Cloud Peak said the new 10-year deal would commence in 2013, when the current contract ended.

The companies, which are working to conclude a definitive agreement, are keeping the transaction’s terms confidential .

Last year, Cloud Peak exported about 3.3 million tons of coal through Westshore to Asian customers.

Last month, the producer was the successful bidder for the West Antelope II North coal tract, one segment of a multi-part auction of Wyoming leases by the US Bureau of Land Management. The BLM estimates the tract contains 35 million tons of mineable coal.

West Antelope II North had been previously nominated by the company’s Antelope operation, which has an estimated 252Mt of coal reserves.

Cloud Peak has estimated total reserves of 970Mt.

Cloud Peak’s successful lease sale bid was approximately $US297.7 million, or about $0.85 per ton based on BLM estimates.

Cloud Peak is the third-largest US coal producer and only pure-play PRB coal company and owns and operates three surface coal mines: the Antelope and Cordero Rojo mines in Wyoming and the Spring Creek mine near Decker, Montana.