Ohio firms buy Montana mine

By Matthew Brown
Wire Service Correspondent

BILLINGS, Mont. (AP) - A pair of Ohio companies plans to sink $450 million into a central Montana coal project to dramatically increase production from an underground mine that has struggled for years.
In a deal announced last Thursday, Boich Companies, a Columbus, Ohio, coal firm, and FirstEnergy Corp., an Akron utility, jointly acquired 80 percent of the Bull Mountain mine and 100 percent of rights of way for a planned railroad.
The companies plan a more than 50-fold increase in coal production, to at least 13 million tons a year within the next several years. That would give a significant boost to the state's coal industry, which sits atop the largest reserves in the nation but has long lagged behind Wyoming in terms of production.
The companies also would build a new 35-mile rail spur to move the coal to eastern markets where FirstEnergy operates a dozen coal-fueled power plants.
A coal preparation plant will be built at the mine site, and the operation will also get a new name - Signal Peak Energy.
"The market for coal is there. This is the right time to be in the business," Boich spokesman Mike Dawson said.
Bull Mountain, largely idle since last year, is Montana's only underground coal mine. It has gone through numerous ownership changes and struggled with financial difficulties for several years.
Bull Mountain Coal Mining Inc. retains a 20 percent stake under the deal announced last Thursday. The company is controlled by the Airlie Group, a Greenwich, Conn., investment fund.
Bull Mountain Coal controller Darrell Roland said the mine's historical peak production was only about 250,000 tons, in 2006. "It's never produced a lot," Roland said. He referred other questions to the other companies involved in Thursday's announcement.
Boich CEO Wayne Boich credited Montana Gov. Brian Schweitzer with making the deal possible, through stressing to company executives the mine's potential importance in the state.
Schweitzer, a Democrat, said the mine expansion would be the first of its kind in Montana in 30 years and would increase the state's coal production by 35 percent.
"I am pleased to see this important project come to fruition with such quality investors," he said, adding that it was a "step in the right direction to securing America's energy future."
Conspicuously absent from last Thursday's announcement was any discussion of the coal-to-liquids plant the mine's prior owners had pursued with support from Schweitzer's administration.
"It's not part of this deal," said Boich's Dawson.
Dawson declined to say if such a plant, which would convert coal to diesel and other liquid fuels, was a future possibility.
In afternoon trading on Wall Street, shares in FirstEnergy (FE) dropped 2.5 percent on news of the acquisition, to $77.05. The company's investment in the project includes a $124 million equity stake.
Boich is a privately held company. It declined to provide further details of its share in the deal.