Coal-Mine Closures Shake Trump Supporters Faith (#GotBitcoin?)
Sudden shutdown of two mines leaves many wondering what’s next; ‘Reality has come crashing through the door’. Coal-Mine Closures Shake Trump Supporters Faith (#GotBitcoin?)
For generations, coal has been good to this bustling town of 32,000, where local mines have long offered well-paying jobs and filled government coffers.
Even as the industry collapsed in Appalachia over the past several years, Wyoming’s Powder River Basin, a resource-rich stretch of plains that produces about 40% of the nation’s coal, seemed destined for a softer landing. Locals in this northeastern corner of the state maintained that the lower cost of operating the region’s surface mines compared with mines elsewhere, and the quality of the coal here, would cushion them from the impact of the nation’s shift toward cheaper and cleaner natural gas—as well as tougher environmental standards.
But on July 1, two of the area’s 12 coal mines abruptly closed, leaving nearly 600 workers without jobs and sending shock waves through Gillette, which proudly dubs itself the “Energy Capital of the Nation.”
“It has been difficult to talk about the decline of coal in Wyoming,” said Robert Godby, director of the University of Wyoming’s Center for Energy Economics & Public Policy. “But…reality has come crashing through the door.”
Wyoming coal mines last year employed just over 5,500 people, about 1% of the state’s population, according to the Wyoming Mining Association. But coal’s economic footprint has been much larger. Revenue from coal, oil and gas has historically accounted for between 50% and 70% of Wyoming’s general fund, according to Mr. Godby.
That footprint has been shrinking, though. Wyoming’s coal production in the Powder River Basin declined 19% from 2015 through 2018, Mr. Godby said, and state figures show severance taxes paid by coal companies fell 26% over the past four fiscal years.
Gov. Mark Gordon, a Republican, said he sounded the alarm on the need to shift away from coal in his previous post as treasurer, and the two closures make the problem more urgent.
“Is it a wake-up call? No doubt,” he said in an interview.
Mr. Gordon said his administration wants a shipping terminal in Washington state so Wyoming can export its coal to Asian markets. West Coast communities have resisted, concerned about the environmental impact.
State-funded research to find more uses for coal is also under way in the Powder River Basin.
Mark Christensen, a commissioner in Campbell County, which includes Gillette, said economic diversification has been difficult to sell in a region where coal has made life comfortable. The county’s estimated median household income in 2017 was the second-highest in the state, at $78,240, U.S. census data shows.
Work in the vast coal pits surrounded by rolling prairie outside Gillette can pay as much as $100,000 a year. Each day, coal trains rumble by the town’s Americana-styled Main Street, and local bars and restaurants are crowded day and night with miners just off their shifts. Tax revenue from coal has helped pay for a $55 million recreation complex.
Anticipating coal’s troubles, Mr. Christensen, a Republican, in 2017 backed a quarter-cent countywide sales tax to raise revenue. The proposal was rejected by voters.
“The writing has been on the wall, but it has been really hard to get people to acknowledge it,” he said.
The two shuttered mines are owned by West Virginia-based Blackjewel LLC, which filed for chapter 11 bankruptcy and closed down operations on July 1. It cited tens of millions of dollars in debt, including taxes and federal mining royalties. The company’s former president and chief executive, Jeff Hoops Sr., who resigned following the bankruptcy, couldn’t be reached for comment. Lawyers representing the company in bankruptcy declined to comment.
“When we actually heard they were shuttering the doors and idling the mines, that just blew us away,” said Rory Wallett, who had worked as a pit hand at both mines for 11 years before they closed.
While Gillette was shaken like this once before, when several companies laid off about 500 workers in 2016, Mayor Louise Carter-King said the actual shutdown of two mines was different.
“We’ve never seen anything like that before,” she said.
About 1,100 workers in West Virginia, Virginia and Kentucky also lost jobs when Blackjewel filed for bankruptcy.
Contura Energy, formerly Alpha Natural Resources , which once owned the Wyoming mines, is trying to reacquire them—which could put miners back to work. But the deal may not go through, and even if it does, Contura’s chief financial officer said on a recent earnings call that the company isn’t interested in operating in the Powder River Basin long-term. A spokesman declined to comment further.
Melissa Peterson-Worden, a 44 year-old mother of three who has worked in the local mining industry for about 20 years, got a job at a Blackjewel warehouse in April. It lasted just a few months.
“For the entire time I lived here, they said this was the one thing that wouldn’t happen,” she said.
Coal Baron Robert Murray’s Companies Edge Closer To The Brink
CEO’s close ties to the Trump administration haven’t brought about coal’s revival.
