Buried Fire:

The Rise and Retreat of Coal Mining in Montana

For more than a century, the black seams folded into Montana’s plains and foothills quietly rivaled gold, silver, and copper as the mineral that built and then unbuilt whole communities. Unlike the state’s celebrated precious-metal booms, coal mining in Montana rarely produced fortunes for individual prospectors. Instead, it built company towns, fed railroads, and eventually powered half a continent’s lights, leaving behind a landscape of reclaimed pits, abandoned tipples, and a permanent trust fund that still shapes state finances today. The story of Montana coal is less a tale of sudden riches than one of infrastructure, immigration, and the slow arithmetic of extraction.

Early Discovery and Subsistence Mining

Coal outcroppings were visible across Montana territory long before anyone thought to profit from them. Along the Beartooth front near present-day Red Lodge, a prospector named James “Yankee Jim” George is credited with noticing coal exposed along Rock Creek Valley in 1866 while he was searching for gold (Western Mining History). However, he could not attract investors because the deposit sat far from any market or rail line and lay within land held by the Crow Nation under the Fort Laramie Treaty of 1851 (Geowyo). The government subsequently renegotiated terms with the Crow, and an 1880 treaty opened the area to settlement beginning in April 1882 (Miningartifacts).

A similar pattern unfolded near Great Falls. At Belt, coal was discovered along Belt Creek through deliberate prospecting, and within a few years a small commercial operation was under way to supply a growing central Montana market (Montana DEQ). Farther east, at what became Sand Coulee, coal was located in 1882 by a settler named Sam Dean, who opened the coulee’s first mine the following year, using little more than hand picks and shovels to supply nearby homesteads with winter fuel (Erickson). These were subsistence operations, not industries; that transformation required railroads.

Railroads and the Birth of Company Towns

The arrival of transcontinental and branch rail lines converted scattered coal outcrops into an industry. At Sand Coulee, the Montana Central Railway reached the coulee in 1888, and under the ownership of Great Northern Railway founder James J. Hill, the field’s output climbed rapidly (Erickson). Sand Coulee produced roughly 600,000 tons of coal annually between 1891 and 1896, fueling smelters in Great Falls, Butte, and East Helena as well as the Great Northern’s own locomotives (Montana History Portal, "Sand Coulee"). The camp divided into three distinct sections nicknamed Shacktown, Finn Town, and Downtown—a reflection of the Finnish, Scandinavian, and other immigrant labor that filled the mines.

At Red Lodge, the Rocky Fork Coal Company began production in 1887, and the town grew accordingly (Western Mining History). By 1891, more than four hundred immigrant miners were extracting an average of one hundred tons of coal a day (ACHP). Red Lodge’s population, drawn from Finland, Scotland, Ireland, Italy, and the Slavic countries, swelled toward a peak of roughly six thousand residents around 1915, making it one of the larger communities in the state at the time (Western Mining History).

In the Musselshell Valley, the coal beneath the Bull Mountains attracted speculative interest as early as the 1880s, but capital did not follow until the Milwaukee Road committed to building its transcontinental line through the valley (Van West). Systematic development began in 1907 when the Republic Coal Company opened its first mine. Its second mine became the field’s dominant producer, at its peak hoisting some 150 underground mine cars an hour up its shaft for nearly two decades (Van West). The Roundup Coal Mining Company followed the same logic, incorporating in October 1908 shortly after the Milwaukee Railroad extended its tracks into the valley the year before (OCLC). Most of the Bull Mountain miners lived not in Roundup itself but in the company town of Klein, which grew to an estimated fifteen hundred residents at its height (Van West).

Life and Labor Underground

Underground coal mining in Montana was dangerous, seasonal, and dependent on immigrant labor willing to accept both the work and the risk. Union membership was common in the coalfields; the cemetery at Klein still holds a section reserved for members of the United Mine Workers of America, marked with headstones bearing names from Croatia, Scotland, and other points of origin—a detail that documents the ethnic composition of the workforce as clearly as any company ledger (Van West).

The industry’s greatest tragedy struck at the Smith Mine near Bearcreek, four miles from Red Lodge, on the morning of February 27, 1943. An explosion tore through the mine while a reduced Saturday crew was underground. Of the seventy-seven men working that day, only three escaped alive, and a rescue worker later died as well (Miningartifacts). Federal investigators attributed roughly thirty deaths to the blast itself, with the remainder dying from injuries or from suffocation caused by methane and carbon monoxide. It remains, by a wide margin, the worst coal-mining disaster in Montana history, and it effectively ended large-scale underground extraction in Carbon County. The West Side Mine at Red Lodge had already closed in 1924 as strip mining elsewhere in the state reduced demand for underground labor, and the East Side Mine followed in 1932; by the time of the Smith Mine disaster, coal’s grip on the local economy was already loosening (Western Mining History).

From Underground Shafts to Strip Mines

The industry’s center of gravity shifted decisively during the twentieth century from vertical shafts to horizontal draglines. In southeastern Montana, the Northern Pacific Railway established the town of Colstrip after awarding an open-pit mining contract to the Foley Brothers Company in late 1923 to extract coal from railroad-granted lands for its own steam locomotives (Montana History Portal, "Colstrip"). Colstrip began as a company town including family housing, a bunkhouse, a mess hall, schools, and a general store. Over roughly three decades, the Northern Pacific and its operators extracted some forty-four million tons of coal there (Montana History Portal, "Colstrip"). When diesel locomotives made steam power obsolete, the Northern Pacific in 1959 sold its coal leases, mining machinery, and the Colstrip townsite itself to the Montana Power Company (Ultimate Montana).

