No offers for Montana's 1/2-billion tons of coal

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By The Associated Press

Story Published: Feb 8, 2010 at 8:48 PM MDT

Story Updated: Feb 8, 2010 at 8:48 PM MDT

BILLINGS - Montana's Land Board will have to reconsider its price for developing a half-billion ton reserve of state-owned coal near Ashland after receiving no offers during a lease sale that ended Monday.

The Otter Creek tracts hold an estimated 1.3 billion tons of coal, about half of it under control of the state and the rest controlled by Arch Coal Inc. of St. Louis.

During a six week lease sale, the state asked for an up front "bonus" bid of at least $143 million plus annual royalty payments that could approach $1 billion over the next several decades. Only Arch responded, although not with a bid but with a letter saying the state's price was too high.

The board is made up of the state's top five elected officials, all Democrats, and chaired by Gov. Brian Schweitzer. It will meet next week to review the failed lease sale.

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