BHP Billiton announced that it has reached a preliminary agreement to sell the Navajo coal mine to the Navajo Nation.
The agreement promises to radically alter the tribe’s relationship to the natural resources on its lands.
Officials say it will also preserve 800 jobs at the 33,000-acre mine and nearby Four Corners Power Plant, which is the sole user of the mine's coal.
“Bottom line: This preserves the jobs,” said Norman Benally, spokesman for BHP Billiton’s New Mexico Coal unit.
Under the agreement, BHP Billiton would continue to operate the mine until July 2016. At that point, the Navajo Nation would take over with its own company, or another company of the tribe’s choosing. Mine employees and equipment would stay on with the new operator, The Farmington Daily Times reported.
Financial terms were not disclosed. BHP Billiton and the tribe hope to have a final deal inked by April.
The agreement comes as coal consumption is in sharp decline nationwide due to economic and regulatory pressures. A mine executive said the deal was about preserving jobs, not profits.
“For BHP Billiton, it’s not about the deal as much as sustaining Navajo Mine for all the stakeholders that depend on it,” said Pat Risner, president of BHP Billiton New Mexico Coal. The company is San Juan County’s largest private employer.
For the tribe, the deal represents a dramatic change from leasing its land to a foreign multinational corporation to exploiting for itself the rich coal veins that stripe the northeast edge of the sprawling reservation. The mine produces about 8 Mt/a (8 million stpy).
“In a larger sense, we're talking about Navajo Nation sovereignty, we're talking about owning our assets,” said Erny Zah, spokesman for Navajo President Ben Shelly. “It's definitely a positive for Navajo to assert control and ownership of the natural resources that are on the Navajo Nation.”
The mine is the sole supplier for Four Corners, a 2,100 megawatt coal-burning power plant that is a key supplier for the West's electricity grid.
Plant operator Arizona Public Service Co. said it would pursue an agreement with the Navajo Nation to continue supplying the plant with coal.
The agreement pushes back the Arizona utility's plan to partially decommission the plant by the end of this year. APS now plans to close three of the plants five units in spring 2013.
The mine and power plant stand to lose about 300 jobs when the decommissioning occurs. Officials at both companies say the job cuts will happen through normal attrition, not layoffs. About 800 jobs would remain.