The owner of an idled coal mine near Paonia says current financial market conditions have scuttled a deal under which it was to have been purchased by investors including coal giant Murray Energy Corp.
Kentucky-based Bowie Resource Partners — owner of the North Fork Valley's Bowie No. 2 Mine, which it idled last year — had announced Oct. 31 that the newly formed company Canyon Consolidated Resources, LLC, was to buy out the majority ownership in Bowie from Galena Private Equity Resources Fund.
A group of investors led by John Siegel, who has an ownership in Bowie and sits on its board, and Murray, the largest underground coal mining company in the country, formed Canyon Consolidated Resources. With the acquisition of Bowie, which was expected to have closed by Nov. 15, entities owned or controlled by Siegel and Murray Energy each were to own about 30.5 percent of CCR.
The agreement envisioned CCR being able to optimize production and achieve cost savings in Utah, where Murray and Bowie both have mines, and further capitalize on coal export opportunities via existing long-term export contracts.
The purchase of Bowie hinged in part on Bowie and Canyon Finance Corp. offering up to $375 million in financial notes to refinance existing Bowie debt and help fund the acquisition.
Financial media reported in early November that the bond sale was pulled due to market skittishness among investors. Bowie last week said discussions with CCR concluded without a sale agreement due to the financial market conditions.
Bowie, which employed more than 300 miners at its Paonia-area mine several years ago, laid off some miners there in 2014 and then was forced to idle the mine last year due to poor coal market conditions. Todd Hartman, a state Department of Natural Resources spokesman, said Monday the mine continues to remain in temporary, idled status, and hasn't been permanently shut down.
As recently as last year, Bowie was trying to buy mines itself, including the Twentymile Mine in Routt County and locations in New Mexico, but it was unable to get the financing to acquire them from Peabody Energy.
Late last year, Bowie floated the idea of building a coal gasification plant at its Bowie No. 2 site, making use of coal mine waste, but it pulled that proposal after hundreds of local residents voiced concerns.
A current proposal to change the agricultural zoning at a former Bowie coal loadout site on Colorado Highway 133 in the Paonia area also is encountering opposition from people who don't want new industrial activity occurring there and want it reclaimed after its temporary mine-related use. Delta County planning commissioners have recommended that county commissioners reject the proposal.
Ted Zukoski, an attorney with the conservation group Earthjustice, said the failure of the Bowie deal to be completed "tells a story about what investors think the future of coal in the West is, which is not very rosy."
He noted the continuing trend of coal-fired power plants closing.
"That shift away from coal does not seem to be slowing, so coal's future is dim on the West Slope and everywhere else," he said.
A Bowie spokesperson couldn't be reached for comment Monday.