In releasing the news on its Twitter feed late Wednesday night, agency officials did not indicate if the Campbell County block would be rebid at a later time.
Typically BLM coal auctions will receive a single bid – that of the company that submitted the lease by application for it to be made available. In rare cases, there are competing bids.
In this case, Cloud Peak Energy was the LBA party, but declined to bid due to the rough coal market.
“We carefully evaluated the estimated economics of this LBA in light of current market conditions, and the uncertainty caused by the current political and regulatory environment towards coal and coal powered generation and ultimately decided it was prudent not to bid at this time,” Cloud Peak president and chief executive officer Colin Marshall said.
He also noted that, due to the north tract’s configuration as well as ownership positions of surrounding land, it felt a “significant portion” of the federal agency’s tonnage estimate would not be recoverable by its crews if it did win the block.
“In combination with prevailing 8400Btu market prices and projected costs of mining the remaining coal, we were unable to construct an economic bid for this tract at this time,” he said.
“We will continue to evaluate any possible future lease sales by the BLM of these tons in the North tract as market conditions improve.”
The block, for which its Cordero subsidiary submitted an application in September 2006, is adjacent to its 8400Btu Cordero Rojo surface mine.
Environmentalists took the producer’s decision and the BLM’s lack of bids as a sign of things to come for coal.
“Even coal companies seem to be acknowledging that more coal leasing is a losing endeavor,” WildEarth Guardians’ Jeremy Nichols told the Associated Press.
Wyoming Mining Association executive director Marion Loomis told the news wire that, while spot prices were making a gradual recovery, companies were making long-term plans based on long-term contracts so they could recoup investments in expanding complexes.
“It just shows the softness of the market right now,” he said.
“They don't want to make investments until they make sure there is a market available for that coal.”
Cloud Peak Energy is the only pure-play Powder River Basin coal company.
Its Antelope and Cordero Rojo mines are located in Wyoming and its Spring Creek operation is located near Decker, Montana.
The Cordero Rojo surface operation is the third-largest US coal mine.
Once the lease is issued to the highest qualified bidder, an annual rental payment of $US3 per acre is required, along with a royalty payment of 12.5% of the value of coal produced by surface mining methods.
