Some of you may have caught a strange piece of news over the Thanksgiving weekend about Level 3 selling a coal mine business. Why on earth did a high-tech company like Level 3 own a very “old tech” business like coal? Well, it kind of goes back a ways…
Our ownership in coal properties can be traced all the way back to 1943 as coal mining was part of the historical Peter Kiewit Sons’ business. As part of the series of transactions that created the Level 3 Communications business in late 1997, we maintained the ownership of our coal mines in Wyoming and Montana.
And finally last week, we completed an agreement to sell our coal mine business to Ambre Energy, a coal mining and export company with operations in the United States and Australia. We are pleased to exit this piece of our non-core business, as we have been interested in selling it for some time. [Side note: some folks on the Internet thought we were trying to “bury the news” by announcing right before the Thanksgiving holiday, but really it was just the timing of the deal, and apparently they don’t celebrate Turkey Day in Australia!]
For those mining buffs out there, here’s some more info for you. Our coal properties were comprised of four mines – three located in Wyoming and one in Montana. Two of the Wyoming mines, Rosebud Coal and Big Horn Coal, are inactive and are in the final stages of reclamation, the process of restoring the landscape as close as possible to its original state prior to mining activities. The other two mines, Black Butte Coal in Wyoming and Decker Coal in Montana, are actively producing coal and are joint ventures with two outside parties, each owning 50 percent in the respective mines. The Level 3 subsidiary that held the joint venture interests was the managing member of the joint venture. To fulfill its management responsibilities, we had contracted with the Kiewit organization to manage these mines on our behalf.
While as a result of the transaction we will not have the revenue generated by the coal mines going forward, the liabilities associated with the coal mining business will be removed from Level 3′s balance sheet as of the closing. The coal is sold primarily to electric utility companies, which use the coal to produce steam to generate electricity. Level 3’s share of the production of the active mines has been in the three million to five million ton per year range for the past few years.
Both the Black Butte and Decker mines have outstanding safety records. Big Horn Coal recently won both the Wyoming Mining Association reclamation award and the National Mining Association reclamation award for 2011. We are proud of the safety records of our mines as well as our attention to addressing our commitments to reclamation following production.
It’s important in the success of any company to focus on what it does really well; selling this non-core business is another step in that direction. Now, back to bandwidth!