Walter Energy, Inc. has proposed an agreement with the Alabama State Port Authority to sell the Blue Creek Coal Terminal located in the Port of Mobile.
The ASPA has agreed to pay $25,000,000 for the purchase, which will include an additional parcel of more than 60 acres located less than a mile from the facility on Baker Street.
The purchase is still pending, but it is anticipated that the transactions will be consummated upon the satisfaction of usual and customary closing conditions.
According to the ASPA, that process could take around 90 days.
Since purchasing the property for an undisclosed amount in 2010, Walter Energy has spent approximately $6 million installing new sheet walls to prevent erosion into the Mobile River.
The Birmingham-based company has also removed the old equipment left over from the Mobile River Terminal, which occupied the property previously.
Walter Energy already exports its current coal through ASPA’s McDuffie Coal Terminal.
The company and the ASPA have agreed to amend the terms of a coal handling agreement, which would include a long-term extension and make certain improvements at the McDuffie terminal.
If approved, the new agreement would ensure Walter Energy has the capability to export coal produced when the company’s Blue Creek Mine in Tuscaloosa County is completed.
“All of our coal currently mined in Alabama goes through McDuffie,” Tom Hoffman, vice president of communications for Walter Energy, said. “If the transaction goes through as planned, there would be additional capacity dedicated to us. That would allow us, at the right point in time, to expand our mining production in Central Alabama.”
Hoffman said Walter Energy wouldn’t be shipping out of anywhere else, calling Mobile “the perfect port.”
“We’re a mining company. Our principal interest is in making sure we have adequate throughput,” Hoffman said. “If we get that by having McDuffie take over and expand their production that’s fine. What we’re motived by is making sure, one way another, we have adequate capacity in the future.”
Hoffman said work on Tuscaloosa County mine has slowed because of the current market for coal, but over the next decade, it would be the next place Walter Energy would add coal-mining capacity.
James K. Lyons, director and chief executive officer of ASPA, praised the deal as key to the authority’s growth in the areas of its container and intermodal operations.
“Strategically, these acquisitions will help us expand our container business,” Lyons said. “One of our biggest problem at port authority is the lack of land for our container terminal.”
The 35-plus acre area on the MRT tract and the 63-plus acre on the Baker Street property are both located adjacent to the authority’s Choctaw Point Complex, which will also give ASPA space to expand its warehousing, distribution and light manufacturing applications.
Lyons said the purchased property wouldn’t be used for coal processing or storage.
“Walter Energy’s concern was the development of the (Blue Creek) mine, which will require additional tonnage above what they already ship,” he said. “They wanted to be sure they had an outlet. We made the case to them we can do an enhancement to the additional volume they will handle.”
According to Lyons, the new coal-handling agreement wouldn’t increase the amount of coal stored on McDuffie Island, but could increase the amount of coal moved through the facility by 3-4 million tons.
Mobile City Councilman Levon Manzie said the pending transaction would likely cause the council to further delay its decision on appeals filed against the facility’s approval to operate, which was planned for the May 6 council meeting.
“If they’re serious about this transaction, it would nullify us having to move forward with a vote on Tuesday,” Manzie said. “All of this is very preliminary. We could need to allow more time for them to consummate that sale.”
Because the ASPA isn’t planning to use the “Blue Creek” property for coal storage, it wouldn’t need approval from the city to move forward with the amended coal-handling agreement.
Attorney Greg Vaughn, who has represented the Church Street East neighborhood during the appeal process, called the announcement of the sale a “small victory.”
“Assuming that they’re not going to use the Virginia Street or Baker Street locations for coal storage or handling, it’s a step in the right direction,” Vaughn said. “We don’t want to have to deal with a coal facility at the foot of Council Elementary School.”
Updated at 4:40 p.m., May 2, to include a quote from Attorney Greg Vaughn.