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Ambre sells interests in N.W. coal projects

Australian firm proposed pair of export terminals

The Columbian
Published: November 27, 2014, 12:00am

Ambre Energy, based in Brisbane, Australia, was an owner with Arch Coal Inc. of Millennium Bulk Terminals-Longview, which wants to build and operate a $650 million terminal at Longview to export coal from Montana and Wyoming to Asia. The terminal would ultimately be able to handle 44 million metric tons of coal a year.

Also, the company had requested Oregon’s approval to bring coal by train to the Port of Morrow in Boardman, Ore., where it would be put on barges to the Port of St. Helens, Ore., for transfer to ocean-going ships. Oregon regulators in August rejected the Columbia River coal terminal, and the company said at the time that it would appeal the state’s decision.

Also in August, Ambre announced an indefinite postponement of an earlier plan to purchase a 50 percent stake in the Decker Mine, in Montana, from Wyoming-based Cloud Peak Energy. As part of that deal, Cloud Peak would have gained the option to move up to 5 million metric tons of coal annually through the Millennium Bulk Terminal in Longview.

Slumping coal markets have caught up with the Australian company proposing two export terminals in Oregon and Washington.

Ambre Energy is getting out of the North American coal market, a victim of a sharp decline in international coal prices. The revelation, contained in an Australian regulatory filing, underscores the uncertainties facing coal exports in the Pacific Northwest.

Ambre Energy, based in Brisbane, Australia, was an owner with Arch Coal Inc. of Millennium Bulk Terminals-Longview, which wants to build and operate a $650 million terminal at Longview to export coal from Montana and Wyoming to Asia. The terminal would ultimately be able to handle 44 million metric tons of coal a year.

Also, the company had requested Oregon's approval to bring coal by train to the Port of Morrow in Boardman, Ore., where it would be put on barges to the Port of St. Helens, Ore., for transfer to ocean-going ships. Oregon regulators in August rejected the Columbia River coal terminal, and the company said at the time that it would appeal the state's decision.

Also in August, Ambre announced an indefinite postponement of an earlier plan to purchase a 50 percent stake in the Decker Mine, in Montana, from Wyoming-based Cloud Peak Energy. As part of that deal, Cloud Peak would have gained the option to move up to 5 million metric tons of coal annually through the Millennium Bulk Terminal in Longview.

Ambre is selling its interests in its Oregon and Washington projects to a U.S.-based private equity company, Resource Capital Funds of Denver, Colo. Ambre’s board has approved the $18 million deal, most of which will pay off debt, and company shareholders are expected to follow suit in December.

Its Utah subsidiary, Ambre Energy North America, will be transferred to Resource Capital and remain the face of the export projects. Its leadership team will remain. The Decker Mine in Montana and Black Butte Mine and Big Horn coal deposit in Wyoming are included in the deal.

“We are extremely pleased to continue to have RCF as an active and committed partner in the development of Ambre’s coal assets and export projects,” said Everett King, Ambre Energy North America’s CEO. “RCF shares Ambre’s vision that these projects will succeed and will result in a welcome boost to local economies throughout the western U.S.”

Ambre’s Oregon project would send up to 8.8 million tons of coal to Asia annually via Columbia River facilities in Boardman and Port Westward. The Oregon Department of State Lands denied a key permit in August.

Even if that project and another in Longview get necessary permits, they still face long odds finding buyers for their coal.

Coal prices spiked in 2011, driven by massive demand from China. Companies quickly proposed export terminals throughout the Northwest to meet that demand.

But as China invested billions to move domestic coal around the country more efficiently, coal prices began dropping and projects were abandoned.

For investors, export projects have become bets that those markets will bounce back.

Ambre doesn’t expect that to happen soon. In its regulatory filing, Ambre noted that coal analysts don’t foresee a recovery until 2019 or 2020 — and that prices could continue dropping in the meantime.

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