The Navajo Transitional Energy Co. has adequate potential collateral for the roughly $400 million in bonds, including a coal mine near Farmington, New Mexico, NTEC Governmental and External Affairs Director Steve Grey told reporters on a conference call.
"Our biggest operation is currently the Navajo mine," Grey said. "It generates very strong revenue for us and the Navajo Nation. Just from that asset alone, we are very well situated."
Navajo Nation President Jonathan Nez cited concerns about risk and a desire to move away from coal in announcing Tuesday the tribe would not financially back the bonds for the Cordero Rojo and Antelope mines in Wyoming and Spring Creek mine in Montana.
NTEC purchased the mines from Cloud Peak Energy, which is going through Chapter 11 bankruptcy. The bonds would ensure the mines could be cleaned up if they ever closed.
Nez, however, said he canceled agreements the tribal energy company might have relied on to seek the Navajo Nation's financial backing for the bonds.
The announcement was the latest development in a tumultuous year for the Powder River Basin coal region, which produces more coal than any other in the U.S. Three companies with mines in the basin have filed for bankruptcy and two other major players, Arch and Peabody, announced they would merge basin operations.
The Cloud Peak deal made NTEC the third-largest U.S. coal producer in the U.S. Antelope is the third-largest coal mine in the U.S., while Spring Creek ranks eighth and Cordero Rojo is 11th.
About 1,200 people are employed at the mines, which combined produced almost 50 million tons of coal last year.
The mines continue to operate with Cloud Peak as their state permit holder. The Spring Creek mine briefly shut down in late October amid a dispute between NTEC and Montana officials over tribal immunity from lawsuits.
Montana officials insisted the company waive immunity so they could enforce environmental laws. Negotiations resulted in an agreement for a 75-day, limited waiver of immunity for the company.
Jill Morrison with the Powder River Basin Resource Council landowner advocacy group said Wednesday she was keeping a close eye on the NTEC bonding developments.
"We're just in new territory with all of these coal companies going bankrupt and trying to shed the liability of the coal mines and the reclamation," Morrison said.
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