Bisti Fuels’ Navajo Coal Mine Agreement Terminated
NACCO Industries Inc. announced that it received notification on June 17, 2021 that the contract mining agreement between Bisti Fuels Company, a wholly owned subsidiary of NACCO, and the Navajo Transitional Energy Company will be terminated effective September 30, 2021. Bisti Fuels currently supplies coal from the Navajo Mine to the Four Corners Power Plant through the agreement with NTEC. NTEC will assume control and responsibility for operation of the Navajo Mine upon termination of the contract mining agreement. All liabilities, including mine reclamation, are the responsibility of NTEC. As required under the agreement, it is anticipated NTEC will pay NACCO a termination fee of approximately USD 10 million.
Bisti assumed operation of the Navajo Mine on January 1, 2017, and between 2017 and 2020, Bisti contributed pre-tax earnings between $4.5 million and $5.8 million annually. Excluding the termination fee, the termination of the contract mining agreement does not materially impact NACCO's outlook for 2021, but it will have a material unfavorable effect on NACCO's long-term earnings. The contract was scheduled to expire in 2031, with seasonal operations, and reduced coal production levels, beginning in the third quarter of 2023.