Who is FM Coal and Why Does it Want Blackjewel's Coal Mines?
October 1, 2019 - In the heart of the Powder River Basin, just off Wyoming Highway 59, a pair of the nation’s largest coal mines have become what some are calling “zombie” mines.
Once ranked as the fourth- and sixth- highest producing mines in the country, Eagle Butte and Belle Ayr mines have been running on fumes with the help of a skeleton crew for four months, as the company’s bankrupt owner Blackjewel attempts to sell them off.
Some companies, including the mines’ previous owner (and current permit holder), Contura Energy, have expressed interest in purchasing the facilities. Though the sale received endorsement from a federal bankruptcy court in August, it has yet to close. The federal government objected to outstanding mineral royalties and lease terms.
But comments from Contura executives suggest the coal supplier may not want to stick in the basin for long anyway. The game of hot potato over the Eagle Butte and Belle Ayr mines has most recently fallen into the lap of an entirely new company, Eagle Specialty Materials, an affiliate of FM Coal.
According to Contura’s Sept. 18 announcement, Eagle Specialty Materials would operate the two mines and assume the reclamation obligations, after Contura paid the new company $90 million. The newcomer would also settle “certain” outstanding debts to creditors and assume the $237 million in reclamation bonds associated with the mines.
Who is FM Coal?
An affiliate of FM Coal, Eagle Specialty Materials was incorporated in Ohio on Sept. 19, according to filings made to the Wyoming Secretary of State. Eagle Specialty Materials received its certificate of authority in Wyoming on Thursday.
The chief operating officer of the young company Jeoffrey Pilon was previously the vice president of engineering for Blackjewel, among other positions, according to permitting documents.
“I would just hope that whoever is going to operate the mines in the future, has distanced themselves from the past, and is able to start fresh,” said Shannon Anderson, an attorney with the Powder River Basin Resource Council, a landowners group.
But before assuming ownership of the mins, FM Coal has some hoops to jump through. It will need approval from Blackjewel, a federal bankruptcy judge, creditors, government agencies and others. The court has not announced a date for the next hearing.
FM Coal and Blackjewel did not return multiple requests for comment.
“There is very little public information about these companies,” Anderson said. “Their record is limited.”
To Anderson, the formation of a fresh company this month simply distances Contura and FM Coal from future liabilities associated with the mines.
Contura declined to comment on the status of negotiations with the new company. But in a Sept. 18 statement, the company boasted the new agreement would free it from future liabilities.
“We are extremely pleased that this deal outlines a path to relieve Contura from any go-forward liabilities related to these assets, while also providing long-term employment opportunities for hard-working miners and ongoing revenue to local, state, and federal governments,” said David Stetson, Contura’s chairman and chief executive officer.
Meanwhile, hundreds of miners have anxiously awaited news on who the new operator and employer in town will be. The current owner Blackjewel filed for bankruptcy on July 1 and shut the gates of the mines for less than a week before bringing back a small team and significantly cutting back production. Hundreds of remaining workers have been left largely in the dark as the company slogs through bankruptcy proceedings.
Roots in Alabama
Though Eagle Specialty Materials is new to the world of coal, FM Coal incorporated in 2017. According to the U.S. Office of Surface Mining Reclamation and Enforcement, FM Coal owns 22 coal mines flaked throughout Alabama.
Nelson Brooke has advocated for the protection of Alabama’s watersheds from the pollution and contamination associated with the dozens of coal mines heavily concentrated in his state. He’s worried about FM Coal’s expansion to Wyoming, given what he called the company’s blemished track record in Alabama.
“There are a lot of negative impacts that come from this (coal) industry in this state,” he said. “While it has been a major employer in Alabama for a long time and gets to be a touchy subject. But they’re really not that big of an employer anymore and they are harming more people than they’re helping.”
It’s not just the environment that critics of the company have expressed concern for. It’s Wyoming’s workers, too.
“I would venture to say that if a company is willing to contaminate the water and the air and cause nuisances and health issues for neighboring property owners, that they probably have the same level and care and concern for their miners,” Brooke said.
FM Coal’s CEO Freddy Hunt lost his son last year to a coal mining accident. The 26-year-old was conducting reclamation work on an FM Coal mine in Walker County, Alabama when he was killed in a strip pit.
Later the same year, another miner was fatally injured at FM Coal’s Little Spring Creek Mine.
“The accident occurred because the mine operator did not conduct adequate daily examinations to identify hazardous highwall conditions and correct such hazards before allowing miners to work near the base of the highwall,” according to a report filed by the Mining Safety and Health Administration.
In response to the incident, the company undertook “corrective actions” and a training.
The latest sale agreement between Contrua and FM Coal has yet to be filed with the federal bankruptcy court.