On April 3, Navajo Nation President Ben Shelly signed legislation that allows $2.3 million from the Undesignated Unreserved Fund Balance to go towards the continuation of the due diligence investigation of the Navajo Mine – prior to any acquisition the tribe will make.
The Navajo Nation signed a Memorandum of Understanding with BHP Navajo Coal Company (BNCC) on December 18 that would transfer ownership of the mine to the Nation – scheduled for completion by June. (Related story: Navajo Nation Taking Control of Coal Mining on Reservation)
Since the MOU was signed, the Nation has been investigating the mine focusing on Shelly’s main concerns – long-term investment of the mine and how eventual repairs to the equipment, buildings, railroads and other infrastructure would be paid. (Related story: Negotiations For Navajo Mine Will Continue Between Navajo Nation and BHP Billiton)
“I signed this legislation because we need to know whether acquire this mine is beneficial for the Navajo Nation. We are in times unlike any other with federal budget cuts, reduced revenue and taxes. We must consider investments that could help sustain critical programs that help our people. The due diligence investigation will help us learn all we need to know to make an informed decision about acquiring Navajo Mine,” Shelly said.
The mine currently employs more than 400 people with about 85 percent of them being American Indian and is the sole source of coal for the nearby Four Corners Power Plant.
President Shelly added that the Navajo Nation hasn’t decided to buy Navajo Mine yet.
“At this point, I need to know more information about the entire operation of the mine. I also want to know how are we going to pay for the mine, if we decide we want to buy it. And, I want us to think far into the future and consider other technologies for clean coal. We need to look ahead and see how we can make use of our resources,” Shelly said.
This legislation will be used to support the second phase of the due diligence investigation. The potential ownership change started when the Four Corners Power Plant and Navajo Mine owners could not agree on a coal price
The legislation was signed today. The investigation is the second phase into a due diligence investigation that started last fall.
The proposal for Navajo Nation to acquire Navajo Mine came after the owners of Four Corners Power Plant, Arizona Public Service (APS) and the owners of Navajo Mine, BHP Billiton, could not agree upon a coal price. The Navajo Nation stepped in to essentially keep either facility from closing the doors and creating more unemployment on the reservation.
“We have to keep in mind that we have about 800 Navajo people working at the mine and the power plant. We have to protect their jobs too. If acquiring Navajo Mine can protect those existing jobs, it is my duty as president to ensure that we at least consider the proposal. We have to protect jobs,” Shelly added.
If the acquisition happens, the transfer of ownership would take three years, and the Nation would buy all shares of BHP Navajo Coal Company then merge it with a Navajo company yet to be determined. The Navajo company would receive all equipment, improvements, workforce, tangible and intangible intellectual property rights, and permits.
APS has estimated that it requires about six to eight million tons of coal per year to maintain operations beyond 2016 – when full ownership would transfer. Navajo Mine last year supplied approximately 8.1 million tons, generating more than $40 million for the Navajo Nation.