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Arch Coal seeking reduced royalty rate for West Elk mine

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Arch Coal seeking reduced royalty rate for West Elk mine

Arch Coal Inc. submitted a renewal application for a previously approved royalty rate reduction at one of its mines but is getting some resistance from those who benefit from the company's payments.

According to a report from the Crested Butte News in Colorado, the Crested Butte Town Council is planning to send a letter to the U.S. Bureau of Land Management asking the agency not to approve a rate reduction request for Arch's West Elk mine near Paonia, Colo. The letter was requested by a representative of High Country Conservation Advocates, who said the town received $26,942 from mineral leases in 2016 and a related school district received $49,717, according to the paper.

Arch reportedly is seeking to lower its royalty rate from 8% to 5%. Arch spokeswoman Logan Bonacorsi said the royalty rate reduction had expired a "couple of years ago."

"Given the continuing presence of less-favorable geologic conditions in certain areas of the mine and the volatile coal market environment — as evidenced by the closure of the other two mines in the North Fork Valley — we think it is entirely appropriate to pursue qualified royalty rate relief under the Mineral Leasing Act," Bonacorsi said.

A recent S&P Global Market Intelligence analysis showed that West Elk was the second-highest producing mine in the Uinta Basin and churned out about 1.2 million tons of coal in the first quarter. An analyst recently reported there was "promising" seaborne demand for coal from West Elk.