Engineering & Mining Journal

JUN 2013

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NEWS-THIS MONTH IN COAL Bankruptcy Judge Allows Patriot to Abandon Union Contracts Engineers and the Construction and Specialized Workers Union both claim HD Mining granted work permits for the Chinese after rejecting numerous Canadians with exemplary qualifications. The high court, however, sided with a decision by immigration authorities to allow the workers into the province. Chinese Coal Imports Surge Coal imports in the world's biggest coal using nation surged by 15% in the 30 days leading up to April as cheaper prices abroad drew increased shipments—with Indonesia and the U.S. leading the way. Indonesian imports jumped about 800,000 metric tons (mt) to 6.85 million mt last month. U.S. shipments, meanwhile, nearly doubled in April to 1.05 million mt. Retired union mineworkers protest against Patriot Coal in St. Louis. On May 29, a federal bankruptcy judge in St. Louis ruled in favor of officials at Patriot Coal seeking to annul union contracts, a move allowing the financially distressed company to impose sharp wage and benefit concessions on current and retired miners. In a 102-page decision, Judge Kathy A. Surratt-States of the U.S. Bankruptcy Court granted Patriot's motion to reject collective bargaining agreements with the United Mine Workers of America (UMWA) while terminating current benefits for retirees. Patriot had asserted reorganization would be impossible without the cuts—a claim the union fought in court and with frequent, sometimes boisterous, public protests. Citing union requirements and "without relief from debtors' current retiree benefit costs, debtors will be forced into liquidation," Surratt-States wrote of a case "plagued with uncertainty," after a week's worth of hearings. The ruling was a major blow to the union, which represents about 40% of Patriot's miners. UMWA President Cecil Roberts described the outcome as wrong and unfair. "Under American bankruptcy law, the short-term interests of the company are valued more than the dedication and sacrifice of the workers, who actually pro44 E&MJ • JUNE 2013 duce the profits that make a company successful," Roberts said. He said the union would appeal it in federal court. Patriot Coal CEO Ben Hatfield, however, hailed the decision. "This ruling represents a major step forward, allowing our company to achieve savings critical to reorganization and preservation of more than 4,000 jobs," he said in a statement. "The savings contemplated, together with other cost reductions across our company, will put Patriot on course to a viable business." Accordingly, Patriot may now cease contributions to a union pension plan on behalf of unionized workers, while reducing overtime pay, planned wage increases and vacation time, among other concessions. In addition, Patriot may terminate current retiree benefits while transferring them to a trust as of Q1 2014, financed by up to $300 million in future profit-sharing contributions. Canadian Court Clears HD Mining in Worker Dispute A federal Canadian court has dismissed a complaint filed by two unions against HD Mining International alleging the company hired 201 unqualified short-term Chinese employees for a coal mine in British Columbia in lieu of Canadians. Representatives of International Union of Operating South African Pipeline to Supply Mines with Water South Africa is set to complete construction of a 44-mile pipeline in 2013 to supply reservoir water in the northern part of the country to local coal mines, Water and Environmental Affairs Minister Edna Molewa announced. The De Hoop Dam in Limpopo Province is nearly finished and water storage has begun, Molewa said. Work on a separate pipeline supplying water elsewhere in the province is under way. Linc Energy Finalizes Exxaro UG Gasification Project Linc Energy has formalized a deal with Exxaro Resources to jointly develop its first commercial underground coal gasification (UCG) project in sub-Saharan Africa, including the use of synthesis gas for power generation and gas-to-liquids, according to company officials. Under the agreement, Linc said it will receive $19 million in licensing fees, royalties indexed to Australian CPI from Q4 2012, indexes for synthesis gas, $6.7 million pending UCG's initial regulatory approval in 2017 and engineering partnership fees. Linc Energy officials have also agreed on a minimum 15% equity in the initial project, with an option to buy 49% equity in all operational parts developed by Exxaro which, in turn, will enjoy a non-exclusive license to Linc Energy's UCG, officials said. www.e-mj.com

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