Robert Murray, the coal executive known for his outspoken advocacy of the industry and close ties to President Trump, could be on the brink of losing his companies as the power industry shifts away from coal to cheaper fuel sources.
Mr. Murray through a combination of bold strategy and deal-making has kept his Murray Energy Corp. from following a dozen other U.S. coal companies into bankruptcy over the past decade.
Murray Energy, which expanded even as other producers collapsed into chapter 11, last week entered a forbearance agreement with it lenders after skipping an interest payment on $1.7 billion in debt. This buys the coal-mining company more time to negotiate a restructuring deal possibly before a potential filing for bankruptcy.
This comes as Foresight Energy LP, a coal company in which Murray Energy owns a majority stake, also missed an interest payment last week. Both companies are working with a 30-day grace period to hold separate restructuring talks with their creditors. Both sets of discussions could lead to bankruptcy filings by the two companies, according to people familiar with the matter.
A surge in natural gas production and renewable projects is roiling U.S. electricity markets, while green-energy mandates work against coal as a source of fuel in key markets. The share of U.S. electricity generated from coal fell to 28% from 48% between 2008 and 2018, according to the Energy Information Administration, which expects a further drop to 25% this year and 22% in 2020.
In response to cratering demand, Murray Energy pulled back its coal production by 16% between 2014 and 2018 to 52.6 million tons from 62.8 million tons, according to private company reports reviewed by The Wall Street Journal. A recent crash in the price of export coal also has snuffed out what had been a brisk international business and one of the company’s few bright spots.
A Murray Energy spokesman declined to comment for this article.
Murray’s predicament “sharpens the focus on rapidly declining domestic demand and gives a glimpse of what the future will hold,” said Mark Nelson, coal analyst for Moody’s.
Until recently, Murray Energy was one of the few big coal miners to buck the broader industry downturn through a creative combination of deal-making and financial engineering and thanks to better prices for both domestic and export coal.
The company has been able to juggle a heavy load of more than $2.5 billion in debt for years, even as it has barely generated any cash in the past four years after paying interest to financial creditors and health benefits for retirees, according to people familiar with the matter.
Despite Murray’s troubled financial situation, it persuaded most of its bond and loan holders to extend debt maturities last year. But the company now finds itself too tight on cash to meet more than $200 million in obligations coming due in the next 12 months, these people said.
The company is expected to generate no more than $100 million in cash over the next year. As of June 30, the company had about $73 million in cash and revolver loan availability, they said.
At the same time, financial markets and debt investors have become increasingly convinced that the long-predicted demise of coal is finally at hand. For instance, in September, Peabody Energy Corp. was forced to cancel a $1 billion debt offering due to poor market conditions.
Investors have fled Murray Energy’s debt, sending prices on its $500 million in notes due in 2024 dwindling to just over 1 cent on the dollar, according to MarketAxess.
“They don’t have a lot of cushion in a downturn,“ said Vania Dimova, analyst at S&P Global Ratings. ”Even though they’re generating a lot of cash, debt service eats up a lot of it.”
Murray Energy also has blamed its business struggles on “well-funded nongovernmental organizations” dedicated to minimizing or eliminating coal as a power source. It has singled out the Sierra Club’s Beyond Coal campaign as a business risk and cited the financial backing the environmental organization received from billionaire Michael Bloomberg, the former New York City mayor.
“The net effect of these developments is to make it more costly and difficult to maintain our business and to continue to depress the market for our coal,” Mr. Murray said in the company’s 2018 annual report released to holders of bond and loans.
Mr. Murray and his company have been generous donors to Mr. Trump’s political groups, Federal Election Commission records show. Mr. Murray has worked hard to tip the political and regulatory scales in favor of coal amid pressure on utilities to switch out of fossil fuel.
He lobbied the White House last year to order grid operators to favor coal-fired power plants, arguing they were critical to ensuring reliable power in crisis situations. But the plan pushed by Mr. Murray and a key Murray Energy customer, FirstEnergy Solutions Corp., never materialized.
“Despite several attempts, the Trump administration has not stemmed the decline of U.S. coal consumption caused by the sustained drop in natural gas prices and the massive expansion in the U.S. wind fleet,” said Barry Kupferberg, a distressed debt investor who has been involved in the coal and power generation sectors.
Even after FirstEnergy filed for bankruptcy in April 2018, Mr. Murray was optimistic, enumerating how surging demand in Asia and his company’s growing exports to that region revived his business.
“I’ve got the best coal company in the world,” he said at that time to the Journal.
