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Signal Peak Declares Force Majeure Again


Stymied by an unexpectedly slow longwall move, Signal Peak Energy in early fall found itself unable to ship high quality bituminous coal from its Signal Peak mine in Montana and declared a force majeure event, it’s second in the past year.

Signal Peak spokesman Mike Dawson said on September 30 it was unclear when the company would be able to lift the force majeure and resume shipments. Signal Peak notified all of its customers not to expect any deliveries in October and it was too soon to say if shipments would return to normal in November.

Company officials released few details about the longwall move delay except to indicate they were in the process of moving from panel two to panel three at the mine formerly known as Bull Mountain near Roundup in Musselshell County. Dawson, in particular, said he did not know what caused the inordinate delay.

The delay came at an inopportune time as the mine was ramping up production nicely and was on its way to record output in 2012. Signal Peak produced 5.1 million tons in 2011 but had reached nearly that amount—4.2 million tons—in the first six months of this year. Eventually, production could approach 15 million tons a year.

Things had been running fairly smoothly at the mine this year following a tumultuous 2011 when it was shut down for several weeks in December and a force majeure issued because of high carbon monoxide levels. That force majeure finally was removed in early January.

The mine, which has about 300 employees, also was idled a couple of times last year due to a series of roof falls.

Two Ohio companies—FirstEnergy Corp. and Boich Group—purchased the mine several years ago and invested about $400 million to prepare the operation for stepped-up production. A year ago, the two companies each sold a one-third interest in Signal Peak to Pinesdale LLC, a subsidiary of Swiss-based trader Gunvor Group.

Gunvor’s intent is to grow Signal Peak’s exports, and the mine is believed to be selling some coal to Asia.

In mid-September, the Montana Land Board leased 12 million tons of coal to Signal Peak under a 10-year deal. The company agreed to pay $3.6 million upfront to the state and tonnage royalties expected to generate about $15 million overall to Montana.

Signal Peak was the only bidder for the 640-acre tract.