Navajo Nation to acquire coal mine from BHP Billiton

November 2, 2013

Navajo Transitional Energy Co. LLC, an energy company created by the Navajo Nation agreed to purchase a coal mine in northwestern New Mexico for $85 million.

The deal with BHP Billiton Ltd. that is expected to close Dec. 1 marks the Navajo Nation's first venture in the coal mining business.

The tribe formed Navajo Transitional Energy Co. LLC earlier this year to look into buying the Navajo Mine near Farmington, which produces up to 8.5 million stpy of coal. It is the sole provider of coal to the nearby Four Corners Power Plant, which provides electricity to about 300,000 households in Arizona, New Mexico and Texas.

The amount of coal extracted from the mine and the number of jobs likely will decrease as the plant's operator, Arizona Public Service Co., follows through with plans to shut down three of the units and acquire ownership of two other units.

However, Craig Moyer, an attorney at Manatt, Phelps & Phillips who served as the Navajo Nation's lead counsel in the deal told The Associated Press, that the tribe should see $100 million a year in taxes and royalties from the coal mine and power plant. The cash flow to NTEC as a result of coal sales is expected to bring in $1 billion through 2031, he said.

The Navajo Nation is paying for the coal mine with the profits the mine generates. BHP will manage it until 2016, when the Navajo Nation will have to find a new manager.

The Navajo Nation will acquire mining equipment, improvements at the mine, intellectual property rights and permits. Ten percent of the profits from the mine will be set aside for clean energy development.

Pat Risner of BHP released a statement saying the company was pleased to work with the Navajo Nation to ensure a future for the mine that will benefit the tribe, mine employees and others.
 

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