Two months after Arch Coal filed for bankruptcy protection amid a steep decline in the coal industry, the company has announced that it will stop pursuing a project in the grasslands of southeastern Montana that would have been one of the larger surface coal mines in the country.
In a statement Thursday, the company blamed "capital constraints, near-term weakness in coal markets and an extended and uncertain permitting outlook."
Arch made the announcement on the same day that the U.S. Energy Information Administration released estimates showing coal production declining across the country by 29% in the first 10 weeks of 2016 compared with the same period last year.
The proposed mine, called Otter Creek, is in the Powder River Basin, which is home to some of the most productive coal mines in the country. About 40% of the coal used to generate electricity in the United States comes from the basin, most of it produced next door in Wyoming.
Otter Creek, along with a related rail line, has been pursued in various forms over many years by different companies. Although many people in the region have supported the proposals for economic reasons, the plans have also drawn strong opposition from environmental groups, ranchers and some tribal members, including among the Northern Cheyenne, whose reservation is nearby.
Arch faced a setback in March 2015 when environmental regulators in Montana asked it to make hundreds of corrections to a permit application for the mine. In November, the companies planning to build the railroad, which include Arch, dropped their efforts. Yet that month, Arch said it planned to resubmit an application for Otter Creek. The proposed mine is believed to include as much as 1.4 billion tons of recoverable coal.
On Thursday, Arch noted that it secured a lease for the area in 2010 and soon after began pursuing permits for the project.
"That process has taken longer than anticipated, and further deterioration in coal markets has led to the decision to suspend the permitting effort," the company said.
The mine also faced opposition far from Montana, including from groups that did not want Powder River Basin coal shipped to Asia out of West Coast ports.
Cesia Kearns, who helps lead the Sierra Club's Beyond Coal campaign, noted that Arch owns a large stake in Bulk Millennium Terminals, a company that has proposed building a controversial export facility in Washington state. Arch's bankruptcy filing added to questions about the viability of the terminal project. The company's decision not to pursue Otter Creek will increase those questions.
"For communities facing the threats of the largest proposed coal export terminals in North America such as Millennium Bulk Terminals in Longview, Washington, this is yet another example of the folly of coal companies pursuing projects of the past, rather than those with a sustainable and thriving economic future," Kearns said in a statement.
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