The closing of the transaction is currently anticipated to occur during 2014 and is subject to the satisfaction of various terms and conditions.
Upon completion of the transaction, Ambre Energy will also grant Cloud Peak Energy an option for up to 7 million metric tons per year (mtpy) of its throughput capacity at the proposed Millennium Bulk Terminals coal export facility. The proposed new coal export facility at Millennium Bulk Terminals, which is owned 62% by Ambre Energy and 38% by Arch Coal, is currently in the permitting stage.
It is being developed in two stages. The first stage is planned to have capacity of 25 million mtpy with the second stage taking annual capacity to 44 million mtpy. Cloud Peak Energy’s options cover up to 3 million mtpy of Ambre’s share of the first stage and 4 million mtpy of its share of the second stage. Cloud Peak’s throughput capacity will have an initial term of 10 years, with four renewal options for five-year terms.
“This agreement positions both our companies to meet anticipated future growth in Asian thermal coal demand,” said Colin Marshall, Cloud Peak Energy’s president and CEO. “We look forward to completing the transaction in the near future and, longer term, to shipping our low sulfur Spring Creek coal to Asian markets through the Millennium Bulk Terminals facility. We wish Ambre Energy every success with the development of the terminal and with their strategy to develop the Decker mine.”
Everett King, Ambre Energy North America’s CEO, said, “This transaction is a very positive and productive outcome for both of our companies. The Decker mine has a sizeable resource and reserve base, produces some of the highest energy coal in the PRB (Power River Basin) and has the benefit of extensive infrastructure, including two rail loadouts and rail connections to existing and proposed West Coast export terminals. The mine is geographically well-positioned for Asian markets via export through the Pacific Northwest. Taking full ownership of the Decker mine is another significant step for Ambre in developing coal exports through the U.S. Pacific Northwest. As well as building new port infrastructure, Ambre will now also be able to guarantee the supply of high quality U.S. coal to customers in Korea, Japan and the Asia Pacific region from its own mining operations.”
The Decker mine, located in Montana’s Big Horn County, has produced approximately 300 million mt of coal since it opened in 1970. The coal it mines is presently sold to the U.S. domestic market. The Decker mine is serviced by BNSF Railway and produces approximately 3 million mtpy of coal.