The company that entered into a sale agreement for bankrupt Blackjewel’s Powder River Basin (PRB) mines was incorporated on September 19 and is headed by a former Blackjewel executive, according to local media reports.
On September 18, Contura announced the agreement where it would pay Eagle Specialty Metals (ESM) $90 million to acquire the Eagle Butte and Belle Ayr mines, among the biggest surface coal mines in the world. ESM would assume some of Blackjewel’s debts as well as $237 million in reclamation bonds.
ESM is reported to be an affiliate of FM Coal, which was incorporated in 2017 and owns 22 mines in Alabama.
Jeofffey Pilon, formerly the vice president for Blackjewel, will be the chief operating officer of ESM.
The sale agreement has yet to be filed with the bankruptcy court. A series of negotiations would follow, to include those covering royalties to the federal government.
According to local reports, a lawyer for a PRB landowners group said if the sale goes through, it could succeed in further severing Contura from the PRB mines.
Contura currently owns the reclamation obligations for the mines.
Contura acquired the mines when the company was spun off from bankrupt Alpha Natural Resources, at the time under CEO David Steston, in 2015. Stetson joined the new company’s board of directors.
Contura initially planned to expand Belle Ayr. Coal prices never bounced back fully and by the second quarter of 2017, the miner abandoned those plans.
Later that year, Contura paid the recently formed Revelation Energy more than $20 million to take the mines. The CEO of Revelation energy, Jeffrey Hoops, created Blackjewel to run the mines, but never put up the money to assume the reclamation obligations.
Previously, Hoops was a board member of Trinity Coal Partners, which, after bankruptcy restructuring became Trinity Coal Corp. and appointed Stetson an executive.
From the onset, Hoops and Blackjewel was mired in litigation. Hoops maintained his innocence to the press.
Meanwhile, extreme winter weather and flooding disrupted operations in the PRB, contributing to a decline in production for the first half of 2019. Blackjewel declared bankruptcy on July 1.
On July 26, Contura was announced to be the stalking horse bidder for the mines. Three days later, the company announced it had appointed Stetson as CEO.
Contura’s bid to acquire the mines fell through when word got out the company possibly planned to shutter the mines within two years.
Since declaring bankruptcy, Blackjewel has been at the center of a legal firestorm over not providing 60-days’ notice and pay to employees prior to shutting down. Employees protesting lack of backpay blocked coal car tracks in Kentucky for months and gained national media exposure.