A truck hauls coal at the Eagle Butte mine. Photo: Casper Star-Tribune

Last week, with no warning, Blackjewel LLC, which operates Eagle Butte and Belle Ayr mines — closed both which are the largest and most productive mines in Wyoming, because the United Bank of West Virginia denied Blackjewel financing, forcing the company to file for bankruptcy.  The 700 mine employees are now struggling to survive, with unresolved questions about the mess left behind, for both the people and the unreclaimed mining sites.

Why This Matters:  The death of coal mining is coming faster than expected, even as the President has continued to try to prop it up.  But the transition is going to be painful.  In this case, the industry argued that these mines were different than the ones shuttered in West Virginia — the coal is “cleaner” and was supposed to have a longer wind-down period. The fact is that coal production in this region of Wyoming has plummeted from 462 million tons in 2011 to an expected 175 million tons next year simply because of lack of demand.  And, as the Caspar Star-Tribune editorialized back in April, the region’s leaders just ignored the familiar warning signs.  Vox explains the phenomenon well: “it is known as the ‘resource curse’ — economies rich in natural resources and dependent on export commodities tend to grow more slowly and perform worse on a range of social indicators, and they are left worse off when the resources dry up.”   Worse yet, the company that owns these mines owes millions to the federal government in royalties and will likely not have enough money to clean up their mining mess.  This kind of corporate mismanagement and profiteering off natural resources that belong to the public, while also leaving hard-working people in ruin, ought to be illegal.

Why Did Blackjewel Go Bankrupt?

According to Vox, by last week, it had “accrued $500 million in debts — to local vendors ($156 million), the Bureau of Land Management (BLM) for royalties, the Mine Safety and Health Administration (MSHA) for violations, and several states for back taxes ($6 million in Kentucky; $1.6 million Virginia; $17 million in Campbell County, Wyoming). The Eagle Butte and Belle Ayr mines alone owe $60 million in royalties and $37 million in county taxes.”

Sadly, Jeff Hoops, who owns what is left of Blackjewel, also has a history of bleeding coal companies dry in West Virginia.  The model is to “buy the mines (or assets) for cheap from a company in restructuring, thereby escaping health, pension, and environmental obligations; take out huge loans to keep the mines going; pay yourself and your executives handsomely from those loans; and then, when the mine goes under anyway, pay yourself additional bonuses for “managing” your own bankruptcy and walk away richer than you started.”  According to Vox, Hoops is currently planning to build a 189-acre resort in his hometown of Milton, West Virginia — it will house a 3,500-seat replica of the Roman Coliseum that will be called the “Grand Patrician.”   Hoops told the local Wyoming paper that, “no one is hurting more than me,”  but the town’s Mayor, Louise Carter-King, warned, “If I were him, I wouldn’t show up in Wyoming.”

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