Officials at Montana’s Land Board are considering whether to lower the minimum bid for the 570 million ton Otter Creek coal tract near Ashland, Montana. The Board received no bids for the southeastern Montana tract by Monday’s deadline and received notification from Arch Coal that the $143 million upfront price was too high.
In a memo prepared for the Land Board’s meeting next Tuesday, the officials at the state’s Department of Natural Resources and Conservation outlined the value of several lower-priced bids. Bid options would reduce the present-value price of the coal from $30 million to $170 million. It said the present value of the original bid price is about $1 billion. The Board – a political grouping consisting of five representatives from the state’s Democratic Party – set an upfront bonus of 25 cents a ton along with a 12.5 per cent royalty. It is this upfront bonus that has caused bidders to balk at making a bid, especially as a nearby tract of coal was sold just three months earlier with a bonus of just 10 cents a ton.
Earlier this week State Governor Brian Schweitzer indicated that he thought the state should negotiate with Arch Coal, however that received short shrift from environmental groups who are opposed to the tract being developed at all.
Anne Hedges, program director for the Montana Environmental Information Center accused the state of behaving like a Third World country with regards to its dealing with Arch Coal: “For the price of a postage stamp used to send a letter to say the price is too high, they get, at worst, a $28 million price cut.”
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