In February, Contura Energy, the owners of the Cumberland Mining Complex near Waynesburg, contemplated its need for a $60-million coal-refuse impoundment in order to continue production, and the owners cited current finances and market conditions as being a major issue of concern. In June of 2020 Contura announced that it is actively marketing the mine and that it employs roughly 700 workers. Then In August, the United Mine Workers of America (UMWA) ratified a new five-year bargaining agreement that will affect about 475 union members at the Cumberland Mine (sidenote: about 225 workers are non-union members). In August, Contura also reported a $238 million loss for their last quarter.
This is great news… A union helped to pass a contract that will not allow for wage or benefit cuts during these trying times and will also provide some additional job protections for the future. However, what was not reported was a wage-increase freeze for the next 5 years. Neither was it reported that there is a good chance that Contura Energy will not be able to sell the mine, and will either close or the company will declare bankruptcy, leaving these miners with no place of employment past 2022. I say 2022 because this is when all current contracts with the buyers of the coal will expire, as well as the operator noting this timeline for the sale of the mine.
In February, while the company was contemplating the $60-million coal-refuse impoundment, David Stetson, CEO of Contura Energy, stated “…it is clear that these properties are not economical and will not be able to deliver the kind of value we strive for in our portfolio.” I decipher this statement as, ‘the higher-ups at Contura Energy are getting out of Dodge.’ Contura is publicly making the mine an unattractive investment.
Perhaps the mine will sell, but nonetheless wouldn’t it be smart to begin a plan just in case it doesn’t? It’s better to be prepared than sorry. If we look at the other coal players in the area and see what kind of position they are in to potentially buy the mining complex, it does not look promising. Additionally, it can’t be a good sign that Contura made a public sale announcement, because typically these companies make offers and trade deals with other coal operators behind closed doors.
Alliance Coal, who operates the Tunnel Ridge Mine that is currently mining in the western parts of Washington County, has stated publicly that the company does not plan on taking any new capital investments in coal.
Murray Energy, which purchased five longwall coal mines throughout southwestern PA and northern WV from Consol in 2012, is currently in bankruptcy court trying to reorganize their mountain of debt. They are probably not interested in acquiring anything new that is coal-related.
Consol Energy just reported a horrible first half of 2020, including a $21 million loss over the last three months. The company already owns a massive swath of coal reserves across Greene County and has three longwall operations – Harvey, Enlow, and Bailey. Enlow is currently idled due to the degrading market conditions for coal. Consol has also been looking to diversify its portfolio by making investments in CFOAM LLC, based in West Virginia and making partnerships with OMNIS Bailey LLC, a waste-stream to revenue-stream idea. This is all evidence to me that Consol will not be interested in buying Cumberland and would more likely just wait to get something out of bankruptcy court.
So, to review: The Cumberland Mine needs a $60 million investment to make a coal refuse impoundment pond that will have to be installed in order to continue production into the future; they have no contracts with buyers past 2022; the market for coal is awful; and no other coal company in the area is in a good position to buy the mine.
Art Sullivan, a coal miner with more than 50 years of experience and owner of Art Sullivan Mine Services, gave us his take on the current state of the coal industry. Sullivan explained, “In the last three years, nationwide coal production has been reduced by nearly 30% … comparable to what we produced in the early 1960’s.” He cited the cause of the demise of the coal industry as being a result of several factors, “Most significant are the advancements made by other industries. Gas drillers have created new methods for recovering their resources… The shale gas industry has reduced the cost of gas production by nearly 80%. Wind and solar electric generation have, even with soon-to-expire tax subsidies, achieved a cost per Kilowatt hour below what can be achieved by efficient coal-fired power plants. Current coal mining methods are essentially the same as they used 30 years ago.”
On the topic of Cumberland Mine, Sullivan explained:
The potential sale of the mine is problematic. The negatives a buyer must consider are several, and they are significant. Substantial capital expenditures will be required for the refuse disposal ($60 million) … Contura will expect any buyer to commit to continuing its Black Lung obligations ($$). The mine has significant reclamation obligations ($$). There has not been a sale of such a large steam coal producing mine in many years. Most significantly, a buyer will appreciate the continuing decline in demand due to the high sulfur coal Cumberland produces. The future of Cumberland is, at best, uncertain.
History has taught us that once coal companies/coal bosses cannot make a profit off our labor and resources, they will bail. In this current situation we have some indication that the CEOs of Contura will pitch their golden parachutes during 2021 and 2022 and profit as much as possible. They will then leave workers and community members in the dark with reclamation costs, a dwindling tax base, and empty pensions and healthcare costs. What history has also taught us, as we just celebrated on Labor Day, is that when we collectively come together, we can win the fight to protect our communities. Therefore, we are fortunate to have this two-year warning about the unstable future of the Cumberland Mine. If we are going to protect our schools, economy, and people, we are the only ones who can create a Just Transition Plan.
For folks interested in chatting about Economic Justice in Greene County, please contact Nick at nick@centerforcoalfieldjustice.org or 724-229-3550, ext. 7, and find out how to get involved.
