New Elk Coal settles issues with MSHA over worker termination

The U.S. Mine Safety and Health Administration said May 8 that New Elk Coal Co., operator of an idled underground coal mine in Colorado, has agreed to pay approximately $115,000 to a miner whose employment was terminated shortly after he filed a hazard complaint.

The company also has agreed to pay MSHA a civil penalty of $10,000.

In April 2012, an electrician working at the New Elk mine in Trinidad, Colo., contacted MSHA about hazardous conditions along a beltline that he claimed were not being properly addressed by his supervisors. The day after he filed the complaint, MSHA issued several citations to the mine.

His position and shift changed multiple times over the next three weeks and, on May 12, he was terminated, MSHA said. One month later, the miner filed a complaint of discrimination with MSHA, alleging that he had been fired for notifying the agency of the mine’s hazardous conditions.

In a complaint filed with the Federal Mine Safety and Health Review Commission, MSHA sought a finding that New Elk Coal unlawfully had discriminated against the employee in violation of Section 105(c) of the Federal Mine Safety and Health Act of 1977. The statute protects miners, their representatives and applicants for employment from retaliation for engaging in safety and/or health-related activities such as identifying hazards, asking for MSHA inspections or refusing to engage in an unsafe act.

An administrative law judge ordered during an August 2012 hearing that the miner be temporarily reinstated. However, based on an agreement by the parties, the miner received approximately seven months of pay in lieu of returning to work. Prior to a scheduled hearing on the merits of the miner’s discrimination claim, the parties settled the case, with New Elk Mining agreeing to compensate him for an additional 10 months of pay.

In a separate case last January, the parties reached agreement that resolved a claim of discriminatory termination of a supervisor at the same mine. In that case, too, New Elk agreed to pay a civil penalty of $10,000 to MSHA, plus approximately $88,000 to the terminated employee, the agency said. Additionally, the company agreed to provide company-wide training regarding miners’ rights.

New Elk Coal parent works out new financing

The parent of New Elk Coal, Canada-listed Cline Mining (TSX: CMK), had to idle the New Elk mine last year in the face of soft markets for the mine’s metallurgical coal. It has also had some financial problems lately. But on April 26 the company said that it has entered into a definitive recapitalization agreement  with Marret Asset Management, as agent for the bondholders and standby purchasers party thereto.

Additionally, the company announced that the Toronto Stock Exchange has granted an extension postponing the date of the listing committee hearing to June 25 to consider whether the company continues to meet TSX listing requirements. The continued listing of the company on the TSX is a pre-condition to completion of the transactions contemplated by the recapitalization agreement and a related preliminary prospectus.

Said an April 15 Cline Mining financial report: “New Elk Coal continues to maintain its coal operations on a care and maintenance basis, with the ability to recommence production within thirty days of securing a long-term sales agreement and securing sufficient funding for start-up, in accordance with the operational reimplementation plan. Cline is discussing long-term sales agreements with interested parties, but at this time these discussions have yet to produce an executable agreement.”

The New Elk mine has coal resources of 618.9 million tons of National Instrument 43-101 compliant in-place metallurgical steel making and thermal grade coals. The New Elk assets include a coal preparation plant which was recently upgraded to a production capacity of 800 run of mine (ROM) tons per hour, product coal silos and rail load-out, buildings, railway right of way, surface real estate, mining equipment, conveyor systems, electrics, underground workings with mine portal access from the plant site, mine permit and coal waste dump.

There has been no change to the outputs of the technical mine planning review process for operations of the New Elk mine that was completed during September 2012, the financial report noted. The main focus of the review and subsequent mine plan was on the development of the Central Zone of the mining lease, which provides best utilization of the already present infrastructure coupled with the highest short-term production output possible; without sterilizing any of the existing resource. The Northern and Southern areas of the lease will be fully developed once the action plan for the Central Zone is complete and pending future production scheduling. These areas in supplement to the Central Zone facilitate the ability to perform low-capital brownfields expansion.

The company is initially working within the parameters of using existing equipment on site, which includes 10 continuous miners and 15 shuttle cars. Over time a high-output longwall system will be integrated into the operation.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.