This story was co-published with The Financial Times.

When Gunvor, one of the world's largest energy traders, invested $400 million in a troubled Montana coal mine, it looked like a promising deal. The plan was to sell much of the coal to the booming Asian market, where it was fetching far more than the prevailing price in the U.S.

The deal in October 2011 delivered impressive profits to the mine's previous owners, a rare financial success in America's depressed coal industry. It also set the mine on course to more than double production this year compared with last, at a time when total U.S. coal production is falling.

But shipping coal to the Asia Pacific region was not as straightforward as it seemed. Gunvor expanded from its core of trading oil into other energy sectors just as the price of coal in the U.S., Asia and elsewhere tumbled in part because U.S. power plants are burning cheaper natural gas. Now, the Geneva-based company is battling unexpected economic, political and legal headwinds in the U.S.

Gunvor and the two other owners of the Montana mine, called Signal Peak, are embroiled in a legal dispute over royalty payments. The mine has also bid on federal and state coal tracts, thrusting Gunvor into a debate raging in America over whether governments are getting a fair price for U.S. coal reserves.

Industry experts say Gunvor bought the mine at the height of the market. "The timing of the deal was terrible," said a senior coal trader with a rival trading house. "They overpaid."

In a statement last month, Gunvor defended "Signal Peak's longterm value," noting both the quality of the coal and the quantity — enough for the mine to keep producing for roughly 30 years.

One of the trading house's two principal owners is Gennady Timchenko, a billionaire who has known Russian President Vladimir Putin since both men were based in St. Petersburg in the 1980s. Gunvor grew rapidly from a niche player in the Russian oil markets in the early 2000s to one of the largest global trading firms, reporting sales of more than $80 billion last year. Privately held Gunvor does not disclose profits, but trading houses generally have low margins.

A big beneficiary of the Gunvor investment has been FirstEnergy, the utility based in Ohio, which had owned half the Signal Peak mine with privately held Boich Companies, also based in Ohio. Each company sold a percentage of its stake to Gunvor so that the three now are equal owners. FirstEnergy's public filings show its gains from the sale to Gunvor: It acquired the mine for $133.5 million in 2008. With its sale to Gunvor, it booked a pre-tax profit of $569 million and $260 million in cash.

The price for U.S. thermal coal — the kind produced at Signal Peak and other mines in the Powder River Basin in the western U.S. — has slumped in key Asian countries. Federal energy agency data show China's price per ton of U.S. thermal coal in the first quarter of 2012 plunged to $56 from $121 in the first quarter of 2011.

Gunvor became an equal partner with FirstEnergy and Boich by paying $400 million for its third of the mine. Each must approve the hiring of key mining executives, can veto major financial transactions and is a co-guarantor on a credit extension, public filings show.

Such details can determine whether the Committee on Foreign Investment in the United States, or CFIUS, reviews a deal. The federal panel, which examines the security implications of foreign investment in the U.S., considers factors including whether a foreigner has control over financial or managerial decisions. The government has broad powers to initiate a review and in the past has interpreted "control" to mean less than 50 percent ownership. In this case, the deal has not been reviewed, said FirstEnergy spokeswoman Tricia Ingraham. "The parties did not believe the deal rose to the level of requiring it," she said.

The U.S. government has considerable flexibility in determining the kinds of deal meriting CFIUS review, according to lawyers who handle such cases. Some previous acquisitions of coal assets by foreigners, including one involving a Russian entity, have gone through the CFIUS process.

Gunvor inked "a substantial coal purchase agreement" in the deal, according to a statement by the firm's lawyers, and the mine has increased production. Signal Peak produced 3.82 million tons in the first quarter of 2012, compared to just 4.66 million tons in all of 2011, according to the U.S. federal mine data.

Gunvor’s purchase agreement with Signal Peak has riled former owners of the mine, who sold it to FirstEnergy and Boich and have been reaping royalties from coal sold from the mine since then. Those owners have filed suit in federal court to argue the fairness of the set price used to calculate their royalties.

The royalty holders claim the Signal Peak price should be based on an arm's length transaction. They contend the current owners have used insider transactions, which artificially lower the sale price and reduce the royalties. The current owners have filed for dismissal of the suit.

Gunvor's lawyers argue the claims are baseless in part because the company has "an extremely remote connection at best" to the litigation. Gunvor, they say, "has never and does not presently conduct business in the State of Montana." Gunvor purchased Signal Peak through an American subsidiary.

Signal Peak is pushing ahead with expansion plans, which has also made it part of an industry-wide debate over the price at which the government sells coal. Signal Peak recently paid $10.5 million to the federal Bureau of Land Management for the right to lease a nearby tract containing 31.75 million tons of coal. Critics have argued against the lease, complaining the price was too low given the likely export of the coal.