Contura Energy Story Archives - West Virginia Public Broadcasting

Contura Energy Will Accelerate Exit From Thermal Coal, Citing Global Transition From Fossil Fuels

A major Ohio Valley coal producer announced last week it will speed up its exit from producing coal used to generate electricity. In a call with shareholders last week, Contura Energy, Inc., said the move is tied to the ongoing global transition away from fossil fuels.

“We recognize that the world is transitioning toward an economy that relies less on fossil fuels for power generation, and we therefore have accelerated our strategic exit from thermal coal mining,” said CEO David Stetson.

The largest market for coal has traditionally been “thermal” coal, or that used in power stations. A smaller but lucrative market exists for “metallurgical” coal, which is used in making steel. Executives said Contura plans to focus its operations solely on producing metallurgical and expects to be out of the thermal coal business by the end of 2022.

The Tennessee-based company operates both thermal and metallurgical mines in West Virginia, Virginia and Pennsylvania. Contura in 2018 purchased Alpha Natural Resources. The companies previously split during bankruptcy in 2015.

The 2018 merger turned Contura into the largest metallurgical coal producer in the U.S. Its portfolio also includes mines owned by Massey Energy, which in 2011 was acquired by Alpha Natural Resources following the April 2010 explosion of the Upper Big Branch Mine that killed 29 miners.

Contura last year exited its thermal coal operations in Wyoming’s Powder River Basin. Earlier this year the company announced it is actively seeking a buyer for its Cumberland mine, which produces thermal coal, in Greene County, Pennsylvania. Operations will cease by the end of 2022 if a buyer isn’t found.

The company also said the COVID-19 pandemic continues to hurt coal prices. In April, Contura idled its operations for several weeks to cut costs.

Contura reported a $238 million net loss in its second quarter. Executives said the company will idle its Kielty mine, which produces both thermal and met coal, and the Delbarton prep plant in southern West Virginia in the next six weeks.

Three new metallurgical coal operations are in the works, at the Road Fork No. 52 Mine, Lynn Branch and Black Eagle Mine.

“Even in spite of the disruptions caused by the COVID-19 pandemic, development at our new metallurgical mines remains on schedule,” said COO Jason Whitehead.

In 2018, federal data show Contura was the 10th largest coal producer nationwide.

Separate Sale of Wyoming, West Virginia Blackjewel Coal Mines Approved

A U.S. bankruptcy court has ruled that a coal company may sell two large Wyoming mines separately from one in West Virginia.

Bristol, Tennessee-based Contura Energy originally sought to buy all three mines from Milton, West Virginia-based Blackjewel in a deal held up while U.S. officials seek payment of federal royalties.
Contura would have paid $9.7 million for the Belle Ayr and Eagle Butte mines in Wyoming and Pax Surface Mine in West Virginia.

The Casper Star-Tribune reports that the court in West Virginia on Wednesday approved a deal in which Contura would pay $1.1 million to finalize sale of the West Virginia mine.

The Wyoming mines have been shut down since Blackjewel declared bankruptcy July 1. Federal records show no production at the West Virginia mine since 2006.

Judge Approves Contura Proposal to Bid for 3 Blackjewel Mines

A federal bankruptcy judge has approved a plan by West Virginia-based Blackjewel LLC to begin the sale of its coal mines and other assets.

At the heart of the proposal, Tennessee-based Contura Energy Inc. will be the “Stalking Horse Purchaser,” or initial bidder, for three of Blackjewel’s surface mines.

Blackjewel is the country’s sixth-largest coal company, according to 2017 federal data. It declared Chapter 11 bankruptcy on July 1. The majority of its 1,700 employees are out of work, many awaiting back wages, as the chaotic bankruptcy has unfolded.

Southern District of West Virginia Bankruptcy Judge Frank Volk approved the order Friday. Contura will purchase Blackjewel’s two Wyoming mines — Belle Ayr and Eagle Butte — and the Pax Mine in Fayette County, West Virginia.

“It makes good sense to approve the debtors motion,” Volk told the court. “This appears at the present time to be the only path forward to get some of the [sic] value out of these assets and also to pull back what may very well be the majority of the employees that had employment in the industry.”

