TORONTO (miningweekly.com) – Bankrupt Patriot Coal is allowed to scrap collective bargaining agreements, stop pension contributions and convert retiree healthcare to an outside fund as part of its reorganisation efforts, the Bankruptcy Court in St Louis ruled on Wednesday.
The ruling was a significant blow to the United Mine Workers of America (UMWA), which represents about 40% of the active miners, who have fought the proposed cuts to its active members and retirees.
"This ruling represents a major step forward for Patriot, allowing our company to achieve savings that are critical to our reorganisation and the preservation of more than 4 000 jobs," Patriot president and CEO Bennett Hatfield said.
"While the court has given Patriot the authority to impose these critical changes to the collective bargaining agreements, and our financial needs mandate implementation by July 1, we continue to believe that a consensual resolution is the best possible outcome for all parties," he added.
Patriot, which declared bankruptcy last year, said the ruling would allow it to adjust wages, benefits and work rules for union employees to a level consistent with the regional labour market.
Judge Kathy Surratt-States, in a 102-page ruling, said Patriot might have been a victim of unwarranted optimism about future prospects but that unions shared some blame.
"Unions generally try to bargain for the best deal for their members, however, there is likely some responsibility to be absorbed for demanding benefits that the employer cannot realistically fund in perpetuity, particularly given the availability of sophisticated actuarial analysts and cost-trend experts," Surratt-States said.
“The ruling … to eliminate its collective bargaining agreements and cut off retiree health care is wrong, unfair and fails to fully recognise the coming wave of human suffering that will be experienced by thousands of people throughout the coalfields,” UMWA International president Cecil Roberts said in a statement.
The UMWA said it would appeal the ruling.
“I want to make it emphatically clear that despite this ruling, the UMWA’s effort to win fairness for these active and retired workers is by no means over. Indeed, this ruling makes it more important than ever for the architects of this travesty, Peabody Energy and Arch Coal, to take responsibility for the obligations they made to thousands of retirees who are now at imminent risk,” Roberts said.
Peabody Energy created Patriot through a 2007 spin-off.
Under the Bankruptcy Court’s ruling, Patriot would be allowed to stop paying for retiree health care benefits as early as July 1. Responsibility for paying benefits would be handed over to a Voluntary Employee Beneficial Association (Veba), which would only have guaranteed funding of $15-million plus a royalty payment of $0.20/t of coal the company produces, which may add about $5-million to the Veba per year. Current healthcare costs for these retirees averages nearly $7-million a month.