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Bull Mountain Mine

Coal is loaded onto a nearly mile-long BNSF train at Signal Peak Energy’s Bull Mountain Mine south of Roundup.

HELENA — The state Land Board Monday unanimously approved leasing state-owned coal to the Signal Peak Energy coal mine south of Roundup, allowing the company to expand and continue coal production for another decade.

Signal Peak, which employs about 250 people, will pay an upfront bonus of $3.6 million for the nearly 12 million tons of coal reserves owned by the state, as well as annual rental fees and a royalty payment on mined coal of 10 percent of its value.

The lease is expected to fetch the state’s school trust fund $15 million during the remaining life of the mine, state officials said.

Signal Peak’s mine produced 5.1 million tons of coal last year and already has produced 4.7 million tons through July this year.

The Land Board, comprised of the state’s top five elected officials, approved the 10-year lease with scant discussion Monday — although it did hear plenty of comments from the public, both pro and con.

Critics of the lease, speaking before the board in a Capitol meeting room, said the state is giving away its resources for a “rock-bottom” price, and relied on a flawed appraisal from the U.S. Bureau of Land Management.

Charyn Ayoub of the Sleeping Giant Citizens Council in Helena said coal is selling for $100 a ton in China and other Pacific Rim countries, and the state is getting 30 cents a ton on the bonus payment.

“Montana needs to get a fair market value for its coal, and relying on BLM’s numbers is not doing to get that,” she said.

Bob Guilfoyle of the United Mine Workers of America also said the mine has a bad safety record, as well as a record of improperly resisting union organization, and that the lease should include language that says it can be canceled if the mine violates federal safety and labor laws.

Board members, led by state Auditor Monica Lindeen, briefly discussed whether to include such language, but declined to do so.

Roundup and Musselshell County officials spoke in support of the mine and its lease, saying the mine has paid millions of dollars in local property taxes and provided many valuable jobs.

John DeMichiei, the chief executive officer for Signal Peak, also appeared at the meeting, and said the underground mine has worked to address safety, health and environmental “challenges.”

“We are actively striving to be a good neighbor,” he said. “Our accident and injury record is half the national average. … This is a company that is committed to doing it right.”

Opponents of coal development also spoke at the meeting, saying the state is contributing to pollution and climate-change problems if it approves the lease.

Nick Engelfried of the Missoula-based Blue Skies campaign came with some pieces of coal he said he gathered at a Missoula railroad crossing, strewn from passing trains hauling coal to the West Coast.

“I’d like to leave this for you, Gov. Schweitzer, because I know you’re a big fan of coal,” he said to Gov. Brian Schweitzer, who chairs the Land Board. “I’d be careful with it, though, because it has lots of poisonous arsenic and mercury.”

“I’ll add it to my collection of various coals I have on my desk,” the governor replied.