Arch Coal approved to give up stake in Longview terminal project

A judge at the U.S. Bankruptcy Court for the Eastern District of Missouri on June 17 signed off on a May 26 request from Arch Coal for approval of a sale of the company’s stake in an unbuilt coal export terminal in the Pacific Northwest.

Arch Coal, which sought bankruptcy protection on Jan. 11, said this deal will relieve it of a financial burden.

The deal is among Arch Coal West LLC and LHR Infrastructure LLC and involves the sale and transfer of Arch Coal West’s 38% membership interest in Millennium Bulk Terminals-Longview LLC to LHR. Millennium is a joint venture created to develop, own, lease and operate a bulk cargo port and terminal facility in Longview, Washington, on the Columbia River. LHR currently owns the other 62% of the project.

Millennium is in the process of obtaining approvals for and constructing the terminal, which sits on land that is leased to Millennium by Northwest Alloys Inc. Construction and development of the terminal is a long-term and capital-intensive project, and Arch Coal West is subject to periodic capital calls. Given the anticipated frequency of Millennium capital calls, if Arch Coal West were to stop honoringthe capital calls, such dilution could eliminate Arch Coal West’s membership interests entirely within the span of eight weeks.

Arch Coal will enter into an agreement to receive an option to utilize up to 10% of the throughput capacity of the terminal for a period of ten years, with the option to extend such period for two additional five-year terms, at a cost no less favorable than any other customer of the terminal with a throughput contract with term business.

Lighthouse Resources Inc. on May 26 had announced its intent to secure 100% ownership of Millennium Bulk Terminals-Longview in Longview, Wash, by purchasing a stake in the project from Arch Coal.

“Lighthouse is pleased with the progress Millennium is making – both at the site and in the permitting process,” said Everett King, president and CEO of Lighthouse Resources, in the May 26 statement. “Millennium recently reached a major regulatory milestone with the release of its draft environmental impact study. This announcement underscores our strong ongoing commitment to the project and our growing confidence in Millennium’s future prospects. As we carry the project forward to completion, we are pleased to work with Arch in its new role as customer and strategic adviser.”

Lighthouse Resources said its project provides a trade route for U.S. coal from the Rocky Mountain region that is an important source of energy for Japan, Korea and Taiwan, key U.S. trading partners.

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.