No offers for Montana's 1/2-billion tons of coal

Montana's Land Board will have to reconsider its price for developing a half-billion ton reserve of state-owned coal after receiving no offers during a lease sale that ended Monday. Critics had said the price sought by the state was set too high and suggested Land Board members undermined the sale to appease mining opponents. The Otter Creek tracts hold an estimated 1.3 billion tons of coal, buried in a remote stream valley near Ashland. About half of those reserves are controlled by the state and the rest by Arch Coal Inc. of St. Louis. During a six-week lease sale, the state asked mining companies for an up-front "bonus" bid of at least $143 million plus annual royalty payments that could approach $1 billion over several decades. Only Arch responded — although not with a bid as officials initially believed but a letter saying the state's price was too high. The Land Board is made up of the state's top five elected officials — all Democrats — and chaired by Gov. Brian Schweitzer. It will likely review the failed lease sale next week. Schweitzer insisted Monday he was "encouraged" by the letter from Arch, since it demonstrated at least some interest. "Just about everybody that's ever bought a car knows the way this works," Schweitzer said. "Like any good deal, it starts by working your way from the high to the middle and the low to the middle."