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7/22/2008



Rail News: Rail Industry Trends

Bull Mountain mine deal a boon to BNSF's PRB coal traffic


A deal announced last week means more coal will be pouring out of the Powder River Basin (PRB) via rail within two years.

A FirstEnergy Corp. subsidiary and the Boich Cos. agreed to jointly acquire a majority stake in the Bull Mountain mine operation near Roundup, Mont. A joint venture will acquire 80 percent of the mining operations and 100 percent of affiliated rail operations.

FirstEnergy — which plans to invest $125 million in the joint venture — will own a 45 percent stake and a Boich affiliate will retain a 55 percent interest. The joint venture retains an option to acquire the remaining 20 percent of the mining operations after 18 months.

FirstEnergy entered into a 15-year agreement to purchase up to 10 million tons of bituminous coal annually from the PRB mine and reached tentative agreements with railroads — including BNSF Railway Co. — to move coal from the mine to generating stations. The company expects to begin taking delivery of coal in late 2009 or early 2010.

The joint venture plans to build a 35-mile rail spur from the mine to BNSF's mainline as part of $450 million worth of upgrades and expansion projects at Bull Mountain.


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