Navajo Mine owners ready to take over from BHP

James Fenton
BHP Billiton General Manager Shawn Goeckner, left, and BHP Billiton Superintendent of Drilling and Blasting Josha Kantor examine a portion of the Navajo Mine's Chinde Reclamation area in Fruitland on May 26.

FRUITLAND — Even as the Navajo Transitional Energy Company, owner of Navajo Mine, prepares to take full ownership of the open-pit mine by the end of the year, officials say they are using environmentally friendly approaches that will enhance the land's value and contribute to the tribe's welfare.

On a tour last month that touted BHP's mine reclamation efforts, BHP officials focused on a "natural" form of reclamation called "fluvial geomorphic" reclamation. The technique is designed to restore the contours and patterns of the landscape that existed prior to mining to mold an exhausted mining area back into a thriving ecosystem with vegetation that will provide grazing land for wildlife.

BHP spokesman Dan Ware said the tour was intended to change the perception that mining operations leave the resource-depleted land uninhabitable.

"(BHP puts) the land back the way it was, if not better," Ware said.

Environmentalists have differed on that point. Most recently, in April, a coalition of environmental groups filed a lawsuit challenging the U.S. Department of the Interior's 25-year extension of operations at the mine and power plant. The groups blame the federal agencies for not thoroughly considering all the potential impacts to the environment, wildlife and nearby communities.

Nonetheless, NTEC officials say they are gearing up to take over the mine and operate it in an environmentally responsible way.

In December, NTEC entered into a 15-year contract with the Bisti Fuels Co., a subsidiary of the North American Coal Corp., to manage operations at the mine after BHP leaves.

"One reason North American Coal Co. was selected as the new mine manager was its safety record and reclamation work," said NTEC spokesman Erny Zah.

Zah said NTEC believes the new manager will match, possibly at a lower cost, the reclamation efforts of outgoing BHP Billiton.

BHP Billiton employees and guests on May 26 tour a section of the Navajo Mine's Chinde Reclamation area in Fruitland.

In 2013, BHP sold the mine to the Navajo Nation by providing  a three-year loan of $85 million. Zah said the tribal entity is on track to pay back the loan by the end of the year. BHP is managing the mine for the new owners until then.

BHP Billiton has been operating the open-pit mine since 1984. Navajo Mine employs about 375 workers, 80 percent of whom are Navajo.

BHP is divesting its coal operations in the Four Corners after more than 30 years in the area. NTEC was created to facilitate the transaction and oversee the operation.

Earlier this year, BHP sold its other Four Corners-area mine, nearby San Juan Mine in Waterflow, for about $127 million to Westmoreland San Juan, a subsidiary of Westmoreland Coal. Co.

PNM Resources, Public Service Company of New Mexico's parent company, financed a $125 million loan to Westmoreland so the company could buy that mine.

Both mines have sole-supplier contracts with their respective coal-fired power plants.

Navajo Mine has a contract with Arizona Public Service Co. to deliver coal by its electric train line to Four Corners Power Plant until 2031, said Ware, BHP's spokesman.

The mine delivers about six million tons of coal a year with reserves of about 650 tons, Ware said.

San Juan Mine provides coal by truck to neighboring San Juan Generating Station, which is owned by Public Service Company of New Mexico.

The power plants date back more than 40 years and are currently undergoing multi-million-dollar retrofitting projects to install pollution controls so they can comply with federal haze rules by 2018.

APS shut down its three older, less efficient generating units at the plant at the end of 2013. First put into service in the early 1960s, the three units are expected to be demolished and removed from the plant by 2017.

Despite two planned 95-day outages at the plant and the removal of the coal-burning units, Zah said NTEC's current production is sufficient to meet its coal supply contract and generate the needed revenue to pay back the loan.

"Our plans are to have the loan paid by the time of BHP’s exit (at the end of the year)," he said.

Before the reductions and retrofitting projects, Navajo Mine hauled about eight to nine million tons of coal to the plant each year. Now, mining is conducted five days a week and delivers about five to six million tons a year, Zah said.

Trucks dump overburden into a pit on May 26 at the Navajo Mine Chinde Reclamation area in Fruitland.

Zah said the mine provided $35 million — $9.2 million in taxes and lease payments and $24.9 million in coal royalties — to the tribal government's general fund last year.

Zah said NTEC and Bisti Fuels will do its part to ensure the environment is protected as mining continues. He said the power plant's multiyear project to install pollution controls will benefit  "the air quality in the region" and "will only add to the overall value of the land once it’s handed back to the Navajo Nation."

"We understand the importance of the land to our people," he said. "Our traditional beliefs, how we’re tied to the land and how that is our identity as a Navajo people, continue."

James Fenton is the business editor of The Daily Times. He can be reached at 505-564-4621.

BHP Billiton employees and guests on May 26 tour a section of the Navajo Mine in the Chinde Reclamation area near Fruitland.