Augusta Liddic/The Daily TimesA plan to turn over Navajo mine to the tribe was discussed by San Juan County commissioners Tuesday.
Augusta Liddic/The Daily Times A plan to turn over Navajo mine to the tribe was discussed by San Juan County commissioners Tuesday.
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AZTEC — BHP Billiton plans to cut about 100 jobs at Navajo Mine before its midyear sale to the Navajo Nation, a company executive told San Juan County commissioners Tuesday.

The company announced in December that it will sell the coal mine west of Farmington to the tribe.

BHP intends to achieve the job reductions without resorting to layoffs, said Pat Risner, president of the company's New Mexico Coal operation. The mine has 165 employees beyond normal retirement age and they will be offered buyouts, he said.

The job cuts stem from a plan by Arizona Public Service Co., operator of Four Corners Power Plant, to close three of the plant's five stacks to comply with federal environmental laws.

Selling Navajo Mine to the tribe could preserve 800 high-paying jobs at the plant and mine, Risner said. The jobs pay about $75,000 to $80,000 a year, he said.

Four Corners is Navajo Mine's sole customer. The plant's partial shutdown will reduce demand for the mine's coal by about 30 percent, Risner said.

With tightening environmental regulations, the mine's profitability likely will decline.

Risner made clear the only alternative was the total closure of Navajo Mine and, inevitably, the power plant.

"Our overriding concern and our overriding reason for taking this action was to preserve operations at Four Corners Power Plant and Navajo Mine beyond 2016," Risner said.

The coal contract between the mine and power plant expires in 2016. After two years of negotiations to extend the contract between BHP and the Arizona utility, the mine owner decided to approach the tribe about taking over the operation.

"The alternative was you lose the jobs and you lose the revenue in 2016," Risner said. "That was an unacceptable outcome for BHP Billiton."

The deal is to be structured as a stock sale of 100 percent of Navajo Mine's assets to a tribally chartered corporation. A tribal corporation would have certain tax advantages, which would improve profitability, Risner said.

BHP would continue to run Navajo Mine on the tribe's behalf through 2016. At that point, the tribe would need to choose another operator.

Australia-based BHP has operated the mine for 49 years. Risner said the company will not see any additional value from the mine's sale to the tribe.

BHP is the largest employer in the county, with more than $100 million in payroll.

And the sale of Navajo Mine could ensure a continued coal supply for Four Corners Power Plant, a 2,100-megawatt, coal-burning plant.

The plant is an important contributor to the West's electricity grid. However, it is under pressure from the U.S. Environmental Protection Agency to cut emissions that contribute to regional haze.

County executive Kim Carpenter said his staff is assessing how much tax revenue the county would lose after the mine transaction. Initial indications are it would cost the county about $1.8 million annually.

"We'll continue to do our diligence to determine the impact of this," he said.

Risner emphasized the transaction will not affect operations at San Juan Mine, the area's other major coal producer, which is also operated by BHP.

"We will continue to own San Juan Mine, we will continue to operate San Juan Mine as we do today," he said.

But the long-term fate of that mine will hinge on whether the owners of San Juan Generating Station Ð primarily Public Service Company of New Mexico Ð decide to close some of the plant's stacks in years to come, he said. San Juan Mine feeds coal to the Generating Station.