Coal deal stalls as companies renegotiate

May 9, 2013

An agreement that would have Australia-based Ambre Engery pay $57 million to Cloud Peak Energy for full control of the Decker Mine in Montana stalled because of a renegotiation.

Supporters say the deal would boost Asian exports of the fuel via the West Coast.

Representatives of the two companies involved said that a deal for the mine near the Wyoming border still was expected, but did not immediately address what prompted the renegotiation or what the new terms might be.

Ambre has been seeking to ramp up production from the once-bustling mine, and ship coal to growing Asian markets through a pair of proposed ports along the Columbia River, the Associated Press reported.

Opposition has been stiff from Oregon and Washington state, and critics have questioned whether Ambre has the financial wherewithal to see its ambitious plans to fruition.

Cloud Peak is seeking land and rail easements for a new Wyoming mine in the deal with Ambre.

The Wyoming-based company also would gain the option to move 4.5 Mt/a (5 million stpy) of coal annually through Ambre’s Millennium port in Longview, WA — part of an industry-wide strategy to increase exports as domestic coal sales have faltered.

It was not clear what prompted the companies to seek an extension of a May 10 deadline they faced to settle a dispute over the Decker Mine. The mine is co-owned by Cloud Peak and Ambre and has been the subject of a management quarrel that led to a lawsuit in U.S. District Court.
Court filings requesting until July 12 to finalize the deal cited “unforeseen complications with the original sale.”

The sale originally was slated to close April 1 and the deadline already had been extended once.

Ambre spokeswoman Liz Fuller said the company was continuing to work to complete the mine acquisition and that a deal could be finalized in the next few months.

Decker was once among the largest coal strip mines in the U.S., and produced more than 9.1 Mt/a (10 million stpy) as recently as 2002.

But domestic demand for coal has been on the decline due to competition from cheap natural gas and the costs of making older power plants compliant with environmental regulations.

In December, Decker laid off 59 employees — more than one-third of its workforce. The mine is on track to extract only 1.5 million tons of coal this year, based on first quarter production figures reported to the U.S. Department of Labor.

Australian media last year reported that Ambre was at risk of financial collapse after a proposed coal mine and coal-to-liquid fuels plant it was pursuing in the country was rejected by government officials.

The Sightline Institute, a Seattle-based environmental think tank, in February released a report that revealed Ambre racked up losses of more than $124 million from 2005 through 2012. The company responded at the time that early losses are not uncommon for companies developing new projects.

 

 

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