Montana News

Sep 17, 2012 6:01 PM by Melissa Anderson (melissa@kxlh.com)

State Land Board will sign long-term coal lease with Signal Peak

The Montana State Land Board has agreed to sign a long-term coal lease to Signal Peak Energy in Musselshell County.

The agreement is expected to bring in millions of dollars for the state of Montana schools in the future.

But the passage of the lease doesn't come without controversy and uncertainty.

The agreement will allow Signal Peak to extract 12 million tons of coal from the Bull Mountain Mine.

The lease agreement allows the mine up to 640 acres in Musselshell County just south of Roundup.

As the only bidder in the process, Signal Peak will be allowed to mine underground coal until the year 2023.

Mary Sexton, director of the MT Department of Natural Resources & Conservation, said, "The estimated revenue to the school trust over the life of the lease would be $15.3 million dollars."

Musselshell County Commissioner Sue Olson said, "They pay about $2.00 in tax per every ton of coal they produce."

Ann Hedges of the Montana Environmental Information Center said, "The bid says that you are going to get about $12 per ton right now. This coal is going for between $8.50 and $9.40. You are not going to get as much money as intended."

Signal Peak CEO John DiMichiei noted, " We are blessed with one thing. The quality of Signal Peak does cause it to be higher valued."

DiMichiei says the price now is at $22 per ton, but he agrees that the prices are reflected by supply and demand in the industry, noting, "I think it's a very dynamic thing. It's very volatile. If I probably had the answer to that I'd be in much better position to answer."

Sexton said, What we get for the coal cannot be less than the fair market value of the coal at the mine prepared for shipment."

But others say despite the economic factors, there are environmental issues to consider.

Nick Inglefreed of the Blue Sheep Campaign said, "Governor Schweitzer, I'd love to leave this with you. I know you are a big fan of coal. I'd be careful with it though, it's got lots of poisonous mercury, arsenic and uranium, that kind of thing."

Although they support the extraction of coal in Montana, the United Mine Workers of America wanted provisions to be included in the lease language to ensure that mine workers are being treated fairly and safely.

UMWA representative Bob Gilfoil said, "652 safety violations and I just want to say that of those 652 violations, 12 were warranted failure violations where the employer willfully violated the standards of its miners."

Monica Lindeen, the MT State Insurance Commissioner, said, "Very disturbed by some of the things that I've heard and by some of the information that we've been getting about the safety of workers at this company."

DiMichiei said, "I think that we have effectively dealt with those challenges whether it be safety, health, and or the environment."

Despite concerns, the land board gave its final approval.

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