HELENA – The proposed Otter Creek coal mine in southeastern Montana, once operating, would create a $200 million-a-year positive economic impact for the state, says a report released this week by the University of Montana’s Bureau of Business and Economic Research.
The report, paid for by the Montana Contractors Association, says the giant mining project south of Miles City also would create 2,600 jobs during its construction phase and 1,740 permanent jobs once the mine is operating.
“As a result of Otter Creek coal development, the state economy is significantly larger, more prosperous and more populous than would otherwise be the case,” the report said.
Otter Creek developers are expected to submit a mining application to the state this year. The report assumed that construction on the mine and accompanying railroad would begin in 2015 and peak in 2016, while the mine itself would start operating full time in 2019.
Among other things, the 43-page report said the mine and accompanying railroad would increase personal income by $125 million a year, generate $92 million in state and local taxes, create hundreds of jobs locally and across the state, and increase the state’s population by nearly 3,000 people.
The report is likely to become a weapon in the political debate over Otter Creek, which faces opposition from some landowners and environmental groups.
“We want the public of Montana and elected officials to understand the economic opportunities, because we know there will be environmental assaults on the proposed subject,” said Cary Hegreberg, executive director of the Contractors Association, which paid $40,000 to finance the study.
“We wanted to get out in front of that, and we wanted people to understand what a huge economic opportunity this was for the state of Montana,” he added.
The report also is attracting criticism from opponents of coal development, one of whom said it ignores the costs of the mining project and the possibility of fading markets for coal.
“It certainly looked at the benefits, but it did a very poor job of assessing any of the costs of developing Otter Creek,” said Derf Johnson, program associate with the Montana Environmental Information Center.
MEIC, based in Helena, is a plaintiff in a lawsuit challenging the state Land Board’s leasing of state-owned coal to the developer, Arch Coal Co.
Patrick Barkey, director of the BBER, said Wednesday he respects the criticism, but that the report did consider some of the costs, such as driving up wage costs for area businesses, the investment by out-of-state firms developing the project and switching some land use from agriculture to mining.
Barkey said he agrees the mine would transform the rural area into an industrialized zone, but that social and environmental impacts are hard to quantify.
Still, he said those factors don’t really change the basic message of the report, which calculates the broad, sweeping economic impact such a large project would have on eastern Montana and the entire state.
The report assumes that the Tongue River Railroad would be built from Miles City to Ashland, about 90 miles to the south, and that most coal from the Otter Creek mine would be shipped by train to Pacific ports, for transport to east Asia.
It said jobs directly at the mine would average $78,000 a year, and that the project would generate other jobs in retail trade, construction, railroads and other transportation, health care, government and schools.
Missoulian State Bureau reporter Mike Dennison can be reached at 1-800-525-4920 or at firstname.lastname@example.org.