By Dillon Tabish, 11-17-11
BILLINGS — Federal officials on Thursday rejected a $5.3 million offer from a company seeking a lease to mine 35.5 million tons of coal that is in the path of a major underground mine in Montana.
The Bureau of Land Management said the coal is worth more than the 15 cents per ton that Signal Peak Energy offered. The federal coal leases are in the path of the company's 300-employee Bull Mountain mine. No other bids were submitted during a public auction of the leases that ended Wednesday.
Signal Peak had anticipated mining the coal as early as 2013, but it was uncertain how that date could be affected by Thursday's action. The mine's owners have plans to increase production in coming years and ship large volumes of coal to Asian and South American markets.
The mine's production in recent months translates into about 12 million tons annually.
The state of Montana had stood to receive about half of the initial bid on the lease and a share in future royalties.
Gov. Brian Schweitzer said he was concerned Thursday's rejection could have a "chilling effect" on Signal Peak's willingness to invest more money in the mine.
"What is the price, BLM? Can you tell us? It makes it tough to bid when there's no competitive bid and the people that sell it won't tell you how much they want," he said.
The BLM does not disclose what it considers fair market value for the coal it leases.
Agency spokeswoman Mary Apple said Signal Peak can ask again for the coal to be put up for lease. But a sale would not be immediate because of the need for public comment.
"It would be three or four months. That would be the minimum," Apple said.
The prior lease sale had been challenged by environmental and conservation groups and some landowners near the mine.
One concern raised was whether Signal Peak was in effect purchasing multiple coal seams for the price of one. The company has tentative plans to mine coal from other seams within the federal lease. BLM officials said rights to that coal were covered by the company's bid but not factored into the agency's 35.5 million ton estimate of what could be mined.
Opponents of the project also had requested more studies of the potential for land subsidence and damage to water quality from mining.
Signal Peak is jointly owned by Boich Co. and FirstEnergy of Ohio and the Gunvor Group, an international commodities broker. Gunvor paid $260 million for a one-third stake in the mine last month.
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