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Komatsu Wants Immediate Permission to Take Shovels at Eagle Butte, Belle Ayr Mines

 

 

By Greg Johnson

May 8, 2020 - Frustrated with a lack of legal action from Blackjewel LLC, the U.S. Bankruptcy Court and that Eagle Specialty Materials continues to operate a pair of its large coal shovels, Komatsu Mining Corp. wants to either be paid or take its equipment.

In a motion filed Thursday morning, Komatsu is seeking to immediately lift an automatic stay on assets that prevent the company from reclaiming its property. The stay was placed as part of last year’s Blackjewel LLC bankruptcy that included the Belle Ayr and Eagle Butte coal mines in Campbell County.

Eagle Specialty Materials bought the mines from the Blackjewel estate and has claimed in previous court filings that allowing Komatsu to take the shovels “would be a devastating result” that would force the immediate closure of the mines.

“If the automatic stay is lifted, the two Wyoming mines will not be able to operate and hundreds of coal miners and related workers will immediately be out of work, leaving their financial future in doubt,” ESM said in a response to an earlier motion by Komatsu. “The shovels are absolutely essential to the operation of the mines in Wyoming.”

ESM also claimed that the shovels were considered part of Blackjewel’s assets and therefore part of the sale.

Without a resolution and several cases of hearings on the dispute being continued or canceled, Komatsu says in its latest filing that enough is enough and that ESM has been using its equipment for eight months with no compensation. Any ownership or responsibility for the shovels belong to the Blackjewel estate and not ESM, the motion says.

While the matter remains unresolved, “ESM, who is not a party to any interest or tile in the shovels, is hiding behind the automatic stay while it converts Komatsu’s collateral value,” according to the motion. The company continues to use the shovels “without any permission, title, legal interest or payment whatsoever.”

Michael Costello, the top executive at ESM’s parent company FM Coal, declined to comment because of the ongoing legal proceedings.

If the company were to immediately shut down both Powder River Basin mines, as stated in ESM’s January court filing, it could impact 463 coal workers, according to the latest employment numbers reported by the federal Mine Safety and Health Administration. As of the end of the first quarter of this year, 239 people are employed at the Belle Ayr mine and 227 at the Eagle Butte mine.

Since taking over the mines near the beginning of the fourth quarter of 2019, the mines under ESM have produced nearly 10 million tons of coal, including about 5.8 million tons in the first quarter of this year.

Eagle Specialty Materials bought the mines from Contura Energy and Blackjewel after Contura’s efforts to buy the mines failed when it couldn’t come to an agreement over unpaid federal coal royalties.

Contura paid ESM $90 million to assume more than $200 million worth of reclamation obligations attached to the mines. In return, ESM paid Blackjewel $16.2 million in cash and $32 million to the company’s senior debt holders.

The sale also included an agreement to pay about half of the outstanding production taxes owed to Campbell County, estimated to be at least $11 million. ESM has since come to an agreement with the county to pay that off in installments. It also has agreed to pay its county ad valorem taxes on a monthly schedule, which the company has been doing.