The bankruptcy in the US of Alpha Natural Resource has called into question the way miners have been able to use controversial state self-bonding programmes for coal mine reclamation.

Miners may be required to post letters of credit (L/Cs) or some other surety if opponents of the self-bonding programmes have their way.

No insurance

Self-bonding programmes allow coal producers not to insure a portion of their reclamation obligations if they meet certain financial criteria.

But Alpha Resource's bankruptcy has underlined criticism of the programmes from regulators, lawmakers, and especially environmental groups.

They argue that struggling producers will not be able to pay for cleanup and that taxpayers will be stuck with the bill.

Court approval

A federal bankruptcy court earlier this month approved Alpha's plan under Chapter 11 bankruptcy proceedings, but only after the coal producer struck deals with state and federal regulators to resolve its mine cleanup responsibilities.

These settlements included the provision that Contura Energy - the group of first-tier lenders that will purchase the majority of Alpha's assets - replaces self-bonds for its West Virginia and Wyoming mines with third party assurances such as L/Cs or commercial surety bonds.

Several reports suggest that the self-bonding programmes will be wound down and that other coal miners will be required to provide such third party assurances.

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