Coal firm Bowie wants government guarantee for cleanup costs
By Patrick Rucker
WASHINGTON (Reuters) - Privately held U.S. coal company Bowie Resource Partners wants taxpayers to guarantee more than $360 million in future cleanup costs for mines in New Mexico and Colorado, U.S. officials said, a move that analysts estimate would save the company $6 million a year.
Coal companies are required by U.S. regulations to rehabilitate the environment at depleted mines using cash, private financing or self bonds, a government program that allows companies to use their balance sheets as collateral and provides government backing for rehabilitation costs.
Kentucky-based Bowie, which is owned by private equity investors, has asked to self-bond at mines it bought from Peabody Energy Corp (BTU.N: Quote) last month.
Self bonds save coal companies money by trimming insurance costs, but the program could also leave taxpayers with a cleanup bill if a miner goes bankrupt.
Coal operator Alpha Natural Resources Inc ANRZQ.PK left behind more than $670 million in self-bond liabilities when it filed for bankruptcy in August.
More than $360 million in liabilities at the Bowie mines are covered by Peabody's self bonds, and state officials say they are reluctant to extend those to Bowie.
“We said we'd have a hard time supporting (self bonds),” said Ginny Brannon, director of the Colorado Division of Reclamation Mining and Safety.
In New Mexico, officials said they would reserve judgment until a formal application has been filed. Continued...