UMWA members approve compromise labor deal with Patriot Coal

Patriot Coal (OTC: PCXCQ) said Aug. 16 that employees represented by the United Mine Workers of America have ratified compromise five-year labor agreements that have also been filed for approval with Patriot’s federal bankruptcy court.

These agreements were reached between Patriot’s signatory subsidiaries and the UMWA, as previously announced on Aug. 12. The terms of these agreements are less severe for the union than Patriot proposals approved earlier this year by the bankruptcy court.

“Ratification of these agreements provides labor stability and ensures cost savings essential to Patriot’s plan of reorganization,” said Patriot President and CEO Bennett Hatfield. “These agreements should set Patriot on a path to emerge from bankruptcy by the end of 2013.”

A motion seeking authorization to enter into these agreements has been filed with the U.S. Bankruptcy Court in St. Louis and will be heard at an Aug. 20 omnibus hearing.

The final UMWA member vote tally was 85% in favor to 15% opposed to the new agreements. Members from 13 union locals participated in the vote, which was overseen by UMWA local union tellers and conducted at worksites. The UMWA International Auditor/Tellers have certified the vote.

“The membership has made it clear that they are willing to do their part to keep Patriot operating, keep their jobs and ensure that thousands of retirees continue getting the health care they depend on and deserve,” UMWA International President Cecil Roberts said. “This has been a difficult and uncertain year for our members. But I believe that in the end, they understood that we had done a lot to improve what the judge had ordered. They also understood all that was at stake and resolved to move forward in a positive way.

“But as we work to keep Patriot a viable company into the future, we have not forgotten how we got here and who is responsible,” Roberts said. “With this agreement, we have foiled the schemes of Peabody Energy and Arch Coal by continuing to both provide health care for retirees and maintain union jobs at these mines.”

Roberts noted that the settlement with Patriot does not provide enough resources to fulfill the promise of lifetime health care benefits that Peabody and Arch agreed to provide to thousands of retirees from those companies.

“We are now able to turn our full attention to securing the lifetime health care benefits Peabody and Arch promised these retirees,” Roberts said. “If those companies thought our public effort to highlight their poor corporate citizenship was over, they will quickly find out otherwise. We’re moving into a new phase of that effort, and soon. We fully intend to hold Peabody and Arch accountable.

“It is also more critical than ever that the bipartisan legislative efforts in Congress to provide help to these retirees move forward,” Roberts added. “This settlement has not solved that problem, it has only bought us time to seek a more permanent solution.

“The clock is now ticking towards a day when the funding we have been able to secure for retiree health care benefits will run out,” Roberts said. “It would be unconscionable to leave these senior citizens hanging, wondering if they will be again thrust into the uncertainty they have endured the last 13 months. I urge our friends in Congress on both sides of the aisle to move as fast as they can to renew the government’s promise to these retirees, their dependents and widows.”

Patriot is made up largely of former Peabody Energy (NYSE: BTU) and Arch Coal (NYSE: ACI) operations. Peabody and Arch have said they divested these assets years ago, at a time when Patriot was financially healthy and the coal market was much better, and that they bear no responsibility for what happened to Patriot since then and for any additional UMWA liabilities related to those divested mines.

Patriot Coal is a producer and marketer of coal in the eastern United States, with 11 active mining complexes in Appalachia and the Illinois Basin. Patriot ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls approximately 1.8 billion tons of proven and probable coal reserves.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.