If a tentative lease deal between Cloud Peak Energy and the Crow Tribe goes through, almost 1.4 billion tons of coal will be extracted from southeastern Montana’s Crow Indian Reservation.

A dragline moves overburden covering a coal seam at Cloud Peak Energy’s Spring Creek Mine near Decker. (Photo by Tom Howard/Billings Gazette)

Cloud Peak Energy said it would pay the tribe up to $10 million during an initial option period if the deal is approved by the Crow Tribal Legislature and federal officials with the Department of Interior.

The deal covers three coal deposits near Cloud Peak’s existing Spring Creek mine near the Wyoming border. The tribe’s reserves are within the Powder River Basin coal fields, which account for about 40 percent of the nation’s coal production.

Crow Chairman Cedric Black Eagle has said in past interviews that the coal could be exported to Asian markets, although it’s uncertain when mining could begin.

The Crow Tribe has a portion of the northwestern edge of the reservation already leased and was close in past years to sealing a deal with an Australian company to build a coal-to-liquids plant there.

Tribal leaders hoped that plant would give an economic boost to the Crow’s 13,000 enrolled members. But four years after the Many Stars coal-to-liquids project was announced, its prospects remain uncertain due to financing difficulties and other problems.

Negotiations with Cloud Peak to lease and mine reserves on the eastern side of the 2.2 million-acre reservation have been going on since at least last fall. The agreements provide for exploration and options for Cloud Peak to lease the three deposits for an initial five-year term.

That lease could be extended to 2035 if certain conditions are met, the tribe and Cloud peak said. If the company exercises the lease options, it would pay the tribe up to 15 cents per ton, royalties and production taxes.

Jenna Cederberg