(Gillette News Record, July 27) – The first of three large Powder River Basin coal mining companies to declare bankruptcy over the past year has successfully emerged from bankruptcy.
Alpha Natural Resources, in a press release issued Tuesday afternoon, announced that the company has reorganized and will continue mining coal. While the company takes an enthusiastic tone with its release, the bankruptcy reorganization to discharge more than $4 billion of debt included selling its PRB mines, the company’s most productive and cost-effective operations.
“By completing this restructuring, ANR emerges as a company with a solid financial foundation and a strong team to continue to mine and sell coal,” said David Stetson, who has been appointed CEO of the reorganized company. “We are also better positioned to satisfy ANR’s environmental responsibilities.”
Part of the deal approved by the U.S. Bankruptcy Court is that a new company spun off to run the Belle Ayr and Eagle Butte mines, Contura Energy, is seeking private bonding to guarantee reclamation.
A call Wednesday morning to Contura Energy for comment on the company’s plans for its newly acquired PRB mines wasn’t returned by press time.
However, when the bankruptcy deal was announced prior to court approval, it included that the Belle Ayr and Eagle Butte mines would continue normal mining operations.
Alpha Natural Resources also has confirmed that some of the company’s leadership and officials have become part of Contura. The Contura group was formed by the company’s senior lenders during the bankruptcy process for the purpose of bidding on Alpha assets. That has left Alpha’s coal interests mostly in West Virginia and Kentucky, with 14 mining complexes in Central Appalachia.
The sale of the PRB mines to Contura was part of a $300 million sale of Alpha assets. Along with the Belle Ayr and Eagle Butte mines, which together produced about 38 million tons of coal last year, the company also bought mines in Virginia, West Virginia and all of Alpha’s Pennsylvania coal operations.
Market conditions that saw coal prices plummet and increased federal regulation on coal-fired power plants have helped push the coal industry in the United States to the brink. In addition to Alpha, two other large operators — Peabody Energy and Arch Coal Inc. — have filed for Chapter 11 bankruptcy reorganization.
Although Contura has emerged as the operator of the Wyoming mines and has guaranteed private bonding for its more than $400 million in reclamation obligations, whether that becomes a blueprint for how Peabody and Arch Coal emerge from Chapter 11 remains to be seen.
Between them, Peabody and Arch account for about $1.2 billion in self-bonding obligations. Prior to its deal being approved by the court, Alpha’s self-bonding brought that total up to $1.6 billion, which is the majority chunk of the state’s overall $2.1 billion in outstanding self-bonded obligations.
End of Alpha in the basin
Tuesday’s announcement means that Alpha Natural Resources officially is done mining Powder River Basin coal, but it doesn’t necessarily mean Contura is jumping into uncharted waters.
Under the deal, former Alpha CEO Kevin Crutchfield becomes the CEO for Contura. While at Alpha, Crutchfield was the CEO in 2009 when the company took over rival Foundation Coal Holdings in a $1.4 billion acquisition. Eagle Butte and Belle Ayr were part of Foundaton until then.
Riding a wave of high prices at the time, Alpha also paid $7.1 billion in cash and stock to buy out Massey Energy Co. and its 19 mining complexes in Virginia, West Virginia and Kentucky.
