Maple Carpenter Creek Plans Montana Coal Mine

Nick Shakesby, chief operating officer at US miner, Maple Carpenter Creek, said on Monday that a new mine could be up and running by 2014, at a site the company controls about 50 miles northeast of Billings, Montana.

Mr Shakesby said that the company was not interested in just sitting on the mine: "We're marketing it offshore — Asia and India." Maple Creek has a permit application pending before state regulators to dig a 300,000 ton test pit near Melstone. Public comments on the application are due by March 10. The company is also considering a second mine in the west of the state, at Snider Ranch

Maple Carpenter Creek controls 380 million tons of coal through leases on an estimated 30,000 acres with more leases to come.

Montana is known to have vast proven reserves of coal of around 120 billion tons – enough to last the USA over 100 years – yet coal production in the state is still quite low – around 39 million tons a year, or one-tenth of that produced in neighbouring Wyoming. One reason for this is the prevalence of surface coal mines in Wyoming, but as those mines become more expensive as the easier coal is mined, then places such as Montana become more attractive.

Last month the state’s land board was unable to lease the 572 million Otter Creek coal tracts near Ashland after potential suitors balked at the high up-front payment while in November, Arch Coal signed the lease on a 730-million ton tract in November.

Montana Lowers Bonus For Otter Creek Coal Tracts

The Montana Land Board voted 3-2 Tuesday to reduce the asking price for the 572 million ton Otter Creek coal tracts near Ashland after receiving no bids on an earlier offer.

The 25 cents a tone bonus set by the board in December has been reduced to 15 cents a ton, which will bring in $86 million in bonuses against the $143 million under the terms of the original plan. The bonus bid the right to develop the coal, pending environmental permits.

State Governor Brian Schweitzer supported the reduced price, arguing that Arch Coal is going to be mining in the area regardless of whether it gets the Montana coal leases. Arch Coal agreed to a 10 cent per ton bonus bid to be paid over five years to lease a 732 million tons tracts owned by Great Northern Properties of Houston, Texas.

"If this board votes not to lease coal at any price, there will still be development at Otter Creek," Schweitzer said. "I'm a realist and I understand that we have a fiduciary responsibility to strike a price that is as good as we can get and get the development to go forward."

Governor Schweitzer said that the 15 cent bonus is still almost triple that suggested by an appraiser hired by the stat and that the greatest profits would come if the state-owned coal was mined. A 12.5 percent royalty payment would generate about $1 billion, as would the 15 percent coal severance tax.

Arch Coal was the only company to respond to the original offer, but their written response stated only that the bonus payment the state was asking for was too high.

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Montana Considers Options For Otter Creek Coal Tract

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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No Bids For Montana Coal Tract

Montana’s Land Board will have to reconsider its price for developing the half-billion ton Otter Creek tracts after receiving no offers during a lease sale that ended on Monday.

The state had asked for an up front “bonus” bid of at least $143 million plus annual royalty payments that could approach $1 billion over the coming decades.

The only respondent was Arch Coal who sent a letter saying that the state’s price was too high. The “bonus” bid was double what Arch Coal had paid for a nearby tract only a few months ago.

The Land Board will meet on 16 February to review the situation.

Montana Awaits Bids For Otter Creek Coal Tracts

The Montana Land Board will discover on Monday whether or not their decision to put a high bonus bid on the Otter Creek coal tracts has discouraged any potential developers.

In December the state put a $143 million up-front price tag on the Otter Creek tracts - which are estimated to hold 572 million tonnes of coal - in order to ensure that the state got the best price for the coal, double what Arch Coal paid for nearby tracts only three month ago.

Bids lodged with the Land Board by Monday will be considered at the board's Feb. 16 meeting.

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