NTEC names new operator for Navajo Mine

Noel Lyn Smith
The Dixon Pit in Area III at the Navajo Mine as seen in early October.

FARMINGTON – The Navajo Transitional Energy Co. has entered into a 15-year contract with the Bisti Fuels Co. to operate the Navajo Mine.

Bisti Fuels is a subsidiary of the North American Coal Corp. Negotiations between NTEC and North American Coal started in October for the corporation to assume management after BHP Billiton New Mexico Coal ends its operating contract in December 2016.

The announcement was made in separate press releases Wednesday from NTEC and NACCO Industries Inc., an operating holding company that has North American Coal as one of its subsidiaries.

The contract was approved Dec. 5 by the seven members of the NTEC Management Committee, and the companies signed the deal on Wednesday, according to the NTEC release.

"We are proud to bring in an experienced coal mining company to Navajo Mine. Given the unique structure of Navajo Mine, we believe that North American Coal is the best fit to meet our contractual duties with Four Corners Power Plant," NTEC CEO Clark Moseley said in the release.

According to the NACCO release, the companies entered into a cost-plus contract in which NTEC will pay Bisti Fuels' costs and a profit margin per ton.

NTEC spokesman Erny Zah said in a telephone interview Wednesday the terms of any financial agreement between the two companies are confidential.

When asked if North American Coal has experience working with a tribal enterprise or tribal government, Zah said that was a component examined by NTEC, and its officials were assured North American Coal has a "good understanding" of existing laws, such as the Navajo Preference in Employment Act.

"We’re comfortable they’ll mesh well into our unique environment," Zah said.

Additionally, the agreement consists of a transition period and a production period.

The transition period will start Jan. 1, 2016, when Bisti Fuels shifts into the contract miner role, and the production period is scheduled to begin in late 2016. Bisti Fuels will take over operations on Jan. 1, 2017. Until then, BHP will continue to manage the mine.

Coal production is expected to be approximately 6 million tons annually, according to both companies.

The Navajo Mine, located south of Fruitland, is the sole supplier of coal to the Four Corners Power Plant, which is majority-owned by the Arizona Public Service Co.

APS spokesman Steven Gotfried said Wednesday the company anticipated the agreement announcement.

"We look forward to continuing to use the mine to provide reliable and affordable electricity," Gotfried said.

BHP Billiton has managed the Navajo Mine since 1963 and sold the mine to NTEC in December 2013.

"We look forward to working with their representatives during the upcoming year to ensure a smooth transition by the end of 2016," BHP Billiton spokesman Dan Ware said about the selection of Bisti Fuels as the new manager.

Ware added all employees at the mine will remain BHP Billiton employees until the transition is complete.

The process for selecting a new mine manager started earlier this year and resulted in three finalists — North American Coal, the Kiewit Corp. and the Westmoreland Coal Co., Zah said.

Formal contract negotiations between NTEC and North American Coal began in October.

"We did our due diligence. With each proposing company, we weighed our needs at Navajo Mine against the strengths of each company. North American Coal submitted a compelling proposal which illustrated they could clearly meet our needs," Moseley said in the NTEC release.

Zah said North American Coal officials met with Navajo Nation President Russell Begaye and Navajo Nation Council Speaker LoRenzo Bates last month.

"The meetings were favorable," Zah said.

Noel Lyn Smith covers the Navajo Nation for The Daily Times. She can be reached at 505-564-4636.