CLEVELAND, June 18, 2021 /PRNewswire/ -- NACCO
Industries, Inc.® (NYSE: NC) announced today 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 ("NTEC") 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 $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.
"While this is a disappointing outcome, we recognize that our
customer, NTEC, has the capabilities to manage this operation, and
has made a business decision to do so. We are proud of our
employees, and the work they have accomplished during our oversight
of the Navajo Mine. We empowered employees to greatly improve
the safety culture, and act as strong stewards for environmental
excellence," said J.C. Butler, President and CEO of NACCO and The
North American Coal Corporation.
During North American Coal's tenure as operator of the Navajo
Mine, the operation received the Sentinels of Safety Large Coal
Processing Award from the National Mining Association, the
Excellence in Surface Coal Mining Reclamation Award from the U.S.
Department of the Interior's Office of Surface Mining Reclamation
and Enforcement, the National Mineral Education Award, the National
Mine Safety and Health Training Award, and the Community Outreach
Award from the Interstate Mining Compact Commission, as well as the
Excellence in Reclamation Award from the New Mexico Energy,
Minerals and Natural Resources Department for STEM related outreach
and education.
Mr. Butler added, "As described in our 2020 annual report, we
remain steadfastly focused on our two key strategies, Protect the
Core and Grow and Diversify. We are working diligently to
support our North American Coal customers, and we continue to
execute on key initiatives developed over the last several years as
part of our strategy to Grow and Diversify. We are purposefully and
deliberately diversifying into other businesses that leverage our
core skills, capabilities and reputation. We are building a strong
portfolio of affiliated businesses for growth and diversification
through North American Mining which is rapidly building a business
focused on aggregates and non-coal mineral production, Catapult
Mineral Partners which is driving growth in our Minerals Management
segment, and Mitigation Resources of North America which is focused on providing
environmental offset solutions."
Forward-looking Statements Disclaimer
The statements contained in this news release that are not
historical facts are "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. These forward-looking
statements are made subject to certain risks and uncertainties,
which could cause actual results to differ materially from those
presented. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
hereof. The Company undertakes no obligation to publicly revise
these forward-looking statements to reflect events or circumstances
that arise after the date hereof. Among the factors that could
cause plans, actions and results to differ materially from current
expectations are, without limitation: (1) changes to or termination
of a long-term mining contract, or a customer default under a
contract, (2) a significant reduction in purchases by the Company's
customers, including changes in coal consumption patterns of U.S.
electric power generators, or changes in the power industry that
would affect demand for the Company's coal and other mineral
reserves, (3) the ability of the Company to access credit in the
current economic environment, or obtain financing at reasonable
rates, or at all, and to maintain surety bonds for mine reclamation
as a result of current market sentiment for fossil fuels, (4)
failure to obtain adequate insurance coverages at reasonable rates,
(5) the impact of the COVID-19 pandemic, (6) changes in tax laws or
regulatory requirements, including the elimination of, or reduction
in, the percentage depletion tax deduction, changes in mining or
power plant emission regulations and health, safety or
environmental legislation, (7) changes in costs related to
geological and geotechnical conditions, repairs and maintenance,
new equipment and replacement parts, fuel or other similar items,
(8) regulatory actions, changes in mining permit requirements or
delays in obtaining mining permits that could affect deliveries to
customers, (9) weather conditions, extended power plant outages,
liquidity events or other events that would change the level of
customers' coal or aggregates requirements, (10) weather or
equipment problems that could affect deliveries to customers, (11)
failure or delays by the Company's lessees in achieving expected
production of natural gas and other hydrocarbons; the availability
and cost of transportation and processing services in the areas
where the Company's oil and gas reserves are located; federal and
state legislative and regulatory initiatives relating to hydraulic
fracturing; and the ability of lessees to obtain capital or
financing needed for well development operations and leasing and
development of oil and gas reserves on federal lands, (12) changes
in the costs to reclaim mining areas, (13) costs to pursue and
develop new mining and value-added service opportunities, (14)
delays or reductions in coal or aggregates deliveries, (15) changes
in the prices of hydrocarbons, particularly diesel fuel, natural
gas and oil, (16) the ability to successfully evaluate investments
and achieve intended financial results in new business and growth
initiatives, (17) the effects of receiving low sustainability
scores which could result in the exclusion of the Company's
securities from consideration by certain investment funds, and (18)
disruptions from natural or human causes, including severe weather,
accidents, fires, earthquakes and terrorist acts, any of which
could result in suspension of operations or harm to people or the
environment.
About NACCO Industries, Inc.
NACCO Industries, Inc.®, through a portfolio of
mining and natural resources businesses, operates under three
business segments: Coal Mining, North American Mining and Minerals
Management. The Coal Mining segment operates surface coal mines
under long-term contracts with power generation companies and an
activated carbon producer pursuant to a service-based business
model. The North American Mining segment provides value-added
contract mining and other services for producers of aggregates,
lithium and other minerals. The Minerals Management segment
acquires and promotes the development of oil, gas and coal mineral
interests, generating income primarily from royalty-based lease
payments from third parties. In addition, the Company's Mitigation
Resources of North
America® business provides stream and wetland
mitigation solutions. For more information about NACCO Industries,
visit the Company's website at www.nacco.com.
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SOURCE NACCO Industries, Inc.