The connection from the main line to the mine in Hardin, Big Horn County, will allow tonnage to be transported west.
Westbound coal also broadens the market opportunity horizon for Absaloka’s coal, which is leased by the Crow Tribe following a deal signed in April and given final approval last month.
Additional outlets for the coal could lead to both increased royalties for the Crow Tribe and a rise in mine employment.
“Westmoreland’s investment in the expansion of the rail line has already resulted in several new accounts including a test burn and spot sales to a new utility plant customer,” president and chief executive officer Robert King said.
“The … line opens up Westmoreland’s sales opportunities to the west, allowing us to capitalize on our geographically-advantaged position in the North Powder River Basin.”
The deal between Big Metal Coal, a subsidiary of Cloud Peak Energy, and the Crow Tribe, includes the lease and development of as much as 1.4 billion tons of in-place northern Powder River Basin coal on the tribe’s reservation in southeast Montana.
Big Metal Coal paid $US3.75 million in option payments to the tribe and will continue making additional payments during an initial five-year agreement period.
Payments could total $10 million.
Big Metal Coal will provide preferential hiring, training, and promotion to Indians and will also make royalty, bonus and production tax payments to the tribe.
“The tribe’s large coal resources offer significant potential for good-paying jobs and a diversified source of revenue for essential Tribal government services,” tribe executive branch chairman Darrin Old Coyote said.
Absaloka is a single-pit complex expressly developed to supply PRB coal to a group of Midwestern utilities.
Its capacity is up to 7.5Mtpa, according to the Westmoreland website.