Coal's long shadow 

The Crow Reservation is banking on a massive development deal with Cloud Peak Energy. The implications stretch far beyond southeast Montana.

Crow Tribal Chairman Darrin Old Coyote rides proudly along Crow Agency's main drag on a Thursday morning in mid-May, wearing an ornate headdress and riding a horse named Skip. Behind Old Coyote stretches a long procession of tribal officials, parade floats and 20-year-old Crow member Amanda Not Afraid, recently crowned Miss Indian Rodeo 2014 at a ceremony in Las Vegas. Hundreds of people line the streets. A vendor on the curb is selling decorative beach towels. Another offers biscuits and gravy for $3 off a grill in the bed of a pickup.

Old Coyote became the 21st chair of his tribe in late 2012, when his people elected him by a wide margin over incumbent Cedric Black Eagle. Today's parade honors the tribe's Head Start students, and each class sits atop its own float. Other flatbeds are dedicated to various tribal offices and organizations, from the Apsaalooke Housing Authority to the Apsaalooke Nights Casino. Near the end of the parade route, Old Coyote stops on the side of the road, waving to the procession until the last float rolls slowly by.

The Crow Indian Reservation in south-central Montana is the state's largest, encompassing roughly 2.2 million acres—nearly half of it individually allotted trust land. Flanked on the west by the Pryor Mountains and the east by the Little Bighorn Battlefield, much of Crow is dedicated to livestock grazing and cropland. But the area is rich in natural resources, too. The Powder River Basin, a geological bonanza of coal deposits, stretches north from Wyoming over the reservation boundary. An estimated 9 billion tons of coal lie beneath Crow alone, and since the Colorado-based Westmoreland Mining Company first came to the reservation to open its Absaloka Mine in the 1970s, the tribenow numbered at more than 13,600 membershas relied almost solely on the coal industry as its economic backbone. Revenues from coal development account for nearly half of the Crow Tribe's annual budget.

After the parade, Old Coyote leans against his horse trailer. He's untucked his green ceremonial shirt from his jeans and replaced the headdress with a cowboy hat. His spurs—the same pair, adorned with the American flag, that he wore while riding behind President Barack Obama on horseback on the reservation in 2008jingle as he crosses his legs. Coal might be a "bad four-letter word" to many, he says. But for a people suffering from a staggering 47 percent unemployment rate—a people now 40 years dependent on a product scientists, environmentalists and political officials around the globe are blaming for climate change—there aren't many alternatives.

"Unless these NGOs can tell me how else to feed my people," Old Coyote says, "we're going to pursue development."

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In January 2013, Old Coyote signed an agreement with mining company Cloud Peak Energy to lease 1.4 billion tons of coal in the reservation's southeast corner. Negotiations started in earnest years earlier, and former Chairman Black Eagle—who had also attempted to focus on advancing the now-botched $7 million Many Stars coal-to-liquids plant—helped advance the deal prior to being voted out of office. Cloud Peak paid the tribe $2.25 million at the onset of the agreement. Approval by the Bureau of Indian Affairs last June won the Crow an additional $1.5 million. Since 2012, Cloud Peak has awarded more than $65,000 in scholarships to Crow students. The company has also promised preferential hiring of tribal members when mining commences. The exploratory phase of Cloud Peak's agreement is estimated to last five years.

Cloud Peak is something of an anomaly among coal companies in the Powder River Basin. For a company incorporated just five years ago, it has made significant progress not only in securing vast coal reserves but in greasing the political wheels in the West. And by Old Coyote's thinking, Cloud Peak could bring new opportunities for his people. He's already seen the impacts in his own family.

"My daughter, she's applied for one of the grants," he says, referring to the company's tribal scholarship program. "She's currently going to school in MSU Bozeman, and she's a recipient of the Cloud Peak scholarship."

A bigger picture

The Crow aren't alone in seeing the promise of what Cloud Peak has dubbed the Big Metal project—named for a character from Crow creation stories. Cloud Peak, which derives its own name from the peak in the Bighorn Mountains where Crow ancestors first settled, currently trails behind regional heavyweights like Peabody Energy, Alpha Natural Resources and Arch Coal with a mere 1.3 billion tons in coal reserves. But the 1.4-billion-ton deal with the Crow tribe will more than double the company's coal reserves in the region, solidifying it as the third largest reserve holder in the entire Powder River Basin.

"We continue to see projections for a very robust demand internationally for coal, and a very stable demand for coal from the Powder River Basin," says Rick Curtsinger, Cloud Peak's media relations manager. "We believe that we are very well positioned moving forward to help meet that demand for low-cost, affordable electricity."

While Cloud Peak may be a relatively new name, the company can trace its roots back more than a century through its former parent company, multinational British-Australian metals firm Rio Tinto. Rio Tinto was founded in 1873 when investors purchased a mine complex along the Rio Tinto River in Spain. Over more than a century, the company's interests expanded globally to include iron ore, uranium, copper, diamonds and coal. And as it expanded, the company increasingly garnered the attention of environmentalists across the globe.

Rio Tinto arrived at the Crow Reservation as one of the largest mining companies in the world, and the second largest producer of coal in the U.S. In 2008, it announced plans to sell off its Wyoming-based American offshoot, along with heavy stakes in mines throughout the Powder River Basin. Cloud Peak Energy was born, and in November 2009, common stock in Cloud Peak was offered to the public at $15 per share. Executives who had overseen the offshoot during its Rio Tinto days transitioned to the new company.

click to enlarge Crow Tribal Chairman Darrin Old Coyote is a strong proponent of coal development on his reservation. - PHOTO BY CATHRINE L. WALTERS
  • photo by Cathrine L. Walters
  • Crow Tribal Chairman Darrin Old Coyote is a strong proponent of coal development on his reservation.

Cloud Peak's stock soared 40 percent in its first year. By summer 2011, the company had won a bid on additional coal tracts at the Antelope Mine in northern Wyoming for roughly $297.7 million. The bid more than doubled Cloud Peak's holdings at the Antelope Mine and helped beef up the company's portfolio, which also included Rio Tinto's old Spring Creek Mine, an expansive open-pit operation just over the Montana border near Decker. Cloud Peak signed a 10-year deal that June to ship coal from its Antelope, Spring Creek and Cordero Rojo mines through Vancouver's Westshore Terminal to markets in Asia.

But Cloud Peak's agreement with the Crow came as a surprise to some. Mike Scott, regional representative for the Sierra Club in Billings, notes that other companies in the past six years have experienced serious difficulty in expanding their operations in the Powder River Basin. Cloud Peak's play seemed bold when he first heard about it in 2011.

"When Otter Creek got leased in 2010, there was this flood of new proposals for mines that came right after," he says. "Most of those projects just collapsed, to the point where Otter Creek is really the only one that's still floating around out there. To see Cloud Peak decide to come and try to make that play when all these other companies sort of failed did surprise me."

Cloud Peak's plans for the future—and the coal it hopes to develop through the Big Metal project—hinge heavily on the completion of two proposed export terminals on the West Coast: The Gateway Pacific Terminal in Cherry Point, Wash., and the Millennium Export Terminal in Longview, Wash. Those port projects are pivotal to Cloud Peak increasing its coal supply to markets in Asia, Curtsinger says. "Our CEO and President Colin Marshall has said that the ports developing terminal capacity certainly makes the production of the Crow tribal coal much more likely," he explains, "as it's incredibly important to have that capacity to meet that demand."

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