Mining company bankruptcy stills 10 mines in southwest Virginia

A CSX train carrying a load of coal stops near the James River in Richmond in July 2019. (Sarah Vogelsong/Virginia Mercury)

The owner of 10 mining facilities in southwestern Virginia filed for bankruptcy this week, potentially dealing another blow to the state’s shrinking coal mining industry.

On July 1, West Virginia-based Blackjewel, LLC, along with its affiliated holding and management companies, filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of West Virginia, citing declining demand for coal and liquidity problems.

The companies, which in 2018 reported 484 employees in Virginia, have apparently told their workers to go home, said Virginia Department of Minerals, Mines and Energy public relations manager Tarah Kesterton.

“They haven’t said whether it’s a layoff or a closing at this point,” Kesterton said.

Blackjewel’s Virginia mining facilities are in Wise, Lee, Tazewell and Russell counties. The U.S. Energy Information Administration listed the company, which also operates mines in Wyoming, West Virginia and Kentucky, as the fourth-largest coal producer in the United States in 2017.

In court filings, Blackjewel CEO and president Jeff Hoops described the “intense pressure” faced by the coal industry as a result of natural gas, the rise of renewable energy and increased regulatory scrutiny of coal-fired plants.

“The entire U.S. mining complex has been impacted by these events,” Hoops wrote. “A growing number of peers have filed for bankruptcy over the course of the past 5+ years. The entire industry either has gone through, or is currently going through, a period of financial distress and reorganization.”

Other factors cited by Hoops as contributing to the bankruptcy declaration include changes to Kentucky’s workers’ compensation laws that he said cost the company $20 million and revenue losses caused by the shutdown of the Lone Mountain mining complex, which straddles the Virginia-Kentucky line, following a major roof collapse in November 2017.

The largest debt listed in the company’s bankruptcy filing is over $60 million in natural resources royalties owed to the U.S. Department of the Interior.

Debts also include $1.6 million to the Virginia Department of Taxation and $6.1 million to Virginia-based United Industrial Services, Inc.

Under Chapter 11 bankruptcy, Blackjewel would be able to reorganize and restructure its debts with the intent of continuing operations.

On Tuesday, the Associated Press reported a statement from Hoops that the company is “confident that this restructuring will solidify Blackjewel’s position as a significant participant in the coal market.”