UMWA President Says Liquidation Would Be Bad for Murray Miners
By Mike Nolting
May 1, 2020 - United Mine Workers Union President Cecil Roberts elaborated Thursday on his opposition to a petition from CONSOL Energy asking a bankruptcy judge to change the Chapter 11 reorganization of Murray Energy to a Chapter 7 liquidation.
Roberts said during a Thursday afternoon press availability that CONSOL's allegations of mismanagement by Murray aren’t relevant to the bankruptcy filing because the new company will have a entirely different board and does not reflect the intent of CONSOL's court filing.
“I believe the intent by CONSOL is to eliminate their competition,” Roberts said. “If they eliminate their competition then the northern area will be expanded to where they will have more coal orders, they may be able to make more money.”
CONSOL, one of Murray’s largest creditors, knows all about the Murray mines in West Virginia that Roberts said could close in liquidation.
CONSOL sold McElroy, Shoemaker, Blacksville, Loveridge and the Robinson Run mining complexes to Murray Energy in 2013 for about $3 billion. As part of the sale, Murray Energy paid $800 million in cash to CONSOL and assumed billions of dollars of their liabilities in retirement benefits for mine workers and mine reclamation obligations.
At the time, CONSOL Energy said the sale was made in order to focus more on the natural gas market.
Murray Energy officially took over operations at the five mines in January 2014.
In 2016, UMWA members renegotiated contract with Murray Energy that provided concessions to prevent bankruptcy at that time. The UMWA recently ratified a new contract with Murray, which had the blessings of the company’s creditors and was to be honored by the new company once it emerged from bankruptcy. CONSOL's motion would be that the company never emerge.
Roberts said since 2014 the price of coal and demand fell putting Murray Energy into a financial crisis.
“The price of coal in the northern Appalachia area has dropped $8,” Roberts said. “That’s about $280 million less per year in revenue coming into Murray Energy than when they purchased these mines.”
Because of these market conditions, Murray Energy was forced to take on a large amount of debt to keep the operations going.
“As time went on and the price of coal continued to drop and the market share for coal continued to be reduced,” Roberts said. “They filed for bankruptcy in October of 2019.”
Through the entire period miners have continued to work through tough conditions, and now the COVID-19 crisis.
Roberts said for every job in coal mine five others are created to support the industry, like power plants and the steel needed in underground mining. Additionally, miners spend money in their communities at car dealerships, restaurants and stores.
“Liquidation is the worst thing that can happen in a bankruptcy,” Roberts said. “The employer goes away, the jobs go away and all the benefits to the community of that employer operating go away.”
Roberts says the bankruptcy process puts workers at an extreme disadvantage and favors the people involved in the process.
“I think it’s clearly best for the workers and for the communities that these mines operate and these 2,000 people are employed,” Roberts said. “And the thousands of people that benefit from these people having a job at Murray Energy currently, and then with the new company when reorganization is finalized.”