Yet Another Delay for the Largest Proposed Coal Mine in the Country
Arch Coal can’t catch a break.
Yesterday the Billings Gazette reported that Arch Coal had to write off a $57.7 million loss on their DKRW Advanced Fuels’ coal gasification project in Medicine Bow, Wyoming.
The project was a speculative venture that would have bilked taxpayers out of billions of dollars in public loan guarantees. Taxpayers for Common Sense (TCS) found that there was no real high point for the project backers. DKRW started losing money the same year that Arch Coal began investing in the project. TCS found they lost $400,000 in 2006, $6.7 million in 2007 and $17.5 million in 2012. Arch Coal loaned DKRW a total of $44 million between 2006 and 2013, none of which has been recovered.
Then, they reported a larger then expected loss for their first quarter earnings. Arch Coal lost $124 million (59 cents per share) in the first quarter of 2014. That’s up from a loss of $70.5 million, or 33 cents per share, during last year’s January-through-March period.
To top off their bad month, there is yet another delay on the proposed Otter Creek coal mine in southeastern Montana.
More delays and they still do not have a permit
Just a couple days ago, Mike Rowlands, Arch Coal’s only employee in Montana, signed a new agreement with Montana Department of Environmental Quality (DEQ) extending, yet again, the timeline for the Draft Environmental Impact Statement (DEIS). To see the Montana DEQ Otter Creek timeline just click on the link.
The new release date for the DEIS has been pushed back to January 2015 instead of September of 2014. The new Record of Decision and Final Environmental Impact Statement is now not expected until September of 2015.
Unfortunately, the new expected dates for public hearings are in February of 2015 which, as you can guess, is not the easiest time to be traveling in southeastern Montana.
A company in dire straits
If you are under the impression that this is a company capable of opening a new greenfield mine and building a new 43-mile rail line to haul their coal, you’re wrong. If you think that this is a company who has the resources to successfully reclaim the Otter Creek valley back to anything even close to the original condition, you’re wrong.
So the real question we should be asking is what is Arch Coal’s plan for the Otter Creek and Tongue River Valleys?
Many of us believe that Arch Coal is trying to secure the necessary permits from the state of Montana in order to sell the permitted but unbuilt mine to another company. Coal tracts with a permit are a lot more valuable than coal tracts without a permit.
They spent a combined $159 million dollars to lease the coal tracts in the Otter Creek valley from the state of Montana and Great Northern Properties. $159 million is a bit harder to walk away from than $57 million.
So, not only does Arch Coal not have enough money to open a new mine, they are also faced with the stipulations of the lease which gives them a 10-year window to develop the mine. It has been almost exactly four years since they leased the coal from the state of Montana.
Stay tuned though. I’m pretty sure by fall or winter of 2014, I’ll be writing another piece about yet another change in the Otter Creek timeline.
The hole Arch Coal isn’t digging just keeps getting bigger and bigger.