WASHINGTON (Reuters) - The leader the Navajo Nation said it would offer no financial backing for a deal under which a tribal energy company recently bought three coal mines, citing the tenuous future of coal and the tribe’s desire to expand its use of renewable energy.

The Navajo Transitional Energy Company (NTEC), wholly owned by the Navajo Nation, purchased coal mines in Wyoming and Montana from Cloud Peak Energy more than a month ago after Cloud Peak declared bankruptcy earlier this year.

The purchases made NTEC the third largest coal producer in the United States but also took tribal and western state leaders by surprise, raising concerns about potential financial risks for the Navajo tribe amid the coal industry’s rapid decline.

That is especially true as the tribal government pursues policies to move the Navajo Nation away from fossil fuels.

“Many experts question the viability of expanding our interests in a coal market that appears to be dwindling. We will not support initiatives that attempt to circumvent or undermine the laws and policies of our Nation,” Navajo Nation President Jonathan Nez said in a statement.

He said the government would reject NTEC’s use of tribal-backed indemnity agreements for bonds to secure the purchase of the Cloud Peak mines, which lie outside of the Navajo reservation.

The original agreements had enabled NTEC in 2013 to purchase the Navajo Mine, the chief supplier of coal to the Four Corners Power Plant in Arizona, both of which lie within Navajo territory.

NTEC, though owned by the tribe, is run by its own board of directors consisting of non-Navajo members. It did not respond to requests for comment.

The statement by Nez late on Tuesday came as the Navajo Nation is bracing for the closure later this month of the Navajo Generating Station, a massive coal-fired power plant near the Arizona-Utah border that employed thousands of Navajo miners and brought in revenue for education and infrastructure.

Earlier this year, the tribal council voted down legislation that attempted to acquire the plant and adjacent coal mine from Peabody Energy and keep them running. In April, the council voted to prioritize the development of renewable energy, marking what environmental advocates have called this a pivotal moment for the tribe.

“Our nation faces a defining moment, after decades of relying on a coal industry that devastated our natural resources,” said Percy Deal, who lives south of the Peabody coal mine. “We must now come together to heal our families and our land and work toward a just transition.”