Contura is offering $20.6 million for the properties. The company previously ran all three sites. About $8.1 million will immediately be transferred to Blackjewel to fund operating expenses and professional fees through Sunday, August 4.

The approval of the motion also kicks off a speedy sale process. Pending court approval of bids, due by July 31, the company intends to have all sales closed by August 5.

Blackjewel’s mines and processing and prep facilities in Virginia, Kentucky and West Virginia will also be up for sale. Stephen Lerner, a lawyer with Squire Patton & Boggs representing Blackjewel, said the company has entered into non-disclosure agreements with multiple interested buyers and some have visited sites in Appalachia.

Lerner said it’s likely not all of Blackjewel’s assets will be sold during the process, but it intends to settle all unpaid employee obligations after sales are finalized, and before liquidation begins.

The deal, which was hammered out over two hearings Thursday and Friday, was met with substantial objections from many of Blackjewel’s creditors, including the United States government. The company owes $60 million in royalties to the U.S. Department of the Interior for the Wyoming mines in addition to other federal debts.

Fred Westfall, a lawyer representing the government, told the court the time table laid out in the deal was too short to allow interested buyers to examine the company’s mines and assets, and feared the government would lose its ability to collect its debt.

“This encourages situations in the future of encouraging coal mines from not paying royalties,” he said.

He also said Contura currently does not qualify to take over the Wyoming leases, according to Interior’s Bureau of Land Management. Contura will assume none of Blackjewel’s liabilities, except for the nearly $250 million in reclamation obligations associated with Powder River Basin mines.

Sam Petsonk, a lawyer representing Appalachian Blackjewel employees, almost all of whom have not received back wages, told the court the deal should include money for paychecks and benefits owed to employees.

“We’re not asking for the sum to change, but we should be at parity,” he said.

Hundreds of Appalachian employees are owed nearly $11.8 million in payroll and taxes, as well as $1.2 million in employee retirement contributions.

The deal also dissolves Blackjewel’s 401K plan.

Bankrupt Blackjewel says it has Secured a Buyer for Some of its Coal Mines

A buyer for some of bankrupt coal company Blackjewel’s mines has emerged.

In a court filing Thursday, July 25, the West Virginia-based company said Contura Energy Inc., which operates both surface and underground coal mines across Appalachia, had agreed to be a “Stalking Horse Purchaser” or initial bidder for three of the company’s surface mines.

Under the agreement, Tennessee-based Contura would purchase Blackjewel’s two Wyoming mines and its Pax Mine in Fayette County, West Virginia.

Contura Energy was formed following the Alpha Natural Resources bankruptcy, in July 2016. The company later merged with its former owner, Alpha. It previously operated the Eagle Butte and Belle Ayr mines in Wyoming, but sold them to Blackjewel in late 2017. As part of the sale,Contura said it expected to write off more than $400 million in taxes and about $200 million in reclamation liabilities.

In exchange for the three surface mines, Contura has agreed to assume hundreds of millions of dollars in liabilities including remaining payroll obligations for hundreds of employees. The company would also provide $20.6 million in cash to keep operations running, which would include an immediate $12.5 million cash deposit.

Under the deal, Contura also committed to bringing back the majority of employees previously working at the three sites.

The deal is subject to court approval and other bids. Blackjewel is asking the court to approve a swift bidding and auction timeline. The company proposes to close all sales no later than August 5.

Blackjewel’s other Appalchian mines would also be up for sale during the bidding process. In its initial filing, the company listed 24 metallurgical coal mines and processing and prep facilities in Virginia, Kentucky, and West Virginia, as principal assets that employ 1,100 workers. The Appalachian mines have an estimated 600 million reserve tons of coal. The company mined 3.3 millions tons last year. The federal government’sEnergy Information Administration said in 2017 that the companies’ combined output made them the country’s sixth-largest coal producer.

Lawyers representing Blackjewel said the agreement is the company’s “last opportunity” to return employees to work and not liquidate their assets.

“Without Contura’s offer to purchase the Western Purchased Assets and Pax Purchase Assets and fund the Debtors’ expenses during sale process by pre-funding the purchase price, the Debtors would be out of options, would immediately convert to chapter 7, and substantial value and jobs would be lost,” they wrote.

A hearing has been set for 2:30 p.m. EST Thursday to consider the proposal.