Between 2015 and 2016, when four of the biggest U.S. coal producers— Alpha Natural Resources, Peabody Energy, Arch Coal Inc. and Patriot Coal Corp.—filed for bankruptcy, Murray made acquisitions. In 2015, the company bought a majority stake in Foresight Energy, one of the largest thermal coal miners in the country, taking out over $1.5 billion more in debt financing. In 2015, Murray also acquired mines in Colombia.
For a while, those additions boosted earnings and gave the company assets to show creditors and push off debt maturities. Dividends from Foresight and cost synergies with Murray both added to the company’s bottom line. Its purchase of the Colombian mines helped as export coal prices remaining high even as domestic prices dropped.
Last year, the company was able to persuade most creditors to extend maturities on most of its debt to 2021 and beyond, according to people familiar with the matter.
It is unclear if investors would offer a similar extension of maturities and suspension of interest payments this time around, according to people familiar with the matter. Such a deal would keep Murray Energy out of bankruptcy.
Murray recently engaged restructuring lawyers at Kirkland & Ellis LLP and bankers at Evercore Inc. ahead of its decision to skip interest and amortization payments, the Journal has reported.
In Pro-Trump West Virginia Coal Country, the Jobs Keep Leaving
Voters aren’t expecting 2020 election to revive the industry; ‘it’s only going to get worse’.
George and Missy Adkins are considering leaving the state altogether — if they can sell their old coal camp house in Logan County, W. Va.
“Everywhere you looked it was coal trucks. It’s whittled down to almost nothing,” he said. “It’s only going to get worse.”
Donald Trump carried coal communities like this in 2016, with promises to boost what he calls “clean, beautiful coal.”
The president’s popularity in communities like these doesn’t seem to be waning, even as coalfields around the country are shedding jobs again after an uptick in the past two years.
Last year, Logan County, which is struggling with high rates of poverty and drug addiction, led the state in coal employment with 1,459 miners.
“I’m all Trump,” said Ashley Walls, a manager at Nu-Era Bakery. Fewer people have been buying $16 birthday cakes since the Blackhawk layoffs were announced. “People are scared.”
In 2000, Democrat Al Gore won the county with 62% of the vote. But the county like the rest of the state has shifted solidly Republican since. Mr. Trump won 80% of the county’s vote.
“We now expect the worst and hope for the best,” said Rosco Adkins, Logan County administrator. He and others said losing several hundred jobs will take a toll on communities.
County prosecuting attorney John Bennett is struggling to keep up with cases. This year’s arrests include about 400 felonies and 3,000 misdemeanors. The vast majority are drug-related.
Jack Blevins, who owns American Mine Services in nearby Man, said recent mining layoffs will be “a bump in the road” for his business.
Mr. Blevins sells fewer than half the bits used on machines that dig coal, compared with 2010.
Joe Stanley, a retired miner, believes big investments in infrastructure are needed to help the state. “Coal has had its day,” he said. “I would vote for anybody other than Donald Trump.”
“I think it will pick back up. It always does,” said Eric Hughart, 29. He started work in April, but went to a job fair this month because he worries about layoffs. He plans to vote for Mr. Trump.
Coal Bankruptcies Continue With Blackhawk Filing
The company is seeking to reduce a $1 billion debt burden resulting from acquisitions of the assets of distressed mining firms.
In the latest bankruptcy in the coal industry, Blackhawk Mining has filed Chapter 11 to reduce a $1 billion debt load resulting from acquisitions of the assets of distressed mining companies.
Blackhawk operates 25 active mines at ten different mining complexes in Kentucky, West Virginia, and Indiana that produce metallurgical and thermal coal.
The company said it had reached an agreement with more than 90% of its lenders on a financial restructuring that will be implemented through the Chapter 11 process. The plan would convert more than 60% of its debt to equity and provide $150 million of incremental liquidity, with lenders emerging as the owners of the reorganized company.
“The plan provides the debtors with a deleveraged capital structure that will allow the debtors to implement a go-forward business strategy without the overhang of their historical leverage profile and sizeable annual debt service requirements,” Blackhawk CFO Jesse Parrish said in a court declaration.
Blackhawk is the eighth major U.S. coal producer to file bankruptcy since November 2017 and the fifth so far this year.
The coal industry as a whole has been hit by competition from natural gas, which in 2016 overtook coal as the largest source of electricity generation in the U.S., and weak growth in demand for electricity.
Parrish said Blackhawk’s fundamentals are strong. “Through a series of acquisitions from distressed coal operators, Blackhawk now controls one of the largest amounts of proven and probable reserves of metallurgical coal in the United States,” he noted, with annual production approaching 6.9 million tons
However, Parrish said, “the pricing environment for metallurgical coal did not improve until late 2016, and the debt attendant to Blackhawk’s acquisition strategy in 2015 placed a strain on Blackhawk’s ability to maintain its then-existing production profile while continuing to reinvest in the business.”
