Contura Sale Runs on as Patience Runs Out
By Greg Johnson
August 25, 2019 - Patience may be a virtue, but if you’re among the nearly 600 locked out Eagle Butte and Belle Ayr coal miners who have been out of work for 56 days, it’s also more difficult to practice.
For many, there is no more patience.
Deanna Fritz has spent a dozen years as a coal mine worker, including the last two has a haul truck driver for Blackjewel. After Fritz and about 1,700 of her coworkers in four states were abruptly locked out of their jobs without notice July 1, they’ve been living what she described as a roller coaster soap opera nightmare.
The latest blow has been the worst, she said, which has been more than two weeks in limbo not knowing if or when they could be called back to work. Although Contura Energy Corp. was given the green light by the U.S. Bankruptcy Court on Aug. 6 to buy the Belle Aye and Eagle Butte mines, along with the Pax Surface Mine in West Virginia, closing the deal is contingent on Contura and the federal government coming to an agreement on royalty payments.
That hasn’t happened, and Fritz said she and many of her Wyoming coworkers are done waiting.
“This whole thing is just deteriorating,” she said. “While these negotiations go on, we’ve received word our medical insurance would be ending at the end of the month. That’s put everybody in a position that they’ll have to do something.
“Also, people don’t have anything to stick around for anymore.”
A mother with seven children at home, Fritz said she and other Blackjewel families can’t afford to wait indefinitely on a promise of the mines re-opening. At this point, she said, promises from Blackjewel ring hollow.
“Some people are waiting (to return to their former jobs), but I’m not sure what they’re waiting for,” she said. “I’m continuing to put in applications and if I get another job offer, I have to take it. I’m sure others are in the same position.”
Local coal miners had hoped to hear something other than silence about any potential progress being made in the negotiations between Contura and the U.S. Department of the Interior during a Friday court hearing. But the hearing dealt with a dispute over Eastern coal and the sale of the West mines wasn’t discussed.
In another development in what has been a fast-moving, precedent-setting bankruptcy case, Contura Energy has filed a new motion to separate the Pax sale from the Wyoming mines. A hearing on that has been requested for Wednesday morning in the U.S. Bankruptcy Court for the Southern District of West Virginia.
In the motion, Blackjewel attorneys acknowledge the process to close the sale is taking longer than anticipated.
“While negotiations with respect to the sale of the Western assets are ongoing among Contura, the Debtors and various governmental authorities, such parties have not reached an agreement with respect to the terms on which the required governmental approvals will be provided,” the motion says.
Because of that, Blackjewel wants to carve the Pax sale out of the overall bid for the three mines. Closing that part of the deal would pay Blackjewel $1.1 million for the asset and allow $5.05 million of Contura’s overall deposit of $8.1 million be used by the estate.
Fritz said she’s interested in learning more about the sale, but that for her, the Blackjewel ship has sailed. It’s the same for many of her coworkers at the Eagle Butte mine.
“They’re dropping like flies getting other jobs,” she said. “People have been posting notices on that (Blackjewel employees support) Facebook page almost daily that they’re parting ways. A lot of the people I worked with on my crew are gone.”
More Transparency for Contura
Even if Contura Energy can come to an agreement with the government over royalty payments, it will still be under scrutiny over $27 million worth of collateral it has used to help guarantee reclamation of the land with the state Department of Environmental Quality.
The Powder River Basin Resource Council announced Friday that it has won a court challenge to make public the details of the appraisal for the Campbell County ranchland that helped Contura Coal West renew its reclamation bond for the Belle Ayr mine.
At the time, the DEQ was asked by Contura to keep the appraisal private and the state agency complied. Challenged by the Resource Council, a state District Court judge has not only ordered the information be made pubic, but said the appraisal itself may be in question.
“The court concludes the appraisal was ‘made for’ a governmental agency (DEQ) as an important part of the reclamation bonding process,” Judge Steven Sharpe wrote in his decision. “The public possesses a strong interest in knowing that the mining company posted adequate collateral to secure its reclamation obligations.”
Without that decision, other mining companies could be tempted to inflate or manufacture high appraisal values for property to secure bonds, said Shannon Anderson, an attorney for the Powder River Basin Resource Council.
“The main concern is that it’s a lot of property and there aren’t many ranches of that size is Campbell County, so there’s not much in comparative sales,” she said of the parcels that encompass nearly 50,000 acres. “What’s not in the appraisal is the mineral rights and ownership. DEQ never required evidence of title for the property to show it was free and clear.”
While Contura may have to satisfy its financial ability to reclaim the land if it reopens the mines, the longer they remain closed the less likely that may become, said Travis Deti, executive director of the Wyoming Mining Association.
“It’s our understanding that the hangup is at the federal level and those royalties Blackjewel failed to pay,” he said. “We’re watching it carefully and we’d like to see those mines open again and those miners go back to work.”
After that, “we would hope they’d stay open for awhile and mine them,” Deti added.
That Contura owned the Belle Ayr and Eagle Butte mines before transferring them to Blackjewel in December 2017 means the company has some historical knowledge of the area and how the Powder River Basin works, Deti said.
Despite Blackjewel being the fifth large PRB coal producer to file for Chapter 11 bankruptcy reorganization in the past four years, nothing has been what Deti would call “typical” of the other companies.
“This one is a mess,” he said, adding one large difference is Blackjewel’s bankruptcy has less to do with market conditions and more to do with mismanagement and poor leadership at the top.
“The state of Wyoming, the county, we got robbed,” he said. “It’s just been a bad deal overall. This is not a reflection on the Wyoming operations. Those mines are well-run and they were doing their jobs out there.”
After two months of emergency court hearings, failed financing attempts and the ouster of former company CEO Jeff Hoops, Deti said he hopes the mines reopen soon and workers are called back.
Fritz hopes for that as well, but for her, any potential callback is too late.
“I’m watching it and interested in seeing what’s going to happen, but I’m not waiting on it and I won’t pass up any job offers,” she said. “There’s too much going on financially to wait.”