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Company negotiating $50M in unpaid leases

GILLETTE, Wyo. (AP) — A coal mining company has not secured federal leases for two Wyoming mines it bought and reopened almost a year ago in Campbell County.

Eagle Specialty Materials and the U.S. Department of the Interior have been negotiating for months to resolve more than $50 million in unpaid federal royalties owed by bankrupt Blackjewel LLC, The Gillette News Record reported.

Blackjewel and Contura Energy sold the Eagle Butte and Belle Ayr coal mines to Eagle Specialty Materials as part of the bankruptcy last year, which involved closing the mines for three months.

Eagle Specialty Materials is expected to continue operating the mines without owning the leases until there is an agreement on satisfying the payment. The negotiating deadline was recently extended by court order from the end of the September through Dec. 31.

“The problem here isn’t that ESM is behind on its current payments,” said Rob Godby, director of the Center for Energy Economics and Public Policy at the University of Wyoming. “What you’re looking at is a really tough political bargain.”

The Interior Department is tasked with collecting any money owed and protecting public assets, in this case the federal leases, Godby said. The agency does not want to set a precedent of forgiving any or all of the unpaid royalties, but also does not want to force a mine shutdown.

Eagle Specialty Materials is based in Ohio and owned by Michael Costello. Because it is a private company, financial records are not public and analysts can only speculate on reasons why an agreement has not yet been reached.

“The last thing the Trump administration wants is to put a coal mine out of business a month and a half before the election,” Godby said, adding that their may be political reasons the negotiations have continued. “If they push too hard, they might push them out of business, because clearly, if ESM had the money they would’ve paid it by now.”

Eagle Specialty Materials technically is mining as a contractor for Contura under the sale agreement until it can secure transfers of state and federal permits and leases in its name.

Costello did not immediately respond to requests for comment regarding the negotiations.

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