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Navajo company seeks to buy Peabody's Kayenta mine to support Ariz. power plant

A coal producer owned by the Navajo Nation is negotiating to purchase the Navajo Generating Station in Arizona along with a coal mine operated by Peabody Energy Corp. that supplies the power plant.

Arizona utilities told regulators in April 2017 that closing the plant and replacing it with gas-fired capacity would be cheaper than continuing to operate it. The leaders of the Navajo Nation asked the tribe's Navajo Transitional Energy Co., or NTEC, to evaluate options that would keep the power plant and the Kayenta mine open.

Both operations were originally slated to continue operating until 2044 but now are proposed to close in December 2019, which would mean the loss of 700 jobs and $40 million in annual revenue for the Navajo Nation alone, NTEC CEO Clark Moseley told S&P Global Market Intelligence.

"In a region where unemployment hovers near 50 percent, jobs help keep food on the tables and the annual revenue is a significant component of the Nation's budget and supports the health and welfare of the Navajo people," he said in an email. "Navajo ownership of Navajo resources is paramount to Navajo self-determination and sovereignty. Being able to 100 percent own and control our natural resources is the essence of self-determination."

NTEC intends to purchase both facilities and create a vertically integrated energy company that could operate through 2029, according to a Jan. 4 company release.

Moseley said in the release that NTEC, which is a partial owner of the Four Corners power plant, has "expertise in coal mining, and a prudent track record of managing a contract miner."

A Peabody spokesperson said in a statement that the coal producer "continues to support steps to ensure ongoing operation of the Navajo Generating Station and Kayenta mine beyond 2019." The companies are under a nondisclosure agreement, so NTEC declined to comment on the negotiations.

The Kayenta mine produced 6.2 million tons of coal in 2017 and 4.9 million in the first three quarters of 2018, according to the U.S. Mine Safety and Health Administration.