Coal Age

JUL-AUG 2017

Coal Age Magazine - For more than 100 years, Coal Age has been the magazine that readers can trust for guidance and insight on this important industry.

Issue link:

Contents of this Issue


Page 5 of 51

4 July/August 2017 news Alpha to Transfer Idle Assets, Eliminate Self-bonding in West Virginia Alpha Natural Resources plans to pay Lexington Coal Co. (LCC) to take its idled assets. Included with these properties, which are lo- cated in Kentucky, Illinois, Tennessee and West Virginia, are approx- imately 280 permits, substantial reclamation equipment, ongoing royalty payments associated with these properties and 100 million tons of reserves. While the specific economic terms were not dis- closed, LCC will receive approximately $204 million in cash at the time of closing and $112 million in installment payments to assist in the fulfillment of bonding, reclamation, water treatment, and other obligations associated with the conveyed properties and permits. Alpha CEO David Stetson called the agreement a significant transaction for all stakeholders of the Central Appalachian coal producer. "LCC has a decade-long history of reclaiming properties in a diligent and environmentally responsible manner, and Alpha is providing LCC with adequate resources to meet its obligations to the communities in which the properties are located," Stetson said. Alpha established a dedicated management team to oversee its idle and non-active properties after emerging from bankrupt- cy and that team will take senior leadership positions in LCC at the time of closing. "The seamless transition of this management team, which knows the properties and permits and has a demon- strated track record of success, coupled with the conveyance of in- frastructure and capital, will enable LCC to dedicate resources to accelerate the reclamation of the properties with less contingent exposure for the states," Stetson said. In addition to accelerating reclamation compared to current plans, the transaction with LCC will eliminate all remaining self- bonds in West Virginia. Prior to emerging from bankruptcy in July 2016, Alpha had approximately $250 million in self-bonding out- standing. Alpha and West Virginia regulators have worked to re- duce that exposure by more than $100 million over the past year. This transaction with LCC allows Alpha's self-bonds in West Vir- ginia to be replaced nine years ahead of schedule. The closing is subject to various contingencies, including Al- pha obtaining financing and entering into agreements with var- ious state and federal regulatory agencies on the transfer of the permits. After closing, Alpha will continue to operate 19 mines and nine prep plants in West Virginia, and the company still expects to produce 14 million tons of metallurgical and thermal coal in 2017. The parties expect to close during the third quarter of 2017. Mississippi Power to Suspend Lignite Coal Gasification at Kemper Plant At the end of June, Mississippi Power Company notified the Mis- sissippi Public Service Commission that it will immediately sus- pend lignite coal gasification operations at its Kemper County fa- cility and the plant will continue operating as a natural gas plant. b r e a k i n g n e w s Murray Energy Sues CSX Over Service Delays On August 1, Murray Energy Corp. (MEC) announced it had filed two lawsuits against CSX Transportation Inc. The first lawsuit was filed by MEC and alleges that CSX failed to provide reliable service to the company as agreed upon and scheduled by MEC and CSX, and seeks to recover the resulting damages. The second lawsuit was filed by subsidiary companies of Foresight Energy LP, an affiliate of MEC. These lawsuits are in addition to the proceedings taking place before the Surface Transportation Board (STB), which remain ongoing. "Murray Energy was forced to file these lawsuits, in addition to the ongoing proceedings before the STB, in order to hold CSX ac- countable for their gross lack of service, flagrant disregard for our agreements, and their lack of effectively doing anything to correct their failures to provide contracted service mandated by the federal government," said Robert E. Murray, chairman, president, and CEO of MEC. Murray said they have met with CSX several times explaining the impact their service has on MEC's operations. "We are forced to take all possible action to see that CSX provides agreed-to service, and ceases breaking their own charter from the federal government," he added. "The CSX is jeopardizing Murray Energy's existence." Murray said the situation has become "intolerable" and hopes the issue is resolved quickly. "While we hope the STB will act quickly to resolve this lack of service by CSX, we filed this lawsuit as a par- allel path in order to prevent further immediate damage and irrep- arable harm to our customers, mines, and employees, and to collect from CSX the substantial damages that they have already caused in their needless failures to provide contracted and mandated service." Alpha will continue to operate 19 mines and nine prep plants in West Virginia.

Articles in this issue

Links on this page

Archives of this issue

view archives of Coal Age - JUL-AUG 2017