Navajo Transitional Energy Company Becomes Third-Largest U.S. Coal Producer

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Today, the sale between Navajo Transitional Energy Company LLC, (NTEC) and Cloud Peak Energy Company Inc (Cloud Peak) closed. The transaction, which received bankruptcy court approval August 19, and final court approval October 22, empowers NTEC to purchase all Cloud Peak mining assets, making NTEC the third-largest coal producer in the country. Since the August 19 initial sale order approval, NTEC has worked with Cloud Peak and its creditors to produce a seamless transition.

NTEC has assumed ownership of the Powder River Basin, Wyoming Antelope and Cordero Rojo mines — which are the third-and fifth-largest coal mines in the country, respectively — as well as the Spring Creek mine in Montana. Through the bankruptcy buyout, the assets were acquired free of significant debt burdens. NTEC says it will return the Montana and Wyoming mines to profitability while retaining employees and sustaining taxes and royalties to the regions. The mines employ approximately 1,200 employees and provide $230 million in taxes and royalties to their respective states.

“We will probably never see this type of deal again in the next who knows,” said NTEC board Chairman, Tim McLaughlin. “It was an incredible opportunity and we took advantage.”

NTEC is a wholly-owned limited liability company of the Navajo Nation, which owns and operates the Navajo Mine, located on the Navajo Nation, south of Farmington, New Mexico. NTEC’s mission emphasizes being a reliable, safe producer of coal while diversifying the Nation’s energy resources to create economic and environmental sustainability for the Navajo people. The Navajo Mine has been supplying coal to the Four Corners Power Plant for the past 50 years.

According to the Navajo Times:

In September, the Institute for Energy Economics and Financial Analysis produced a report stating NTEC’s purchase of the Cloud Peak mines was a “questionable wager.” The report stated that production at all three mines has dropped enormously in recent years — even more so in recent months. The report noted that energy sector trends continue to move away from coal electricity generation, which threatens the economics of almost all coal produced in the Powder River Basin where the mines are located. But NTEC had its own study done explaining the investment is prudent for NTEC and for the Nation.

“These mines, the mines themselves, are well run. They’re not the reason why Cloud Peak went bankrupt,” said McLaughlin. “Cloud Peak went bankrupt because they made a series of bad investments and took on $340 million of debt that they could not pay back.”

Brenda

Brenda

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