Westmoreland Coal Co. received federal approval to expand its Rosebud mine in the Powder River Basin by 60 million tons, a move that will add 19 years of life and 10.5 square miles to the existing mine.
The office of Interior Secretary Ryan Zinke said Dec. 22 that the expansion had been approved, according to an Associated Press report.
Westmoreland has been looking to calm investor concerns after CEO Kevin Paprzycki stepped down Nov. 28, in the wake of a credit rating downgrade, falling share prices and concern about the company's ability to refinance debt load maturing in 2018.
Seaport Global Securities LLC lowered its price target for the coal producer Nov. 1 but said a bankruptcy is unlikely.
Westmoreland reported a net loss of $19.2 million in the third quarter.
The Rosebud mine produced 2.5 million tons of coal in the most recent quarter, down from 2.7 million tons in the same period last year. Production also decreased in the 12 months leading up to the end of the third quarter compared to the previous period.
According to U.S. Mine Safety and Health Administration data, the Montana mine and associated operations employed 326 workers in the recent quarter.
Jeff Shaw, a spokesperson for the Sierra Club, said that "coal is a bad investment and an economic loser from the mine to the smokestack, and expanding any coal mine with more than half of U.S. coal plants retired or committed to retire is economically nonsensical and environmentally destructive."
A federal appeals court rejected a challenge by environmental groups to the lease expansion in 2014.
The Rosebud mine serves the nearby Colstrip power plant operated by Talen Generation, LLC. The operator said in the summer that it would continue to run the plant despite earlier plans to step back from an operating role.
Two of the Colstrip units are slated to close in or before July 2022, which may limit the potential for greatly increasing production at Rosebud.
Bud Clinch, executive director of the Montana Coal Council, said the closures are likely to reduce contract demands by about 30%, and existing permitted reserves are likely to last longer as a result.