In a record bid, Alpha Natural Resources beat out Peabody Energy for a coal lease in the Powder River Basin, the latest move in the battle for millions of tons of coal between the companies’ mines.
In bids unsealed Wednesday by the U.S. Bureau of Land Management, an Alpha subsidiary bid $143.4 million for a tract containing 130.1 million tons of coal, defeating a Peabody subsidiary’s $127.6 million bid.
Abingdon, Va.-based Alpha agreed to pay $1.10 per ton of mineable coal — a record for the Powder River Basin. In 2005, an Arch Coal subsidiary paid 97 cents a ton in its winning bid for a tract.
The latest bid won by Alpha Wyoming Land Co., a wholly owned subsidiary of Alpha, sits in a 1,024-acre area known as the Caballo West tract. The tract is situated eight miles southeast of Gillette between Peabody’s Caballo mine to the north and Alpha’s Belle Ayr mine to the south.
The two companies were the only bidders for the lease area, part of an increasingly narrow spot of land between the companies’ adjacent and expanding mines.
The Caballo West tract was nominated for federal lease in 2006 by BTU Western Resources Inc., a wholly owned subsidiary of St. Louis-based Peabody. The company hoped to extend its Caballo mine.
“The process is competitive and we look forward to proceeding with our 1 billion ton reserve position at the Caballo Mine,” Meg Gallagher, a Peabody Energy spokeswoman, said via email Wednesday.
Nobody at Alpha’s office in Gillette was available late Wednesday to comment on the losing bid.
Wednesday’s bidding marked the second time in just more than six weeks the companies vied for a tract of land containing millions of tons of coal.
Peabody won the mid-July competition, beating out Alpha subsidiary Alpha Coal West by offering $210.7 million for the 221.7 million tons of coal in the 1,671-acre Belle Ayr North tract.
The bid by a Peabody subsidiary meant it would pay 95 cents per ton of mineable coal — the second-highest per-ton amount at that time.
Owners of coal mines in the basin nominate the tracts for lease by the federal government, and are typically the sole bidder in the federal lease sale. The lease sales Wednesday and in July were the first with multiple bids since 2004, the BLM said last month.
Such competitions are to be expected as mines in the basin grow closer together, Wyoming Mining Association Executive Director Marion Loomis said in the wake of the July bidding for the Belle Ayr North tract.