Once the coal markets began to improve, moreover, Blackhawk was forced to make elevated capital expenditures and bear unanticipated increases in costs — labor costs rose approximately 25% between 2016 and 2018 — to remain competitive.
“The confluence of these factors eventually made Blackhawk’s financial position untenable,” Parrish explained.
As Westmoreland Bankruptcy Concludes, Signs of More Trouble for Coal Industry
The recent bankruptcy of Colorado-based Westmoreland Coal Company offers powerful insight into the bleak future for thermal coal mining in the United States, particularly in the Powder River Basin of Wyoming and Montana.
To begin with, Westmoreland’s business relied exclusively on thermal coal production, particularly at mines that sell to a single power plant. The ongoing decline of the thermal coal industry left the company with few options. Westmoreland didn’t go down without swinging, leaving the brunt of its assaults directed at Westmoreland’s hardworking employees. But even as the company aggressively stripped health care and retirement benefits from its miners, it offered bonuses to a group of its executives. Finally, Westmoreland’s efforts to off-load one of its troubled operations – the Kemmerer Mine in Wyoming – hit a major snag when the proposed buyer was unable to reach terms with any reclamation surety bond provider, which suggests that the surety industry is finally recognizing it’s dealing with a doomed industry.
Westmoreland’s failure shows that thermal coal mining is no longer an economically viable industry and makes clear the importance of preparing for a future without it.
The most significant factor setting Westmoreland apart from the many major coal companies that preceded it into bankruptcy was its exclusive focus on producing thermal coal (used to generate electricity) as opposed to metallurgical coal (used in steel making). Westmoreland was so focused on thermal coal production, in fact, that many of its mines, including its largest operations, operated on the “mine-mouth” model, meaning that each mine was co-located with a power plant that served as its sole customer. Westmoreland’s fate as a company was therefore inextricably tied to the demand for coal-fired energy. Westmoreland acknowledged this outdated reliance on coal-burning power plants in its initial bankruptcy filings, citing competition from “nuclear energy, gas-fired generation, hydropower, petroleum, solar, and wind” as a major driver of its financial difficulties.
Ultimately, an ad-hoc group of Westmoreland’s secured lenders used the bankruptcy process to cherry-pick the handful of mines with the smallest liabilities while passing off additional deadweight operations to other companies. These lenders knew that they would never see a positive return on their investments in Westmoreland, and were just trying to minimize their losses. The lender groups identified a small group of “core assets” to acquire in exchange for releasing the company from its debt obligations: the Rosebud mine in Montana, San Juan mine in New Mexico, Haystack mine in Wyoming, and Absaloka mine in Montana. The fact that these are the company’s “crown jewels” is in itself a damning statement on the grim future facing coal-burning power plants and the thermal coal mines that supply them. Of these mines, only three produce coal, and each of those serves a single power plant that is winding down operations and is slated to close within the next few years.
The Rosebud mine serves the four-unit Colstrip power plant, which is scheduled to close two units in 2022, and the remaining two units in 2027. A recent effort to prop up the Colstrip plant through a bailout failed in the Montana legislature. The San Juan mine serves the San Juan power plant, which has already closed two units and is expected to shutter the remaining two units in 2022. The smaller Absaloka mine serves the Sherco plant in Minnesota, which is retiring two of its three units in 2022. The Haystack mine has not produced any coal for several years. These mines lack ready access to the broader coal market, and do not appear to be cost-competitive. They are unlikely, therefore, to continue operations after they lose their customers.
Whereas the previous three major mine operator bankruptcies – of Alpha Natural Resources, Arch Coal, and Peabody Energy – resulted largely from the failure of those companies to service the debt they had acquired in purchasing additional metallurgical coal mines, Westmoreland’s was a much more straightforward case of falling revenues and increasing costs. This also meant that Westmoreland faced a more difficult task in bankruptcy.
Rather than use Chapter 11 to shed unsecured debt or convert debt into equity, Westmoreland had to cut expenses and trim operations.
Westmoreland’s choice to place the burden on its workers and retirees is the sort of short-sighted decision typical of declining industries.
Westmoreland’s choice to persist in a shrinking and outmoded industry meant that to survive – even in a diminished form – it had to slash costs. Unfortunately, rather than ask its investors or its executives to make these sacrifices, Westmoreland chose to shift the burden to those least-responsible for the company’s problems: its workers.
