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17 July 2008 -- A FirstEnergy Corp. business unit is paying $125 million for a 45 percent stake in the Bull Mountain Mine Operations in Montana. The utility said that compared to typical eastern coal, coal from Bull Mountain has around half the sulfur and ash content. The delivered price is expected to be similar to Powder River Basin coal, but the coal's higher efficiency is expected to help FirstEnergy avoid derates of around 170 to 200 MW that would have resulted from continued use of PRB coal.
As part of the deal, FirstEnergy and its business partner will buy 80 percent of the Bull Mountain mining operations and 100 percent of the rail operations. FirstEnergy will a 45 percent interest and a partner of the Boich Cos. of Columbus, Ohio will own a 55 percent interest. After 18 months, the joint venture will have the option to acquire the remaining 20 percent stake in the mining operations.
In a related transaction, FirstEnergy said it entered into a 15-year agreement to purchase up to 10 million tons of bituminous western coal annually from the mine. FirstEnergy reportedly also reached tentative agreements with the rail carriers associated with transporting coal from the mine to its generating stations. The company said it expects to begin taking delivery of the coal in late 2009 or early 2010. Under its coal contract, FirstEnergy has the right to resell the tonage not used at its facilities.
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