NTEC’s coal mine purchase draws critics
Navajo Transitional Energy Company wasn’t able to purchase Navajo Generating Station but it was able to buy three coal mines in Wyoming.
News that NTEC purchased the three coal mines from bankrupt Cloud Peak Energy for $75.7 million surfaced days before the Kayenta Coal Mine was scheduled to shut its operations. “With this purchase, NTEC becomes the third-largest coal producer in the United Staes,” stated Clark Moseley, NTEC’s CEO. “This growth will allow NTEC to support the Navajo Nation and its members as well as other local economies throughout the West.”
Backlash from critics was immediate. A nine-page summary published by the Institute for Energy Economics and Financial Analysis called the purchase “fraught with financial risk,” especially in a time when the economy is shifting away from coal. “Cloud Peak’s mines attracted only three bidders, at least one of which appears to be clearly unqualified,” stated the report. “So NTEC is seeking to buy a company that few companies or investors want. If it were to complete the transaction, it would be putting hundreds of millions of tribal dollars at risk.”
Each of the three mines acquired by NTEC has a different market based on the quality and nature of the coal produced and each mine has reliable access to the market it serves. In 2018, Cloud Peak Energy sold approximately 50 million tons from its three mines to customers located throughout the U.S. and around the world.
The Antelope Mine produces 23 million tons of low-sulfur, 8800 Btu coal; Cordero Rojo Mine has 12.6 million tons of low sulfur, 8400 Btu coal; and Spring Creek Mine has 13.8 million tons of low-sulfur, 9350 Btu coal each year. In 2018, Cloud Peak Energy supplied fuel to over 58 power plants generating revenue of $832 million.
NTEC’s annual revenue from all four mines (including the Navajo Coal Mine it already owns) is projected to increase to over $1 billion, providing more financial resources to the Navajo Nation and its members through increased tax revenue, the company said. IEEFA called that figure “suspect.”
“The company bases its projections on past Cloud Peak production and revenues rather than on likely future ones, and ignores the fact that Cloud Peak’s revenue fell by $500 million over the past four years,” its report states. Andrew Curley, assistant professor in the Department of Geography at the University of North Carolina at Chapel Hill, has focused on lands, resources, energy and water rights, tribal sovereignty, and has done extensive research on coal mining on Navajo. In his opinion, this purchase is a terrible move.
“The Navajo Transitional Energy Company Inc. is neither Navajo nor transitional nor an energy company,” said Curley. “It is a white-run middleman shell company, based in Farmington, that buys mines and subcontracts the mining. “It’s not really in the energy business, but the mining business,” he said. “And it’s not in any way transitional, and this is a result of the people who were chosen to run it — dinosaurs of the coal industry whose expertise is digging up decayed dinosaurs.”
He said the purchase puts the nation’s assets at risk and changes the nature of Diné governance. Upon its creation six years ago NTEC was meant to be a stopgap to maintain jobs and revenue from Navajo Mine while moving the Navajo Nation toward alternative energy development. Enabling legislation requires that it puts 10 percent of its profits toward clean energy on the Navajo Nation to produce jobs and revenue.
Curley also criticized the behind-the-scenes way the purchase was made. “Over the last 20 years, from the closure of Black Mesa Mine, to Desert Rock, to NGS, most of these projects had some place where the public could comment before any final decision was made,” said Curley. “This is the purpose of a democratic government.
NTEC has taken the public out of the decision-making.” Public outcry played a large part in NTEC’s inability to purchase NGS after months of consultations and hearings with leaders and the Navajo public. President Jonathan Nez, who has supported the closure of NGS and advocated for more renewable energy, said he did not receive prior notice of NTEC’s interest in acquiring these three coal mines.
But the way NTEC was set up it doesn’t need the tribe’s permission to acquire assets. “The provisions under which they were created afford NTEC a certain level of autonomy and we also understand that non-disclosure agreements are often required in business transactions,” said Nez in a statement to the Times. “But there is also the responsibilities of the NTEC member representatives to communicate with Navajo Nation leadership and the public,” he said. “Our administration, through the Háyoolkáál proclamation, is prioritizing renewable energy projects for the Nation and we certainly encourage NTEC to partner with us in pursuing more renewable energy development opportunities for our communities.”
Questions sent to NTEC’s communication director Erny Zah weren’t answered at press time on Wednesday, but this reporter was told answers were being worked on.