A Vulture Firm Picks at Appalachia’s Bones
As the future of the U.S. coal mining industry darkens, one upstart vulture firm has snapped up several mines from distressed coal giants. Founded in 2010, Blackhawk Mining has rapidly built a portfolio of surface and underground mines in Central Appalachia. Notably, in 2014, the company bought three mine complexes from then-bankrupt James River Coal and another four from Arch Coal. In 2015, Blackhawk bought six mines from Patriot Coal as part of Patriot’s bankruptcy settlement. As a result of these acquisitions, in 2015, privately held Blackhawk was the largest producer of coal from mountaintop removal (MTR) surface mines in Appalachia. Blackhawk produced 5.45 million tons of MTR coal in 2015, more than 2014’s top producer, the now-bankrupt Alpha Natural Resources.
Blackhawk went on its MTR mine acquisition spree even as the vast majority of North American and European investment banks were moving away from financing the devastating mining practice in 2014 and 2015. Mountaintop removal has already destroyed 500 mountains in Appalachia and has been linked to health impacts such as cancer, cardiovascular disease, and birth defects. In the face of this evidence, Deutsche Bank led all eight of Blackhawk’s loan transactions between 2012 and 2015, helping to raise $1.3 billion for the company.
Blackhawk has not been immune to the coal market downturn either, issuing layoff notices to mine workers at five of its mining complexes earlier in 2016, even as the company maintained that it planned to dramatically increase production at its mines in 2016 by over 50% year-over-year. In March 2016,Deutsche adopted a tepid commitment to reduce financing for MTR coal — but the damage caused by the bank’s past financing had already been done.