Cloud Peak wins 350 million ton federal coal lease

Cloud Peak wins 350 million ton federal coal lease

Cloud Peak Energy Inc. was the successful bidder for a federal coal tract containing 350 million tons in the southern Powder River Basin, according to the Wyoming Bureau of Land Management.

Antelope Coal LLC, a subsidiary of Cloud Peak Energy, submitted a bid of $297.7 million, or about 85 cents per ton, for the “West Antelope II North Coal Tract.” The tract is just inside Campbell County’s southern border, and adjacent to the western and northern boundary of the Antelope coal mine.

It’s not the highest per-ton bid for Powder River Basin coal in Wyoming, but at 85 cents Cloud Peak Energy’s bid is a vote of confidence in the future of Wyoming coal. Back in the 1990s, Powder River Basin coal sold for less than $5 per ton at times, and mine operators paid about 15 cents per ton for federal coal tracts. Today’s “fair market value” of 75 cents-plus per ton is evidence that prices are not expected to slide much below $10 or stay there for long if they do take a dip.

However, the cost of mining continues to rise as mines dig deeper and further away from their original load-out facilities, which means if spot prices drag long-term contracts below $10 per ton,  mining companies might want to sit on production until prices bounce back. Meanwhile, Powder River Basin coal producers continue to eye the Asian thermal market, which analysts expect will pay more than $130 per ton, depending on heating value.

Cloud Peak Energy owns and operates the Antelope, Cordero and Spring Creek mines in the Powder River Basin.

— Contact Dustin Bleizeffer at 307-577-6069 or dustin@wyofile.com.