Montana coal leases to be offered by end of year

Montana coal leases to be offered by end of year

Leases on vast state-owned coal tracts in southeastern Montana will be offered for bid by the end of the year, but possibly not in time to fulfill an investment bank’s request for an expedited timeline, state officials said.

A London-based bank, Rothschild, had requested the state put the Otter Creek coal tracts near Ashland up for lease within the next few months, according to state officials.

However, Gov. Brian Schweitzer said Friday that moving quickly on a lease sale was not as important as making the most lucrative deal possible with a developer. The tracts contain an estimated 550 million tons of coal.

“It’s not a missed opportunity,” Schweitzer said. “Every day it will be worth more.”

If Otter Creek were developed, it would become Montana’s first new mine in three decades. The state-owned tracts are intertwined with others owned by a private company — Houston-based Great Northern Properties.

State officials also have been under pressure to sell leases by a company that wants to build a railroad into the area and from school officials who want the additional state revenues a sale would entail.

The state and Great Northern have a joint development agreement.

Schweitzer’s chief economic development aide, Evan Barrett, said an appraisal of the coal will be completed by September or October. He said a potential development deal with Rothschild had not yet advanced enough to warrant speeding up that process.

A representative of Rothschild did not immediately return a call seeking comment Friday.

Montana has some of the largest coal fields in the world, accounting for more than a quarter of the United State’s total reserves. However, its five active mines produce only about 40 million tons of coal annually — less than 4 percent of the nation’s 1.1 billion tons.

“The central question for Montana is are we even going to be in the game,” said Mike Gustafson, a Billings businessman who has proposed a $341 million rail line into the Otter Creek area. “I would have thought our state government would be more active on this thing.”

Schweitzer said he was “more than happy” to put the coal tracts up for bid, but had a responsibility to maximize their value.


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