Contura Energy, Inc., a leading U.S. supplier of metallurgical products for the steel-making industry based in Bristol, Tenn., signed a definitive agreement with Iron Senergy Holding, LLC last week for the divestment of Contura’s Pennsylvania operations.
The company’s operations in the Commonwealth include the Emerald Mine in Waynesburg and the Cumberland Mine in Greene County, which Contura had previously announced to exit at the end of 2022. Iron Senergy expressed interest in continuing to operate the Cumberland Mine, extending employment opportunities for the Cumberland workforce and providing a continued tax base for the local community. Iron Senergy’s plan to continue operations will also sustain business opportunities for Cumberland’s vendors as well as a reliable fuel supply for customers.
“In addition to the important benefits to Cumberland employees and the local community in Greene County, the signing of this agreement to divest Cumberland provides a way for both Contura and Iron Senergy to advance our respective strategic goals,” Contura Chairman and CEO David Stetson said.
Iron Senergy also plans to include the development and integration of renewable energy in efforts to further develop synergistic opportunities with regional utilities.
“This transaction allows Contura to nearly complete our move to a pure-play metallurgical company providing critical feedstock for steel production,” Steson continued. “Additionally, closing the transaction will meaningfully reduce our asset retirement obligations and collateralization requirements, allowing us to better focus our resources on the core mines in our portfolio and our strategy as solely a met producer.”
The equity transaction is expected to close before Dec. 31, 2020, transferring to Iron Senergy the subsidiaries that hold the Cumberland and Emerald mines and the associated coal reserves, mining permits and operations, infrastructure, equipment, and transloading facilities.
Upon closing, Contura will also provide $20 million in cash consideration to Iron Senergy and will transfer $30 million in existing cash collateral to Iron Senergy’s surety provider as collateral for Iron Senergy’s replacement reclamation bonds. Iron Senergy will assume all reclamation obligations associated with the Pennsylvania entities, estimated to be approximately $169 million of undiscounted future cash outflows, which will release Contura from these obligations upon closing of the transaction.