Whereas the mine operators in the previous bankruptcies were generally able to honor their commitments to workers and to retirees, Westmoreland made clear early on that its bankruptcy plan rested on reneging on its longstanding obligations to its workers and retirees. Although dozens of retired miners sent impassioned letters to the bankruptcy judge pleading for the pension and health benefits they worked for, the court ultimately signed off on Westmoreland’s plan to default on its obligations for $334.5 million in retiree medical benefits and $21.8 million in black lung benefits.
The court also allowed Westmoreland to freeze its pension plan, though the obligations to current participants will be assumed by the ad-hoc group of the company’s senior secured lenders who will operate certain of Westmoreland’s mines going forward. Those lenders also offered the fig leaf of a $6 million commitment for retiree benefits. Representatives of the miners’ unions estimate that the fund will be exhausted within a year.
At the same time, Westmoreland secured permission from the bankruptcy court to pay $1.5 million worth of quarterly “retention bonuses” to a set of non-union executive employees. Those bonuses failed even to serve their intended purpose, however, as Westmoreland’s CFO still fled the company in the middle of the bankruptcy.
Surety bond companies have seen the industry’s downward trajectory, and are demanding additional protections that mine operators can’t afford.
One of the most significant obstacles to Westmoreland’s emergence from bankruptcy was the company’s difficulty in offloading its additional high-liability mines. In particular, Westmoreland sought buyers for two coal mine complexes in Ohio, and for the Kemmerer Mine in Wyoming.
The Ohio mines sell coal to a single customer, AEP, but the current coal supply contract only runs through 2019 and Westmoreland acknowledged that it does not expect the contract to be renewed. In fact, Westmoreland revealed in bankruptcy filings that its Ohio mines were only expected to generate revenue in 2019. Many of the Ohio mines are already in reclamation, and some have water pollution problems that will require long-term treatment. For these reasons, the initial sole bidder for those mines proposed a deal under which Westmoreland would pay him $20 million to take the mines and assume the reclamation liabilities. The bidder, Charles Ungurean,originally opened the mines before selling them to Westmoreland for $64 million in 2015. Eventually, a competing bid was submitted for the mines and Ungurean ultimately emerged as the successful bidder with an offer to pay about $2.5 million. In just four years, therefore, the mines have declined in value by between $60 million and $80 million.
The bidder who inserted himself into the Ohio mine sale was initially selected as the winning bidder for the Kemmerer Mine in Wyoming, though that sale also fell through in the end. Tom Clarke, a former healthcare executive from Virginia who began purchasing distressed coal properties out of bankruptcy in 2015, offered a total of $7.5 million in cash for Kemmerer, with a promise to pay more than $200 million in the future. Clarke’s bid was complicated by existing outstanding violations at his West Virginia coal mines, and his difficulty finding a surety bond company willing to provide the reclamation bonds required by law. That last obstacle proved impossible to overcome. After multiple rounds of offers and counter offers, Clarke was unable to secure a reclamation bond because he could not come up with sufficient collateral to satisfy the bond provider. Surety bond providers are now demanding additional collateral because the risk of default is increasing. The Kemmerer mine primarily serves the nearby Naughton power plant, and one of the Naughton plant’s three units was shut down in 2019. The other two units are scheduled to close by 2029, but the plant’s owners recently announced that they are developing plans to shut down the entire Naughton facility in 2022. Kemmerer will now be sold to a group of Westmoreland Resource Partners’ secured lenders.
Sierra Club will continue to monitor coal mine operators, and coal mine operator bankruptcies, as the industry stumbles towards its inevitable end. In the Westmoreland bankruptcy, Sierra Club’s participation ensured that the company would not use the proceeding to weaken or strip away environmental protections. This included securing commitments that the new owners of the San Juan mine would carry out the reclamation obligations required under an existing settlement. Sierra Club also acted to protect the public’s right to participate in administrative actions under the Clean Water Act and Surface Mining Act related to the company’s mines throughout Westmoreland’s bankruptcy.
Coal Miners’ Pension, Health Benefits Under Stress After Bankruptcies
A pension plan covering 90,000 retirees and dependents was 38% funded before the bankruptcy of Murray Energy and other coal companies.
A pension fund covering about 90,000 coal workers and their families is on the brink of insolvency while hundreds of these miners also face losing medical benefits, part of mounting financial stress on the larger safety net meant to protect sick or out-of-work miners.
The United Mine Workers of America multiemployer pension plan is projected to become insolvent during its 2022 plan year if Congress doesn’t authorize using public funds to buttress it for the first time in a history tracing back more than 70 years. Murray Energy, which filed for bankruptcy Tuesday, is the last major contributor to the fund.
Large U.S. coal producers have used bankruptcy as a tool to survive the industry’s decadelong decline. Several companies have successfully argued in chapter 11 that they must walk away from pension and medical obligations to stay in business, keep mines open and save jobs, according to court records, testimony and interviews.
