Cloud Peak paid $2 million at the signing of the deal for a 49% interest; it will also pay up to $30 million in permitting expenses for the GPT through 2019. The Crow Tribe will have an option to secure a 5% holding from CPE, and SSA Marine will remain a majority owner in the new structure with 51%.
After CPE’s expenses deal expires, each of the owners will then share any additional permitting expenses based on their interest level. Additionally, Cloud Peak will have the right to exit its investment at any point and return its holding percentage to SSA Marine.
Cloud Peak Energy’s Big Metal Coal subsidiary and the Crow Tribe entered agreements in 2013 for exploration rights and exclusive options for the leasing and development of an estimated 1.4 billion tons of in-place Northern Powder River Basin coal on the Crow Indian Reservation in southeast Montana, near CPE’s Spring Creek complex in Montana and also the Youngs Creek development project in northeast Wyoming.
The producer also has an existing throughput option agreement with GPT that provides it will up to 17.6 million short tons of capacity annually.
“The deal is a win-win for all involved,” SSA Marine Senior Vice President Bob Watters said.
“GPT benefits from the addition of strategic partners such as the Crow Tribe and Cloud Peak Energy and the new shareholders benefit from ownership flexibility common with a project awaiting permits.”
Colin Marshall, Cloud Peak Energy president and CEO, added that the company is pleased to share ownership in a project that could permit U.S. coal to meet growing demand in South Korea, Japan and Taiwan.
“Although the project currently faces a challenging permitting process, we are confident that if the project is assessed on its merits, it will be approved, meet all federal and state regulations, and bring significant jobs and prosperity to Washington State, the Crow Tribe, Montana, and Wyoming,” he said. “The initial $2 million payment and ownership flexibility allow us to take part in this opportunity with very limited risk.”
The Gateway Pacific Terminal, as planned, will have a 54 million metric ton capacity; in addition to coal, the dry bulk, deep water export terminal will also handle other commodities including grain and potash.
GPT will be the only U.S. Pacific Northwest terminal with natural deep water accommodating cos-saving capesize bulk vessels.