The Billings Outpost

Study projects impact of Otter Creek mining

University of Montana Bureau - of Business and Economic Research

MISSOULA – Construction of the Otter Creek coal mine would significantly boost Montana jobs, household income and tax revenues as the Asian demand for the resource expands, according to an economic impact study conducted by economists Patrick Barkey and Paul Polzin of The University of Montana Bureau of Business and Economic Research.

According to the report, “The Impact of Otter Creek Coal Development on the Montana Economy,” construction of the Otter Creek mine proposed by Arch Coal, new rail development and related infrastructure represents a total investment approaching $1 billion.

During the permitting and construction phase, the project is expected to create 2,648 construction jobs in Montana in the peak building year, with most new jobs created in Eastern Montana, the study found.

Statewide impacts on income for Montana households during the peak construction year would be similarly substantial, with $103.5 million of new personal income generated. In Eastern Montana total household earnings would increase more than 8 percent.

BBER’s study found that Otter Creek would generate substantial economic impacts during the operations phase as well. About 1,740 new permanent, year-round jobs would be created in the Montana economy while the mine is operating, increasing household income by $125.4 million per year. The overall state population would increase by 2,850 people and the school-aged population by more than 560 students.

Otter Creek mine operations would raise state and local tax revenue by almost $92 million per year, due to both coal-specific taxes and growth in the overall tax base, the study found.

BBER director and study co-author Barkey notes that though domestic markets are unlikely to provide significant growth for Montana coal, demand in China is projected to swell rapidly and drive Otter Creek’s fate.

“The anticipated increase in coal demand in China between 2010 and 2035 is more than twice the current U.S. production of coal, and Southeast Asia does not have sufficient capacity to satisfy this growth,” Barkey said. “Because Montana coal fields are closer to Northwest ports than those in Wyoming, Montana has a geographic advantage in serving fast-growing Asian markets.”

The Bureau of Business and Economic Research at the UM is a research center producing economic and industry data for Montana. For more information go online to http://www.bber.umt.edu/.

 

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