The group looked at the impact of a key factor – the rising demand for coal in Asia – and produced an assessment of the ultimate impact the mine’s development and operations, including construction and railroad operations, would have on the state.
“This study finds that with the Otter Creek coal development the state economy would be significantly larger, more prosperous and more populous than would otherwise be the case,” the report said, adding that the project could inject $US1 billion into Montana’s economy.
Specifically, as a result of the development of the first of Otter Creek’s three tracts set to produce as much as 20 million tons, as many as 2648 jobs will be created in the region during the construction of the facilities and railroad.
Additionally, the university estimated the income received by Montana households could be substantial – a projected $103.5 million in new personal income and $87.7 million in after-tax income – across the state during the peak construction phase.
It projected continuing mine operations would create 1740 permanent, year-round jobs, which could help realize an increase in household income by $125.4 million per year.
The ripple effect the mine’s presence would create would go even further, the report outlined.
“Job increases would occur across a wide spectrum of industries and, largely due to rail operations, in most regions of the state,” the group said.
“Mine operations would increase state and local tax revenue by more than $91 million per year due to both coal-specific taxes as well as growth in the overall base for Montana’s other taxes.”
When construction is completed, Arch’s Otter Creek mine will produce about 20 million tons per annum and employ about 300 full-time employees plus an additional 50 contractors.
The university said mine-mouth value of the coal was estimated to be $14 per ton.
“We anticipate that the dominant market for this coal will be Asia, with coal shipped by rail to the (new and existing) Pacific northwest coal ports,” the report outlined.
“Significant domestic customers are expected as well.”
One specific key to the study is China's increasing demand for coal.
Co-author and economist Patrick Barkey said Montana had a geographic advantage over Wyoming coal in terms of serving the export market of Asia.
“The anticipated increase in coal demand in China between 2010 and 2035 is more than twice the current US production of coal,” he said.
“Southeast Asia does not have sufficient capacity to satisfy this growth.
“Because Montana coalfields are closer to northwest ports than those in Wyoming, Montana has a geographic advantage in serving fast-growing Asian markets.”
