Arch Coal suspends effort to permit mine in Montana

Arch Coal has announced that it is suspending efforts to secure a mining permit for the Otter Creek coal reserves near Ashland in southeastern Montana, citing capital constraints, near-term weakness in coal markets and an extended and uncertain permitting outlook.

Arch Coal, filed for Chapter 11 protection on Jan. 11 in the U. S. Bankruptcy Court for the Eastern District of Missouri.

Arch had secured lease rights to approximately 8,300 acres of state-owned minerals in the Otter Creek area in 2010. Since that time, Arch has engaged state regulators through the permitting process in order to obtain the approval to mine.

That process has taken longer than anticipated and further deterioration in coal markets has led to the decision to suspend the permitting effort.

The Powder River Basin remains an important coal supply region for domestic and international power generators, Arch said.

“However, given current conditions, Arch can no longer devote the time, capital and resources required to develop a coal mine on the Otter Creek reserve block,” Arch said in a March 10 statement.

“Arch remains committed to navigating a challenging market environment, executing upon its prudent capital allocation strategy and preserving liquidity. This step will allow Arch to further intensify its focus on operating safe, responsible and low-cost mines,” Arch said.

The Arch Coal subsidiaries filing under Chapter 11 include Otter Creek Coal LLC, the applicant before the Montana Department of Environmental Quality (MDEQ) for a coal mining permit for the Otter Creek surface mine in Montana, which would be served by the planned Tongue River rail line.

U.S.-based Arch Coal, Inc. is one of the world’s top coal producers for the global steel and power generation industries, serving customers worldwide.

On Jan. 11, the New York Stock Exchange (NYSE) suspended Arch’s common stock from trading and initiated proceedings to delist the stock.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.