Coal mine deal aims to boost exports to Asia
BILLINGS – Coal companies announced an agreement Thursday to consolidate ownership of a Montana mine in a deal aimed at boosting exports of the fuel to Asia through ports on the West Coast.
Under terms of the deal, Wyoming-based Cloud Peak Energy would give up its 50 percent stake in the Decker Mine to co-owner Ambre Energy of Australia.
Ambre would take over liability for $67 million in reclamation and lease bonds for the mine. Cloud Peak would gain the option to move almost 8 million tons of coal annually through a port proposed by Ambre in Longview, Washington.
Ambre, Cloud Peak and other companies want to increase coal shipments from the Mountain West to Asia as domestic demand falters. But that goal has so far eluded the industry, as proposals for new export terminals in Washington and Oregon run into strong resistance from regulators and environmentalists, prompting some projects to be dropped.
An early version of the Decker mine deal had Ambre also paying Cloud Peak $64 million in cash. The payment was not included in the final agreement.
That suggests privately-held Ambre was able to negotiate a significant discount for a mine with production costs up to five times greater than those of some competing mines, according to court documents filed by Cloud Peak in a 2012 dispute with Ambre over how the mine was being run.
Ambre spokeswoman Liz Fuller declined to explain the change in terms.
By selling Decker, Cloud Peak would avoid losses of $3 million to $5 million annually, according to a Thursday company disclosure to the U.S. Securities and Exchange Commission.
Cloud Peak shares on the New York Stock Exchange rose briefly on Thursday’s announcement but finished the day unchanged at $14.23.
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