Since last October, at least eight coal companies employing nearly 16,000 union and nonunion workers have filed for bankruptcy protection.
The bankruptcies have coincided with a decline in the U.S. coal market, which has grappled with environmental regulations during the Obama administration and competition from alternative fuel sources such as natural gas and renewable energy.
A Growing Shortfall
The use of chapter 11 has nearly eliminated coal company contributions to the plan. During the 2018 plan year, the pension fund collected $30 million in employer contributions, dwarfing its $613.8 million in benefit payments. The fund’s assets were valued at about $2.4 billion, compared with $6.6 billion in liabilities. For every active worker, the plan supports roughly 28 retirees, UMWA Health and Retirement Funds Executive Director Lorraine Lewis told House lawmakers in July.
The multiemployer pension plan was 38% funded, Ms. Lewis said at the time, a significant fall from 2008, when the plan was 93% funded before the financial crisis.
If the plan fails, it would likely mean cuts to monthly benefit payments that average $596 for all pensioners and $368 for surviving spouses. More than half of pensioners get less than $500 a month.
“Chapter 11 has clearly been used, by the coal industry at least, as a convenient way for people to get out of living up to their obligations,” UMWA spokesman Phil Smith said.
Mining companies also have used chapter 11 powers to avoid the costs that come with withdrawing from the pension plan. For instance, Patriot Coal Corp, Alpha Natural Resources, Jim Walter Resources and Mission Coal Corp.—all of which have filed for bankruptcy since 2012—have avoided paying nearly $4 billion in combined withdrawal liabilities, according to Ms. Lewis’s testimony.
Murray Energy said in court papers Tuesday it paid about $15 million into the pension fund in 2018 and as a result of the previous bankruptcies faces liabilities upward of $6.4 billion if it withdraws from the plan. A restructuring support agreement backed by Murray’s senior lenders calls on the company to negotiate modifications to its retiree benefits and reject collective bargaining agreements.
The UMWA said Tuesday: “Our retirees should understand that their health care will continue to be paid, at least until the bankruptcy process is completed.”
The decline of the pension plan has prompted Congress to consider remedies. The UMWA is lobbying Senate Majority Leader Mitch McConnell (R., Ky.) to take up legislative proposals that would send excess funds from an abandoned mine reclamation fund to the pension plan. Mr. McConnell’s spokesman said he “is concerned about the insolvency issues facing a number of multiemployer pension plans and he supports the ongoing process to find a bipartisan solution for pension reform.”
The Pension Benefit Guaranty Corp., the U.S. government’s pension insurer, would step in if the UMWA pension plan goes insolvent. PBGC Director Gordon Hartogensis said the miners’ plan is one of roughly 125 multiemployer pension plans expected to run out of money in the next 20 years, affecting nearly 1.4 million people. The PBGC has said its multiemployer pension program could itself run out of money by 2025.
Recent bankruptcies also have put medical benefits for hundreds of retirees who worked at Mission Coal Co. and Westmoreland Coal Co. in jeopardy. Former coal miners who spoke with The Wall Street Journal said they agreed to do hazardous mine work because they were promised a pension as well as medical benefits for after they retired.
“You put your life at risk every day you go underground. You don’t know if you’re going to make it out or not,” said Westmoreland retiree Gary Wells, 76 years old. “You put your health and everything at risk for the company.”
Westmoreland retirees and their dependents are expected to lose medical benefits by year’s end if Congress doesn’t add them to a UMWA health plan. The company’s bankruptcy advisers said such a plan was needed to avert liquidation and preserve jobs. Lenders that took over Westmoreland provided $6 million to fund retiree benefits temporarily.
Westmoreland retiree Bethel Brock, 79, said he has been notified that he could lose medical benefits for himself and his wife at the end of the year. Mr. Brock said he has been diagnosed with a complicated form of black lung disease and relies on the Westmoreland benefits, UMWA pension, Medicare and Social Security. Westmoreland withdrew from the UMWA pension plan in 2004.
“When a coal company is through with you, you’re just like a used piece of equipment,” Mr. Brock said.
Black Lung Resurgence
Since 2014, coal bankruptcies also have transferred more than $310 million in corporate liabilities to the federal Black Lung Disability Trust Fund, which compensates workers diagnosed with black lung disease. The shift has come as researchers have documented a resurgence of a severe form of the disease in Appalachia.
“Our clients are younger and sicker than ever before,” said Rebecca Shelton, coordinator of policy and organizing at the nonprofit Appalachian Citizens Law Center, which helps workers seeking black lung benefits.
