A London investment bank representing an unspecified company has asked for an estimated 550 million tons of coal owned by the state of Montana to be put up for lease in the next few months, state officials said Tuesday.

The leasing of the Otter Creek coal tracts, located in southeastern Montana near Ashland, could open the door to a dramatic expansion of the state’s coal industry. Mining the tracts also could facilitate construction of a proposed $341 million rail line into the coal-rich Powder River Basin, ensuring a steady coal supply for the long-stalled Tongue River Railroad.

An adviser to Gov. Brian Schweitzer said the state was reviewing the request by the investment bank, Rothschild, but was unsure if it could meet the bank’s timeline.

Montana has some of the largest coal fields in the world, accounting for more than a quarter of the United State’s total reserves. Yet its five active mines produce only about 40 million tons of coal annually – less than 4 percent of the nation’s 1.1 billion tons.

Neighboring Wyoming produces more than 400 million tons annually.

If Otter Creek were developed, it would become Montana’s first new mine in three decades, said Bud Clinch with the Montana Coal Council.

However, prospects for both a mine and the Tongue River Railroad have been fiercely opposed by some southeastern Montana landowners and several conservation groups. They argue the industrialization of the region’s rural landscape would harm water supplies used by farmers for irrigation.

“If this makes it more likely the Tongue River Railroad will be built, that concerns me,” said Jeanie Alderson, whose family owns the Bone Brothers Ranch along the Tongue River near Birney. “That really would tear up the Tongue River valley.”

The request for a lease sale was made by Rothschild on behalf of a corporate client with substantial mining experience, said Evan Barrett, Schweitzer’s chief economic development adviser. Barrett declined to name the company.

A representative of Rothschild – a major financial player in the mining industry – met with Barrett and other state officials earlier this month to pitch its development plan for the tracts, Barrett said.

The banking firm’s client wanted coal leases in place by September. That would mean the leases would have to go out for bid possibly months ahead of time, in part to attract competing offers.

“It’s a fairly big challenge to meet that kind of time frame. We’re trying to figure out if we can do it,” Barrett said.

Because the state’s coal is intertwined with another 550 million tons of privately owned coal, state officials said they would not move on a deal without involving the other owner – Houston-based Great Northern Properties.

“It doesn’t make sense to have state properties offered unless Great Northern’s properties can be offered at the same time,” said Barrett. “You can’t do a mine without the two of them being mined together.”

Great Northern Properties president Chuck Kerr declined comment when asked if Rothschild also had approached his company.

Kurt Oehlberg, the Rothschild managing director said to be negotiating with the governor’s office on the issue, also declined comment.

The Otter Creek tracts were given to the state by the federal government in 2002, as part of a federally brokered deal to shut down the New World gold mine proposed near Yellowstone National Park in the 1990s. The tracts were intended as compensation for revenues the state would have received from the gold mine.

The roughly 20,000 acres overlying the coal beds are broken into a “checkerboard” pattern of alternating ownership by the state and Great Northern. The two parties have an agreement to jointly develop the coal.