Westmoreland adds to coal reserves at Rosebud mine in Montana

Westmoreland Coal (NasdaqGM: WLB) said July 3 that it has leased 2,557.4 acres of private coal, representing an estimated 56.4 million tons of coal resources, adjacent to its Rosebud strip mine at Colstrip, Mont.

Westmoreland didn’t identify the party it leased the coal from. It said in the brief statement that it now controls an estimated 486 million tons of proven and probable coal reserves across all of its operations as of June 30, 2012.

“The Rosebud Mine has two contracts with the adjacent Colstrip Station power generating facility,” said Westmoreland’s March 13 annual Form 10-K report. “Effective January 1, 2010, a new cost-plus agreement commenced with Colstrip Units 1&2 with a projected term through at least 2019 and expected tons of 3.0 million per year. A second agreement at Units 3&4 covers approximately 7.0 million tons per year and is set to expire at the end of 2019. This contract is also cost-plus, but has provisions for specific returns on capital investment.”

The Colstrip power plant has several co-owners, including PPL Corp. (NYSE: PPL).

The Form 10-K said that Rosebud, which produced 8.8 million tons in 2011, had 199.9 million tons of proven reserves left as of the end of 2011, with 123.9 million tons of that within the currently permitted mine area. Those coal reserves are leased from the federal and state governments, and private landholder Great Northern Properties, the Form 10-K said. The mine has a production capacity of 13.3 million tons per year.

Westmoreland Coal’s operations include coal mining in the Powder River Basin in Montana, sub-bituminous coal mining in Wyoming at the recently-acquired Kemmerer strip mine, and lignite mining operations in Montana, North Dakota and Texas. Its power operations include ownership of the two-unit ROVA coal-fired power plant in North Carolina. 

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.