An excise tax to fund this trust fund was scaled back at the end of last year because of Congress inaction, meaning the fund likely will need to borrow more public funds to continue providing benefits. A former miner could get between $660 and $1,320 in monthly black lung benefit payments depending on the number of their dependents, according to the Government Accountability Office.
“A lot of people that are drawing black lung [benefits], they’re struggling to pay their bills,” said Patty Amburgey, a member of a black lung association in southeast Kentucky who lost her husband to the disease.
Sen. Joe Manchin (D., W.Va.) has been a lead sponsor on proposed legislation that would add affected retirees of Westmoreland and Mission Coal to a UMWA health plan, direct excess reclamation funds to the pension plan and restore the higher black lung excise tax. That bill, introduced in January by Democrats, is co-sponsored by presidential candidates Bernie Sanders, Elizabeth Warren and Kamala Harris.
The Hidden Deaths of Coal Mining
Some workers killed on the job aren’t counted in fatality records, making the industry appear safer than it is.
Many mining deaths aren’t captured by global safety statistics, making the industry seem safer than it is to regulators, investors and consumers.
An Examination Of A Handful Of Mining Deaths Around The World And An Analysis Of Mine-Safety Statistics In Several Large Mining Countries Found:
—Mining Deaths In Brazil, One Of The Largest Mining Nations, Could Be Underestimated By As Much As 50% Because They Don’t Count Many Contractors Who Die In Accidents. That Includes The Deaths Of As Many As 139 Of The 270 People Who Died In Brazil This Year In One Of The Worst Mining Accidents Of Its Kind.
—Big Miners May Not Report Deaths At Some Joint Ventures, Leaving Dozens Of Recent Fatalities Off The Books.
—Fatalities That Happen When Transporting What Companies Mine Are Often Undercounted.
“There is a massive statistical gap on just how dangerous mining is,” said Tyler Gillard, a senior official at the Organisation for Economic Co-operation and Development.
Pressure to improve safety is especially intense after a mine-waste dam operated by Vale SA burst early this year, unleashing a river of mud in the Brazilian town of Brumadinho. More than half of those killed weren’t Vale employees, meaning many won’t make Brazil’s official mining death statistics.
Some countries require mining companies to report deaths to the government—though each country has its own standards.
Miners and industry bodies say the sector has made strides in bringing down fatalities and injuries. But a lack of reliable accounting in the most basic safety metric makes it difficult to determine the extent of any gains.
The global death toll from mining also doesn’t include the large number of fatalities in the developing world involving illegal mining—operations on government or company sites mining without permission—or at small-scale digs that escape government scrutiny. The World Bank estimates that 90% of the world’s miners, around 40 million people, work at small mine sites or illegally, without permission to mine.
In many developed countries, though, mining statistics are more consistently collected. In those countries, numbers typically show a steady decline in fatalities in recent decades. Last year, the death toll from mining in the U.S. fell to its second-lowest level ever, with 27 fatalities, according to the Mine Safety and Health Administration. The industry, though, remains one of the deadliest in developed countries.
There is no widely used estimate on how many people die in mining globally. In 1998, the International Labour Organisation, a U.N. agency, estimated that mining accounted for 8% of fatal deaths at work, but only 1% of the global workforce. The agency made that estimate—its most recent—with little data from major mining nations like China and the Democratic Republic of Congo, where mining statistics are non-existent or considered untrustworthy.
The International Council on Mining and Metals, which represents 26 of the largest metals and mining companies, releases a widely watched annual casualty number. In 2018, the 26 members of ICMM recorded a total of 50 fatalities. That’s down from 90 in 2012, among the 22 company members that reported then.
Those numbers are clouded by inconsistencies in how miners report their numbers.
For instance, the ICMM recommends that its members count deaths of employees killed transporting resources, like truck drivers hauling mine production. However, members including Anglo American PLC, Barrick Gold Corp. ,and BHP say they don’t always, for different reasons.
Anglo American noted in its 2013 sustainability report that two workers lost their lives on “work-related travel,” but they weren’t included in that year’s fatality tally of 14. Anglo American said transport deaths are recorded if the company has “managerial control over the direct cause of the incident.”
Susana Peñarrubia Fraguas, a fund manager and adviser on corporate governance at Germany-based DWS Group, which invests in mining stock among other sectors, said miners should report such deaths.
“You need to have your contractors and supply chains more under control,” she said. “It’s all part of the same economic transaction.”
Among uncounted mining deaths are those of contractors who die at mine sites but who aren’t mine-company employees. Brazil doesn’t count deaths at many contractors as mining related, reducing overall fatality tallies for the sector.
