Utah miner loses supply lawsuit appeal

A LEGAL tangle over coal supply between Utah producer CW Mining and Missouri utility Aquila has found an end – and not in the operator’s favour – after the initial $US24 million judgement was upheld this week in an appeals court.
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Donna Schmidt

According to the Salt Lake Tribune, the 10th Circuit Court of Appeals rejected CW Mining’s appeal and sided with US District Judge Tena Campbell, who ordered in 2007 that the Utah mining company pay for failing to supply coal and thereby breaching the contract between the two companies. Campbell’s decision last October led CW to file for involuntary bankruptcy.

The producer and Aquila inked a deal in 2003 for the supply of 1.5 million tons of coal over five years. CW Mining did not dispute that the contract was not fulfilled, but argued a labour dispute qualified as a force majeure.

Campbell and the appeals court sided with Aquila, however, noting the shortfalls were caused primarily by geological issues that were controllable, including roof falls, an underground fire and mud, and argued that CW never notified the power producer of the conditions causing force majeure status.

“To the contrary, it downplayed its geological problems and represented that they would be overcome shortly," the judges said.

The group also reprimanded the operator for not documenting accusations that Aquila could have obtained better coal prices for its replacement product.

“CW Mining provides no citation in the voluminous record … to support its claim about the price of coal," the judges noted.

Neither CW nor Aquila have released public comment on the situation, and a request for comment from the producer was not returned.

Aquila was sold in July to Great Plains Energy and Black Hills Corporation for $2.6 billion.

CW operates several mines near Huntington, south of Salt Lake, including the Bear Canyon complex.

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