Contura Energy Inc. entered an agreement with Iron Senergy Holding LLC to divest its Pennsylvania operations, including the Cumberland Mine in Greene County, Pennsylvania. The equity transaction is expected to close before December 31, and, upon closing, subsidiaries that hold Contura’s Cumberland and Emerald mines and the associated coal reserves, mining permits and operations, infrastructure, equipment and transloading facilities will transfer to Iron Senergy.
Contura will provide $20 million in cash consideration to Iron Senergy and will transfer $30 million in existing cash collateral to Iron Senergy’s surety provider as collateral for Iron Senergy’s replacement reclamation bonds.
Iron Senergy will acquire all of the equity of the following wholly owned Contura subsidiaries upon closing: Emerald Contura LLC; Cumberland Contura LLC; Contura Coal Resources LLC; Contura Pennsylvania Land LLC; and Contura Pennsylvania Terminal LLC. Upon closing, Iron Senergy will post replacement reclamation bonds for the Pennsylvania entities and assume their United Mine Workers Association collective bargaining agreements.
Iron Senergy has expressed its intention to continue operating the Cumberland mine past Contura’s previously announced planned exit at the end of 2022, extending employment opportunities for the Cumberland workforce, providing a continued tax base for the local community, and sustaining business opportunities for Cumberland’s vendors and a reliable fuel supply for customers. Iron Senergy’s plan also includes the development and integration of renewable energy in efforts to further develop synergistic opportunities with regional utilities.
“This transaction allows Contura to nearly complete our move to a pure-play metallurgical company providing critical feedstock for steel production,” Contura Chairman and CEO David Stetson said. “Additionally, closing the transaction will meaningfully reduce our asset retirement obligations and collateralization requirements, allowing us to better focus our resources on the core mines in our portfolio and our strategy as solely a met producer.”
Iron Senergy will assume all reclamation obligations associated with the entities, estimated to be approximately $169 million of undiscounted future cash outflows, which will release Contura from these obligations upon closing of the transaction.