The Signal Peak underground mine south of Roundup in Musselshell County, Montana, USA, temporarily throttled back on production this spring as it underwent its first longwall move since it reopened under a new name and ownership almost two years ago. Formerly known as Bull Mountain, the mine is owned jointly by two Ohio companies: Boich Group in Columbus and FirstEnergy, a diversified energy company based in Akron. They invested about $400 million to acquire and reopen the mine in 2009.
In late May, Boich spokesperson Mike Dawson said the longwall move was still ongoing. “It’s not done yet. We’re moving from one panel to another panel.” Dawson said the move was going well with no unexpected hitches. “We’re encouraged by how things are going,” he said. He declined to predict when the move would be completed.
Signal Peak has been ramping up production since late 2009. After mining only 775,532 tons in an abbreviated 2009 period, the mine’s output increased to 4.3 million tons in 2010. It rose to 1.25 million tons in the first quarter of 2011 and is expected top out around 12.5 million tons annually in a year or so.
The mine owners are marketing Signal Peak’s coal to growing Asian markets. FirstEnergy also has a 15-year contract to purchase up to 10 million tons annually from the mine.
Some Montana mines saw their shipments adversely affected by floodwaters in late May. Signal Peak, however, was not shipping because of the longwall move. Despite claiming it is satisfied with the mine’s progress to date, FirstEnergy continues to say it is planning to divest Signal Peak, probably in the next couple of years. Asked if Boich might be interested in buying FirstEnergy’s stake, Dawson declined to comment.
In late April, Signal Peak was a beneficiary of amended S.B. 266, passed by the Montana Legislature on its final session day this year. The bill cuts the state’s gross-proceeds tax rate from 5% to 2.5% for the first 10 years of a new of expanded coal mine. Governor Brian Schweitzer, a Democrat, pushed hard for passage of the bill, saying it would lead to increased employment in mining. Signal Peak currently has about 280 employees. The legislation is expected to save Signal Peak about $2.8 million a year in state taxes.