Coal production at Colstrip resumed under Montana Power’s subsidiary, Western Energy Company, in the mid-to-late 1960s. Over the following two decades, the company built four coal-fired generating plants at the site with a combined capacity exceeding two thousand megawatts (Montana History Portal, "Colstrip"). The adjacent Rosebud Mine, a massive strip operation drawing on the Fort Union Formation’s sub-bituminous coal, became one of the largest coal sources in the northern Great Plains. Colstrip itself grew into what local boosters would later call the energy capital of Montana, its power lines carrying electricity west to the Pacific Northwest.

Taxing the Black Gold

Montana had taxed coal production since 1921, but the scale of strip mining that arrived in the 1970s prompted lawmakers to rewrite the rules (Montana Legislative Services Division). In 1975, the legislature enacted a new severance tax schedule that could reach as much as thirty percent of the coal’s contract sales price (Law.Resource.Org). The following year, voters approved a constitutional amendment dedicating a growing share of that revenue—eventually half—to a permanent trust fund whose principal could be spent only by a three-fourths vote of the legislature. The amendment passed in 1976 with sixty three percent of the vote (Montana State Legislature). Out-of-state utilities challenged the tax as an unconstitutional burden on interstate commerce, but the United States Supreme Court upheld it in 1981 (Commonwealth Edison Co. v. Montana), finding that the tax applied evenly regardless of where the coal was ultimately sold. The case, and the trust fund it preserved, gave Montana a lasting fiscal stake in an industry that, elsewhere in the country, had often left mined-out regions with little to show for their mineral wealth.

Reckoning with Strip Mining’s Legacy

By the early twenty-first century, Colstrip’s fortunes had become entangled with energy policy far beyond Montana’s borders. Washington State utilities that co-owned the Colstrip plants faced pressure from customers and state law to transition away from coal-fired power, leading to agreements to systematically retire older generation units (The Seattle Times). Reclamation of the strip-mined land has proceeded in phases, balancing legal requirements with the long-term management of ash ponds and groundwater quality. Meanwhile, in the Bull Mountains near Roundup, underground mining persisted into the twenty-first century as Montana’s only active underground coal operation—a modest echo of the industry that once employed thousands across the state.

Montana’s coal history resists easy sentiment. It is not a story of individual triumph but of railroads seeking cheap fuel, immigrant labor absorbing physical risk, and a state government moving to capture a lasting share of the wealth carried out of the ground. The company towns it built—Belt, Sand Coulee, Klein, Bearcreek, and Colstrip—rose and fell according to a rail schedule and a market price largely set elsewhere. The seams that once fired locomotives and secured a state’s fiscal future now sit beneath communities whose economies, in most cases, have long since moved on.

Works Cited

Advisory Council on Historic Preservation (ACHP). "Red Lodge, Montana Mining Industry Growth." Advisory Council on Historic Preservation Reports, www.achp.gov.

Commonwealth Edison Co. v. Montana, 453 U.S. 609 (1981). Resource.org, law.resource.org/pub/us/case/reporter/US/453/453.US.609.80-581.html.

Erickson, George Irwin. A History of Sand Coulee, Montana, 1880 through 1900. Thesis, Montana State University, ScholarWorks, scholarworks.montana.edu/items/e19875ce-3e98-4407-8cbb-9e5cdb463927.

"Geology and History of the Beartooth Front." Geowyo, www.geowyo.com.

Montana Department of Environmental Quality (DEQ), Mine Waste Cleanup Bureau. Great Falls Coal Field: Historic Overview. deq.mt.gov/files/Land/AbandonedMines/documents/CoalDocuments/GTFCoalField_HistoricOverview.pdf.

Montana Historical Society. "Colstrip." Montana History Portal, mtmemory.org/nodes/view/127623.

Montana Historical Society. "Sand Coulee." Montana History Portal, mtmemory.org/nodes/view/128359.

Montana Legislative Services Division. HJ 6: Coal Severance Tax Overview. Sept. 2021, archive.legmt.gov/content/Committees/Interim/2021-2022/Revenue/Meetings/September-2021/hj6-coal-tax-overview.pdf.

"Montana Mines." Miningarticles.org, miningartifacts.org/MontanaMines.html.

"As Washington State Looks for Cleaner Power, a Montana Coal Town Faces an Uncertain Future." The Seattle Times, 6 Mar. 2018, seattletimes.com/seattle-news/environment/as-washington-state-looks-for-cleaner-power-a-montana-coal-town-faces-an-uncertain-future/.

"The Roundup Coal Mining Company Records." Online Computer Library Center (OCLC), www.oclc.org.

"The Industrial Transition of Montana Power Company." Ultimate Montana Engineering Journals, www.ultimatemontana.com.

Van West, Carroll. "Musselshell County Montana." Montana's Historic Landscapes, montanahistoriclandscape.com/tag/musselshell-county-montana/.

Western Mining History. "Red Lodge, Montana." Western Mining History Towns Reference, westernmininghistory.com/towns/montana/red-lodge/.