TORONTO (miningweekly.com) – The United Mine Workers of America (UMWA) on Monday said it had reached a settlement with bankrupt Patriot Coal on new terms and conditions of employment that made significant improvements over what federal Bankruptcy Court Judge Kathy Surratt-States had ordered on May 29, and what Patriot implemented on July 1.

The Bankruptcy Court in St Louis ruled at the end of May that Patriot Coal could scrap collective bargaining agreements, stop pension contributions and convert retiree healthcare to an outside fund as part of its reorganisation efforts.

The ruling was a significant blow to the UMWA, which represents about 40% of the active miners, who have fought the proposed cuts to its active members and retirees.

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.

"After several weeks of nearly around-the-clock negotiations, I believe we have reached something that can be taken to the membership for ratification. We have been able to restore, or at least improve upon, many of the most drastic changes that the judge ordered, including in the area of wages, health care benefits, paid time off, pensions and more. In addition, we have negotiated a mechanism that will allow retiree health care benefits to continue,” UMWA international president Cecil Roberts said.

The vote will take place on Friday, when some 1 800 active or laid-off members in West Virginia and Kentucky would vote to ratify the agreement.

The union would not release details of the settlement until after those members have had a chance to hear its terms.

Patriot president and CEO Bennett Hatfield said the settlement represented the successful conclusion of a “difficult negotiation” in which both the UMWA leadership and Patriot management had invested many long days.

“Both parties want to preserve jobs and protect health care benefits for retirees by keeping Patriot on track for reorganisation – and not liquidation. We appreciate the cooperation of the UMWA leadership and the sacrifices of all of our employees and retirees as we work to restore Patriot to viability,” he said.

While the union was reviewing and ratifying the agreement, Patriot said it would be filing a motion with the Bankruptcy Court seeking permission to enter into this agreement.

Peabody Energy created Patriot through a 2007 spin-off, in what the union had labelled the creation of a company with the worst set of assets that was doomed to fail from the start.