Peabody and assurance: coal mine clean-up deal in U.S reached
The largest U.S coal producer has struck a deal to cover the costs of mine clean-up liabilities while in bankruptcy with three U.S states, court documents have revealed.
Peabody Energy Corp, the world’s largest private-sector coal company with operations in the U.S and Australia, is currently in a state of bankruptcy.
The company has benefited from a governmental program known as self-bonding, which allows the company to extract coal without setting aside cash or collateral in a bid to ensure the company will restore the site to its natural setting.
"Peabody is continuing our actions to restore coal mined lands using best-in-class practices, and we are committed to our reclamation as we have been for decades," said Peabody President – Americas Kemal Williamson.
"We are pleased to reach agreements that provide additional security toward our reclamation obligations and look forward to ongoing discussions regarding Peabody's reclamation bonding long term."
Self-bonding has come under increased scrutiny due to the bankruptcy filing by Peabody as the practice exposes taxpayers to potential billion-dollar clean-up cost, should the company walk away from the site.
In the deal with Wyoming, New Mexico and Indiana, about 15 percent of Peabody's $1.2 billion in self-bonds will be secured by debtor-in-possession financing during its bankruptcy.
Wyoming can receive $127 million cash if Peabody were to walk away from reclamation while in bankruptcy, New Mexico $32 million and Indiana $17 million.
The agreement with Peabody is yet to be approved by a federal bankruptcy judge, with a hearing scheduled for August this year.
Following uncertainty as to whether Peabody will replace its self-bonded liabilities once the company emerges from bankruptcy, state regulators are concerned that the state would foot the bill for the clean-up of the mine.
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Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.