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MT Land Board will sign long-term coal deal with Signal Peak

Posted: Sep 17, 2012 11:21 PM by Melissa Anderson - MTN News

HELENA- 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, but opponents of the plan brought up problems like environmental damage and Signal Peak's record with worker safety.

Signal Peak Energy has signed a deal with the state to extract 12 million tons of coal from the Bull Mountain Mine, with the agreement allowing Signal Peak to mine up to 640 acres in Musselshell County, just south of Roundup, until 2023.

"The estimated revenue to the school trust over the life of the lease would be $15.3 million," Montana Department of Natural Resources and Conservation Director Mary Sexton said.

Musselshell County Commissioner Sue Olson said the company pays about $2 in taxes for every ton of coal produced.

But the plans opponents brought up concerns. Ann Hedges of the Montana Environmental Information Center said while the bid estimates Signal Peak will earn $12 per ton of coal, the current market price is less than $10.

"This coal is going for between $8.50 and $9.40. You are not going to get as much money as intended," she said.

Signal Peak CEO John DiMichiei responded by saying he believes their coal will bring higher prices. 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.

"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," he noted.

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

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

"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," Nick Inglefreed of the Blue Sheep Campaign said.

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.

"Six-hundred-fifty-two 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,"UMWA representative Bob Gilfoil said.

Montana State Insurance Commissioner Monica Lindeen said she was "very disturbed" by some things she's heard, "and by some of the information that we've been getting about the safety of workers at this company."

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

Despite concerns, the State Land Board gave its final approval.