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The Chippewa County government says potential bankruptcy doesn’t change reclamation requirements or plans for frac sand mines.

Emerge Energy Services LP, which owns Superior Silica Sands, entered into a debt restructuring agreement with its lenders in April.

Their new deal would remove Emerge Energy’s debt and make their lenders the majority shareholders of the company, according to paperwork filed with the federal Securities and Exchange Commission.

Superior Silica Sands has mines in Chippewa and Barron counties, and if the current deal doesn’t work, Emerge Energy would file for Chapter 11 bankruptcy.

The industrial sand mining industry in the Midwest is currently in a slump following a boom from around 2010 to 2015.

Following a drop in oil prices, companies cut shipping costs by using lower quality sand from areas like Texas rather than pay for transport from Wisconsin, even for the once-prized “northern white” sand.

However, debt, bankruptcy or going out of business doesn’t get companies out of the ongoing process of reclaiming mines and returning them to other uses, according to Dan Masterpole, deputy director of Chippewa County’s Land Conservation and Forest Management Department.

Masterpole said that state regulation plans for the reclamation by requiring companies to have money for returning the sites to non-mining uses up front.

“In essence ... it’s a requirement of the permit that there is a reclamation plan in place and financial assurance in place,” Masterpole said.

He also noted that it is common practice for companies to implement the reclamation plans as they mine, to reduce their own liability.

The companies are bonded through a third party, who would need to give the county 90 days notice if the bonds were being canceled due to lack of payment or other issues.

The mining industry has been noting the slow down for months.

In Emerge Energy’s third quarter earnings report released in November, 2018, the company said reported a net loss of $3.9 million for the three months ended September 30, 2018, compared to net income of $5.0 million for the same time period in 2017.

It also reported that their total volumes sold decreased 32% in the third quarter.

In a statement on the earnings last year, Ted Beneski, chairman of the board of directors of the general partner of Emerge Energy, said that their market quickly changed from short supply in the first half of the year to oversupply in the last two months, plus there had been a drop in demand as they increased production in sand mining in areas like Texas.

“Consequently, the entire industry has experienced pricing pressure, primarily on northern white product,” Beneski said in the statement. “We are responding to these market conditions by reducing costs and idling over 50% of our northern white capacity.”

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