A Peabody subsidiary company made the winning bid for the ultra-low sulfur coal reserves, at $US0.97 cents per mineable ton. The bids were made through a sealed bid auction process. Subject to the Bureau of Land Management ruling the offer meets its fair market analysis, the lease acquisition is expected to be finalized in the next 60 to 90 days.
Peabody already controls more than 3.5 billion tons of Powder River Basin coal reserves. The addition of the new "West Roundup" reserve area creates a reserve block of nearly 800Mt of coal, combined with existing reserves north of the North Antelope Rochelle Mine.
Peabody believes the strategic reserve block will provide a low-cost, high-quality base to support new mining facilities in the future. Strong long-term demand growth is expected from the region. Industry analysts project that coal demand from the Southern Powder River Basin could grow by as much as 85%, to 700 million tons per annum or more, within 20 years.
The North Antelope Rochelle Mine shipped more than 80Mt last year and is one of the most productive mines in America.