Navajo Nation moves forward with efforts to buy coal mine

Council approves creation of Navajo Transitional Energy Company to operate Navajo Mine after purchase

WINDOW ROCK, Ariz. - On April 29, the Navajo Nation Council voted to approve the creation of the Navajo Transitional Energy Company (NTEC), LLC, the next step in the Nation's possible acquisition of the BHP Navajo Mine.

Speaker Johnny Naize, sponsor of the legislation, said the new company would be responsible for overseeing operations of the mine once the Nation purchases it.

"When (NTEC) is established, it will have a manager and staff. The manager will be responsible for signing all documents needed to finalize the purchase," said Naize, adding that the manager's additional responsibilities include authorizing a Coal Supply Agreement and a Mine Management Agreement to ensure the continuation of operations at the mine.

The Navajo Nation hopes that this step will create greater economic independence and self-reliance.

Erny Zah, director of communications for the Navajo Nation, said that based on preliminary studies, the mine will be profitable for the life of the Four Corners power plant.

Zah said people ask "if the mine is going to be profitable, why is BHP giving it up?" He said initial studies show that the Navajo Nation will not have as much overhead as BHP, which is a global company and is more top heavy than the Navajo Nation.

Attorney Craig Moyer with Manatt, Phelps, & Phillips, said although the mine's financial gains under Navajo ownership for the first three years would be tight, by the fourth year the Nation should be able to pay off its purchase of the mine.

Moyer said because of the anticipated shutdown of three units at the Four Corners Power Plant, coal volumes will decrease by 25 percent,but after 2016, the Nation can expect higher revenue returns because it will be getting a higher price for its coal.

At least 10 percent of net income generated by the mine under Navajo ownership will be reinvested in research and development of renewable and alternative sources of energy, which is in line with what Naize has stated before on the mine acquisition being a stepping stone to more sustainable means of energy.

Council Delegate Walter Phelps said the Council's action is risky but courageous.

"It is a risk that has foresight. It is going to open the doors of opportunity," Phelps said. "If we want to learn to live what it means to be self-sufficient, we have to take risks, and I think this is one step in that direction."

Zah said buying a mine is an opportunity for the Navajo Nation.

"We have the ability to own a coal mine," Zah said. "As much as coal may be being pressured to become cleaner and cleaner by the Environmental Protection Agency, the Navajo Nation has never owned a coal mine this large. And we've never owned an operation this large. That's an opportunity."

Zah said that President Ben Shelly wants to find out where coal can be sold and how.

"Whether it's turning the coal into jet fuel or building a road and shipping it out to other countries who want to use the coal," Zah said. "Those are things that we have to consider because in America coal is facing a lot of heat."

Council Delegate Mel Begay hailed the legislation as a "venture into a new era," because it would create opportunities for young Navajos with higher education and training to play a greater role in developing a more self-sustaining nation.

"It is a vision for the future," said Delegate LoRenzo Bates as he urged colleagues to vote for the legislation's approval.

Bates reiterated that BHP and the Arizona Public Service (APS) Four Corners power plant have a history of success and once the remaining two units at the power plant are retrofitted with selective catalytic reduction technology, it will reduce nitrogen oxides emissions by 80 percent.

Butler said the legislation represents Navajo jobs, economy and revenue that will support Navajo programs.

"I don't support the continued extraction of natural resources, but I also have to consider the revenues that are generated and that come back to the Navajo Nation," Butler said.

Butler added that with sequestration cuts expected to have a huge effect on federal programs, it is critical for the Nation to maintain its revenue stream to ensure continuation of vital services.

The Navajo Nation submitted a mine management agreement to APS on April 3 and submitted a surface mining and control and reclamation act application with BHP the same day. The Nation must submit a coal supply agreement with APS by July 1.

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