Nearly 45% of Vale’s 124,900-strong workforce were contractors at the end of last year, according to the company. Vale is by far the country’s largest miner.
Brazil reported about 15 mining deaths per 100,000 workers for 2017, or 25 deaths, the latest year available. A decade earlier, government numbers showed a death rate of 32.6 miners per 100,000, according to government figures compiled by Dieese, a statistical research body funded by unions.
Those numbers don’t include many of the contractors.
Large mining companies account for deaths in joint-venture operations they manage. They rarely report deaths in joint ventures they do not lead, though they have influence on these mines’ health and safety policies.
Mario Parreiras de Faria, occupational safety and health inspector at Brazil’s ministry of economy’s labor authority in Minas Gerais, which includes Brumadinho said that in his experience investigating mine accidents in Brazil, at least 50% of mine-related deaths were of contractors, and not included in national numbers.
In a 2015 mine-dam failure in the town of Mariana, at an iron-ore mine jointly owned by BHP and Vale, 19 people were killed. Mr. de Faria said only one of those deaths was of a person employed by a mining company. The other 18 deaths weren’t included as mining fatalities.
“Outsourcing masks the fatality statistics,” Mr. de Faria said.
A Brazilian government spokeswoman said job fatality statistics are published based on the official classification of each company reporting a death. Fatalities at Mariana and other places—both miners and contractors—are also recorded by location, she said.
Duke Energy Agrees to Coal-Ash Cleanup Settlement
North Carolina regulators, environmental groups say deal will make state’s water safer.
Duke Energy Corp. has agreed to move 80 million tons of coal ash to lined landfills at six power plant sites in what state regulators are calling the biggest cleanup of its type in U.S. history.
The compromise between Duke Energy, state regulators and environmental groups likely puts an end to a yearslong legal dispute in North Carolina over the environmental risks of the disposal of coal ash.
Coal ash is a byproduct of coal-fired power plants, which scrub potential air pollutants from their emissions. That ash can contain arsenic, selenium, lead and mercury. Coal ash has been commonly stored in pits on-site at power plants, which are often located near rivers and lakes since they need water to produce steam.
Duke, one of the nation’s largest utility companies, said the agreement was reasonable, prudent and “a major achievement that puts the coal ash debate to rest in North Carolina.”
Frank Holleman, a lawyer with the Southern Environmental Law Center, said the settlement ensures that North Carolina’s water will be safer than it has been in decades.
The Southeast has a disproportionate number of unlined coal-ash storage pits in proximity to rivers and lakes in part because of its historic reliance on coal for power, Mr. Holleman said. But he said he expects the settlement to have national implications.
“No utility can now say it’s acceptable to cap this material and leave it in an unlined pit,” Mr. Holleman said.
Michael S. Regan, secretary of the state’s Department of Environmental Quality, said the agreement ensures public health and protects natural resources. “We are holding Duke accountable and will continue to hold them accountable for their actions,” Mr. Regan said.
Coal ash became a flashpoint in the state in February 2014, when a metal pipe running underneath an aging waste-storage pit poured tons of slurry into the Dan River in the central part of the state. In 2018, heavy rains from Hurricane Florence washed out a small portion of a coal-ash landfill near Wilmington, allowing some material to spill into a nearby lake.
Duke has long said it was acting responsibly by gradually phasing out coal-fired plants and ensuring previously generated material was safely stored at more than two dozen sites across the state. Some of the storage basins were lined but many weren’t.
Environmentalists have said the material posed significant health risks, as it could leach into groundwater or flow from faulty basins into nearby bodies of water.
Last April, the state Department of Environmental Quality ordered that Duke had to completely remove coal ash from all storage basins in North Carolina, rather than cover some ponds and leave the ash in place as the company proposed.
Duke balked, saying the order was overly restrictive and costly.
In recent months, Duke, state regulators and a half-dozen environmental groups worked out a settlement agreement, which was signed Dec. 31.
The agreement extends the life of some coal-ash recycling facilities, allows a few old, covered landfills below newer uncovered ones to remain intact and expedites the permitting process, according to a Duke spokeswoman.
Duke said the compromise costs about $1.5 billion less than what the state had originally proposed, with the current estimate being $8 billion to $9 billion to close all ash basins in the Carolinas.
The company will gradually be removing coal ash over the years, with the goal of closing all basins by the year 2034, according to the Duke spokeswoman.
“Five years from now, a heckuva lot of ash will be gone,” said Mr. Holleman, the environmental lawyer. “Every year that goes by, the level of pollution and the risk of catastrophe is being reduced.”
Duke shares fell 1% to $90.28 in afternoon trading Thursday.
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