Blackjewel mine sale closes, some employees called back to work

CASPER — The sale of two Powder River Basin coal mines owned by bankrupt operator Blackjewel closed Friday, leading the new owner to begin mobilizing furloughed employees after nearly four months of limited communication.

The closure of the sale comes after the takeover firm secured surety bonds required to operate the Eagle Butte and Belle Ayr mines, according to a statement released Monday morning by permit holder Contura Energy.

The finalization of the sale brings the nation’s fourth- and sixth-largest coal mines one step closer to returning to full production after nearly four months of nominal operation.

On Oct. 2, a U.S. bankruptcy court for the Southern District of West Virginia approved the sale agreement between three coal mines. But the finalization of the deal stalled over snags in the transfer of necessary bonds and mining permits from Kentucky.

The new owner, Eagle Specialty Materials, an affiliate of Alabama-based company FM Coal formed in September, had to show it had sufficient reclamation, or cleanup, bonding in place before taking over the mines. But this month, Lexon Insurance Company, a surety company for FM Coal, announced that the new operator needed to take care of Blackjewel’s additional 135 mine permits out east before it could extend additional bonds to the Wyoming coal mines.

The new company secured $238 million in replacement surety bonds, according to Contura. According to the sales agreement and a Securities and Exchange Commission filing, Contura will not be held liable by the federal government for Blackjewel mine bonds, permits or violations.

“Closing this deal with Eagle Specialty Materials brings about a positive result for our company and the many stakeholders involved in this transaction,” David Stetson, Contura’s chairman and chief executive officer, said in a statement. “In our view, this transaction represents a best-case-scenario outcome to a lengthy and uncertain process, putting the mines in the hands of an operator with a longterm interest in the Powder River Basin, and getting hard-working coal miners back on the job.”

Lynne Huskinson worked at Wyoming’s coal mines for almost four decades before losing her job at the Eagle Butte Mine on July 1 when the company filed for bankruptcy. Two of her former co-workers received calls Saturday afternoon asking if they planned to return to work, according to her account.

“Are you serious?” she recalled thinking. “[Blackjewel] hasn’t provided information in three months, and now you do...I think it’s bad behavior.”

The company said workers would also receive a $2 hourly raise.

“Just because of all the malfeasance Blackjewel is associated with...I’m just weary,” she said.

Huskinson reached out to the company’s human resources department for additional information. A representative in human resources for the Eagle Butte and Belle Ayr mines declined to comment. But in a statement, the company acknowledged Eagle Specialty Materials “has already started reaching out to employees about returning to work.”

“The completion of this sale marks the end what has undoubtedly been an arduous sale process with exceptional results: virtually all of Blackjewel’s operating mines are reopening under new ownership, hundreds of employees are returning to work, and all Blackjewel employees (east and west) are finally being paid the wages that were due at the time of our company’s chapter 11 filing,” David Beckman, the debtor’s chief restructuring officer, said in a statement Monday.

Blackjewel filed for bankruptcy July 1. After failing to obtain funding from a key creditor, the insolvent company shut down its mining operations, including the two Wyoming facilities employing about 600 workers. When it placed 32 idling coal mines across the country on auction, several of the mines did not receive successful bids, leaving the company little choice but to have them liquidated.

It’s unclear how many workers plan to return to the mines.

According to Rick Mansheim, Wyoming Workforce Services Gillette office manager, a majority of furloughed Blackjewel workers are no longer requesting unemployment benefits. Of the over 400 workers who qualified for unemployment after the closures, as of Oct. 5, only 81 continue to receive support.

Mayor Louise Carter-King of Gillette said she remains “cautiously optimistic” about the imminent reopening of the mines.

“If this happens, we will be very happy,” she said.

According to Carter-King, the city of Gillette had not received any official notification about the final sale or return of workers. She has also not had the opportunity to meet the new employers. Campbell County Commissioners have also not received a formal update from the new owner, a spokeswoman told the Star-Tribune.

“I sure hope they’re better than the last one,” Carter-King said.