Next train to ... China?
Billionaire Forrest Mars, of Mars candy bar fame, used to be the Tongue River Railroad's most high-profile foe. The much-disputed rail line -- first proposed some 30 years ago -- gained new momentum in recent years as interest mounted in mining southeastern Montana's untapped coal reserves, which currently have no path to market. Mars, like many other local landowners, didn't want the tracks bisecting his 82,000-acre ranch. So as the Wall Street Journal puts it, he "emerged from a life of privileged seclusion" to fight the railroad, funding litigation and lobbying to reform the state's eminent domain laws. "Mars said he wasn’t just a rich guy protecting his property," reports the Journal. "(H)e was a real rancher whose cattle and fields would suffer from the railroad."
No more. In late July, Mars dropped his opposition to the railway. Instead of trying to fight its construction in court, he simply bought it -- and rerouted its would-be path around his property. Buying into the Tongue River Railroad Company with Mars were Arch Coal, which has leased the Otter Creek coal tracts that the line will serve, and Burlington Northern Santa Fe, itself purchased by Warren Buffett in 2009. (When Buffet bought the rail behemoth, it was interpreted by many as a bet that coal's economic future was still bright.)
The Northern Plains Resource Council says it will continue to fight the new railroad on behalf of some of the Tongue River Valley's less well-heeled landowners without Mars' help. In June, the Surface Transportation Board rejected their petition to stop construction of the line until additional environmental review was done; separate litigation is still pending. But billionaires make powerful enemies, so it's hard not to see Mars' conversion as a boon for the Tongue River Railroad -- and for coal production in Montana.
Gov. Brian Schweitzer -- Montana's self-proclaimed "coal cowboy" -- has been pushing hard to position Montana to supply rising Chinese demand. (The Missoula Independent's Matthew Frank just published an in-depth look at Montana's bid to become China's "coal colony.") If and when Arch Coal gets around to mining its Otter Creek leases, it's widely assumed that a lot of that coal will be headed for China. Mars' purchase of the Tongue River Railroad may help make that happen.
"And it's not just Otter Creek," Frank points out. "There are a handful of other proposed coal mines in central and eastern Montana. The state's demonstrated coal reserves amount to about 119 billion tons, almost a quarter of the entire country's proven reserves. For a variety of reasons it hasn't made economic sense to tap most of the trove. Asia's coal demand, a new railroad, and the enticement of, in Schweitzer's words, 'a pretty good lump of money' may change that."
We'll be watching.
Cally Carswell is HCN's assistant editor.
Photo: A coal train in the Powder River Basin. Courtesy of KimonBerlin, licensed under Creative Commons.