March 2, 2018 Read More →

Westmoreland Coal, Teetering Near Bankruptcy, Wants Montana to Let It Build a Bigger Mine

Bloomberg Environment:

The nation’s eighth largest coal company is spiraling deeper into financial crisis, but that’s not stopping Westmoreland Coal Co. from chasing a new mine permit in Montana.

Environmentalists now dread three outcomes in succession: first, that regulators approve the permit—which would let Westmoreland widen its existing Rosebud Mine near Colstrip, Mont., by another 6,700 acres; second, that the same regulators set a bond amount that’s too low for actual land cleanup; and third, that the struggling company goes bankrupt, leaving little or no money to pay a higher-than-expected reclamation bill.

On March 1, Westmoreland’s stock price sank to 40 cents a share, a drop of more than 99 percent from its July 2014 high of $43.09.

Westmoreland has no comment “at this time,” company spokeswoman Jen Almquist told Bloomberg Environment. Similarly, both the Montana Coal Council and the National Mining Association declined to comment on Westmoreland’s behalf.

The company’s defenders say fears about reclamation are overblown because no company is allowed to mine in Montana without first nailing down a surety bond to pay for cleanup.

Westmoreland already has $206 million dollars in surety bonds set aside for its three Montana coal mines. Of that amount, $171 million is for the giant Rosebud Mine. An expanded Rosebud, if permitted, would require an additional bond.

“In a perfect world, that’s fine,” said Anne Hedges, deputy director of the Montana Environmental Information Center.

But she also said the Montana Department of Environmental Quality has a history of setting bond amounts that are too low to pay for land reclamation. As evidence, Hedges pointed to the fact that only 2.4 percent of the Rosebud Mine has been fully reclaimed in the more than 40 years the mine has been active, according to a 2017 OSMRE and Montana DEQ document.

The entire issue could be moot if Westmoreland can’t secure a bond on the private market. That’s a real possibility, considering the company now carries more than $1.6 billion in debt and has hit junk bond status with S&P Global Ratings, according to a recent report from the Institute for Energy Economics and Financial Analysis.

The Rosebud Mine has been active for more than 40 years in southeastern Montana. Its coal goes to one buyer only: the 2,100-megawatt Colstrip Power Plant in Colstrip, Mont. But the plant’s owners recently said they want to close the plant by 2027, two decades earlier than planned, and no rail line exists to transport the coal to other buyers.

More ($): Westmoreland Chases New Mine Permit as Stock Plummets

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