foundation of all energy development.”
What’s more, “NTEC is purchasing these mines at a very low cost,” the study stated.
NTEC received court approval to purchase the mines last month. According to the sale terms, it will make a $15.7 million cash payment for the three mines, in addition to a $40 million second lien promissory note and royalties payments for coal produced over the next five years. The coal company will also assume $94 million in pre- and post-petition taxes.
But some analysts and members of the Navajo Nation were not convinced by the rosy report. Many remain concerned about what they see as risks associated with the purchase.
“We still have a lot of questions, concerns and frustrations with the lack of transparency to the Navajo public, our communities and to the council,” said Robyn Jackson, climate and energy outreach coordinator of Diné C.A.R.E., an organization on the Navajo Nation advocating for Diné communities and the environment.
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Though the new owner would not assume the nearly $350 million in senior debt left over from Cloud Peak’s days owning the mines, NTEC still needs to post sufficient bond for reclamation obligations.
“We don’t think it’s a wise purchase, these three mines and the reclamation projects associated with them,” Jackson said. “This is something that is way out of our region. I don’t think that NTEC or our tribal government understands all of the responsibilities and liabilities associated with those mines. We already have a lot to take care of on the Navajo Nation, it is incredibly concerning to take on the cleanup elsewhere.”
A report by the Institute for Energy Economics and Financial Analysis called the sale “fraught with financial risk.” In the last four years, Cloud Peak’s revenue dropped by some $500 million, according to the report. Production came down with it, being nearly slashed in half.
“(Institute for Energy Economics and Financial Analysis) stands by its research and its conclusion that this proposal is ill-time and ill-advised,” said Karl Cates, a researcher at the institute.
NTEC did not return requests for comment but directly contested the institute’s conclusions in the study.
Nicole Horseherder, executive director of the Navajo environmental group To Nizhoni Ani, also expressed opposition to the sale.
This year, To Nizhoni Ani and Diné C.A.R.E., along with other local groups, mounted an environmental campaign to block NTEC’s proposed purchase of a nearby coal mine and coal plant — Kayenta Mine and the Navajo Generating Station — from Peabody Energy. Both facilities are on track to close by the end of the year.
Energy Analysts Visions also conducted an optimistic study commissioned by Peabody Energy last year of the Navajo Generating Station.
Horseherder lives on the Black Mesa Plateau, just south of the coal mine and plant, and has been fighting to close the facilities for years out of concern for the Navajo Nation’s vulnerable fresh water supply. But she was surprised to see NTEC turn around and place a bid on Cloud Peak’s mines outside the Navajo Nation, she said.
“Here is NTEC stepping into Wyoming and Montana trying to thinking they can do something with these dying coal mines. … I’m just horrified that this company ... is going to accept all these liabilities,” Horseherder said.
“We’re scared ourselves as Navajo citizens this is a company gone rogue,” she added. “This is a company that does adhere to the market and does not have the Navajo Nation’s best interest in mind.”
NTEC was formed in 2013 when the Navajo Nation acquired nearby coal facilities from BHP Billiton near Farmington, New Mexico. NTEC was formed as a tribal enterprise to take ownership of the new investments. But the company contracts the operation of the coal mine out to a subsidiary of North American Coal Company called Bisti Fuels Company. The Navajo Mine provides coal to the nearby Four Corners Power Plant, which is set to retire in 2031.
If the sale of the Powder River Basin mines is finalized, NTEC would effectively become the third-largest coal company in the country.