Arch Coal backs out of Montana mine project

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Mining giant Arch Coal on Thursday said it will suspend its work on securing a permit for a new mine in southeastern Montana.

In a statement, the company blamed “capital constraints,” a weak coal market and uncertainty in the permitting process for suspending its proposed Otter Creek Mine project. 

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The company secured the lease rights to 8,300 acres of minerals in Otter Creek in 2010. The permitting process to begin mining, the company said, “has taken longer than anticipated, and further deterioration in coal markets has led to the decision to suspend the permitting effort.”

In its statement, the company said Montana’s Powder River Basin is an important coal supply region, but, “given current conditions, Arch can no longer devote the time, capital and resources required to develop a coal mine.”

Arch, the country’s second largest coal company, declared bankruptcy in January, reporting $6.5 billion in debt and $5.8 billion in assets in its filings.

Arch invested at least $159 million to secure the coal leases, The Associated Press reports, and the company had hoped to mine 20 million tons of coal from the site annually.

Arch’s announcement became a political issue in Montana on Thursday. Republican Greg Gianforte, who is looking to challenge Gov. Steve Bullock (D) in this November’s elections, accused the governor of dragging his feet on Arch’s permit applications. 

State regulators were reportedly concerned about the mine’s impact on water quality. The Montana Department of Environmental Quality asked Arch last year to submit more information before the mine could be permitted. 

In a statement, Sen. Steve Daines (R-Mont.) called Arch’s decision “a devastating loss” for the state’s economy, and blamed the federal government for creating the market conditions the company cited. 

“This decision is an unfortunate repercussion of President Obama's all-fronts assault on domestic energy production,” Daines said.