NTEC must keep public, Nation informed, Nez says
President Jonathan Nez said he expects Navajo Transitional Energy Company to keep the public in the loop.
After Nez terminated NTEC’s indemnity agreement two weeks ago, the company sent out a release stating they are maintaining operations and expect to secure all necessary bonds to continue operations without any delay.
“In our assessment of acquiring Cloud Peak Energy, we realized the possibility that the Navajo Nation would not financially back the NTEC with indemnity agreements,” stated NTEC”s release. “We have been actively working with a broker to secure bonding to assure proper reclamation is performed at all the mines without a Navajo nation guarantee. This action would resolve the concerns expressed by some members of the Navajo Nation, but will come at a great cost to NTEC, and thus, the Navajo Nation.”
In August, the Nation and its leaders found out that NTEC had purchased the Cloud Peak Energy mines in Wyoming and Montana and since then this purchase has been widely scrutinized. The purchase was made final Oct. 24.
“If NTEC is able to secure bonds on their own, we expect NTEC management, their board, and their shareholder representatives, to keep the Navajo public apprised,” said Nez to the Times. “NTEC was created with the Navajo people’s money. There still remain unanswered questions related to NTEC’s financial status and other matters that need to be addressed.”
Through other interviews that Steve Grey, NTEC director of governmental and external affairs, has given to national publications he has stated he’s confident that the company can still get the $400 million in bonds. He continued with stating the company has enough potential collateral, including the coal mine outside Farmington, the Navajo Mine.
Navajo Mine is of course why Navajo Nation Council formed NTEC in 2010.
When asked if Navajo Mine will be put up for collateral for bonds, Erny Zah, NTEC communications director, said the company is currently in “active negotiations” and can’t give a comment to specifics.
After terminating the agreements after the Navajo Nation Council failed to act on the issue but instead tabled an emergency bill to terminate the agreement, Nez said NTEC has other options to obtain bonding and putting up Navajo Mine as collateral wasn’t one of the options.
“If NTEC wants to move forward on this they will have to come back to the Council and ask for another indemnity agreement for the mines,” said Nez. “Or they can go outside of Council and get their own bond from a different entity.”
Shawnevan Dale, program supervisor for Risk Management, said during a work session his office manages $1.2 billion of bonding for the Navajo Nation and its entities. NTEC’s portion is $520 million and bonding the Cloud Peak Mine would be another $407 million.
“When NTEC purchased the Cloud Peak mines they bought those reclamation liabilities,” said Dale. “So previous owner Cloud Peak doesn’t have an outstanding reclamation bond.
“There is no debt being owed to any surety company, it is purchased by NTEC,” he said. “When NTEC decides to finish up and close the mine they will ensure reclamation will take place.”
NTEC is spending $15.7 million in cash, signing onto a $40 million promissory note, paying $20 million in overdue accounts payable and $94 million in back taxes and royalties. The costs are part of a deal that comes also with ongoing royalty payments to Cloud Peak that would amount to $7.5 million a year, according to a study done by the Institute for Energy Economics and Financial Analysis.
“NTEC executives have dismissed Cloud Peak’s problems and subsequent bankruptcy as being sue solely to its high debt levels,” stated the study. “The company’s troubles are much broader than that: each of its mines faces operation and market issues that will challenge any new owner.”
During an October Naabik’iyati meeting NTEC board chair Tim Mclaughlin told members of the Naabik’iyati committee that purchasing the Wyoming Mines was an incredible opportunity that couldn’t be passed up. He also told members of the committee that the mines run well and they’re not the reason behind the bankruptcy, but rather bad investments were the culprit.
“This was an incredible opportunity for NTEC,” said Mclaughlin. “We will probably never see this type of deal again in the next who knows. It was an incredible opportunity and we took advantage.”
In a September study, NTEC listed the positive attributes for Antelope Mine and Spring Creek Mine.
“The Antelope mine has close to the highest average heat content and lowest average sulfur content,” stated the study.
Spring Creek Mine it stated is uniquely positioned to supply power plants in the northern tier of states as well as export markets in Asia. The export markets have high upside potential for sales.
The Spring Creek Mine was the mine that was shut down briefly in late October after the Montana Department of Environmental Quality denied them a permit, resulting in NTEC to sign a 75-day limited waiver of sovereign immunity with the Montana DEQ in order to reopen.
With NTEC staying mum about current negotiations it’s uncertain how they will be able to acquire the bonds or if they will put Navajo Mine up for collateral. This type of secrecy is what Dine CARE considers conflicting with Diné Fundamental Law.
“NTEC’s purchases of coal mines created a huge financial risk, adding the Diné people with enormous responsibilities for outstanding taxes, liabilities, and royalties as well as hundreds of millions of dollars of reclamation responsibilities” said Carol Davis, Diné CARE Coordinator, “The secrecy created around the purchases of these mines were disrespectful to the values of our people.”