Calif. company eyes coal mines near Red Lodge, Bridger

Coal mines eyed near Red Lodge, Bridger

BILLINGS, Mont. — Coal developers are maneuvering to build new mines in south-central Montana near Red Lodge, where the industry shut down decades ago after a tragic fire, leaving behind underground reserves estimated at a billion tons.

Public financial filings show a California coal startup, Management Energy, Inc., has amassed leases on more than 10 square miles of land northeast of Red Lodge near Bridger.

Also being eyed for a mine are parcels near the small town of Bearcreek — site of a 1943 underground mine fire that killed 75 workers. A third possible site is near Grove Creek, near the Wyoming border.

The pursuit of mines in that area is another indication of rising corporate interest in Montana’s huge coal reserves, the largest in the nation but still largely undeveloped.

Last year’s opening of the Signal Peak mine north of Billings was Montana’s first in three decades.

Farther east, the Crow Tribe is seeking to build a mine to serve a proposed $8 billion coal-to-liquids plant. Nearby, Arch Coal recently paid more than $70 million for rights to mine a 731 million ton reserve. And next to Arch’s leases, Montana’s Land Board is seeking bids on 532 million tons of publicly owned coal.

Citing the dangers of climate change, environmentalists have tried to slow or stop some of those projects — so far to little avail.

Montana’s pro-coal governor, Democrat Brian Schweitzer, has courted a steady parade of companies that have gone on to start projects in the state. None of those have yet included the type of carbon capture technology that Schweitzer says is needed to account for climate change.

Management Energy chief executive David Walters said Friday his company is partnering on the Red Lodge-area project with Tennessee coal entrepreneur John Baugues, Jr..

Baugues worked for years to develop the Bull Mountain mine south of Roundup. His efforts brought political embarrassment to the Schweitzer administration, which threw its weight behind a coal-to-liquids plant touted by Baugues that never came to fruition.

By the time the Bull Mountain mine was sold to the Boich Group and renamed Signal Peak, Baugues was being hounded with lawsuits by creditors and was only a minor stake holder in the deal.

That mine, now named Signal Peak, is the only underground mine operating in Montana, which has several surface mines in the Powder River Basin near the Wyoming border.

In a phone interview, Baugues deflected questions about the new development and said he was concentrating on projects in West Virginia.

But documents submitted to the Department of Environmental Quality describe two separate projects, Bearcreek and Bridger-Fromberg, being pursued by Montana Coal Ventures, LLC. Baugues is listed as the company’s president.

No applications have yet been filed for mining or exploration permits, although state regulators have been notified about the plans.

Evan Barrett, Schweitzer’s chief of economic development, said the interest in Red Lodge-area coal underscores Montana’s rising profile within the coal industry.

As production tapers off for many Appalachian mines, Barrett said the industry is looking for new sources of similar high-quality fuel. And the Bearcreek and Bridger-Fromberg coal fits the bill.

“This is very, very high quality coal,” Barrett said. “But it’s like most projects: You need to explore and make sure the resources are there, get permitting in place and capital to develop it.”

The Red Lodge area coal produces more heat than fuel mined from the massive coal fields of the Powder River Basin, making it more valuable.

But the need for an underground mine is a trade off, requiring a major investment to get the project off the ground.

Boich and its partner, FirstEnergy, put an estimated $400 million into the Signal Peak mine and a 35 mile rail spur built to get the coal to market.

Maps submitted by Montana Coal Ventures show a rail spur would be needed for its project, too, although it would not be as long.

Energy Management chief executive Walters said additional members of the team pursuing the Bearcreek and Bridger-Fromberg mines would be made known in coming days.

“We are making changes to our operating team, which would put more definition around what our plans are,” Walters said Friday.

He added that Baugues is likely to remain a player — and the goal still a coal project east of Red Lodge.