Under the deal, the Gillette-based company has already paid an initial $US2.25 million to the tribe, and will pay another $US1.5 million once the agreement receives the approval of the Department of the Interior – a step which is now pending, with an expected completion within 180 days.
Cloud Peak will then make additional annual payments to the Crow Tribe over an initial five-year term that could total $10 million for that period.
The exploratory phase of the deal is projected to take at least five years, and the producer does have two extension periods on the agreement to extend it through 2035 provided certain conditions are met.
It is not yet known if Cloud Peak will move to develop a stand-alone mine from its other coal deposits near the NPRB properties – Spring Creek and Youngs Creek in Montana and Wyoming, respectively – but officials said they would potentially be developed as part of a larger complex.
Should Cloud Peak exercise its option to lease, it will pay the tribe an amount equal to $US0.08/t to $0.15/t, depending on the lease specifics and coal deposit. The final figure is subject to adjustment for inflation.
The deal also includes adjustable royalties ranging from 7.5-15%, and coal production taxes amounting to a nominal 20% of FOB mine gross proceeds to the tribe.
Cloud Peak has also committed to provide preferential hiring, training, and promotion for suitably qualified Indians to work on the reservation. It will also fund Crow scholarships at $75,000pa under the option agreement, increasing to $150,000pa upon the lease exercise and approval.
“Cloud Peak Energy is pleased to have signed the agreements with the Crow Tribe and is hopeful that Department of Interior approval will follow in good order,” president and chief executive officer Colin Marshall said.
Mr Marshall reiterated that the exploration and other work required to reach a decision on the ultimate exercise of an option and subsequent production was a multi-year process.
“Ideally, the development of the Crow Tribe coal resources and our larger Spring Creek complex would coincide with the development of new west-coast export terminal capacity,” he said.
He said Cloud Peak also envisioned the potential to expand NPRB domestic customers with high-Btu, lower sodium content coal from Crow Tribe coal deposits.
“We are embarking on what we see as a long-term partnership with the Crow Tribe that will hopefully provide revenue and jobs and economic development on the Reservation.”
“By prioritizing this set of agreements, and with the recent approval of the Crow Legislative Branch, we have reaffirmed our collective commitment to responsibly develop our natural resources for the long-term benefit of our tribal citizens,” tribe executive branch chairman Darrin Old Coyote added.
“We believe that the Cloud Peak Energy agreements offer the best potential for near-term development of the tribe’s large coal resources in the south-eastern part of the reservation. This development would diversify our revenue sources to fund essential Tribal Government services, provide substantial educational and training opportunities for our youth, and generate many new good-paying jobs.”
