There's some good news and some bad news this week for coal miners who retired from the ill-fated Patriot Coal company.
The world's largest private coal company, Peabody Energy, which spun off Patriot Coal back in 2007, reached an agreement with the United Mine Workers of America union (UMWA) this week to pay $75 million into a fund for about 12,000 retired Patriot Coal employees' health benefits.
"If anyone has ever earned retirement benefits, coal miners have," said Phil Smith, a spokesperson for the UMWA.
It's hard to disagree -- being a coal miner comes with a host of inherent health risks, including black lung, heart disease, cancer and joint deterioration from working for years in confined spaces. But it seems that miners who make it to retirement may be left fighting for scraps in a declining industry.
The 2010s have not been a good decade for coal. Production capacity in the United States has been declining for years, according to the Energy Information Administration, and the number of coal mines in the United States declined by more than 13 percent between 2012 and 2013, the latest year for which there is data.
The details of this particular agreement are complicated because of the Patriot spinoff and its (two!) subsequent bankruptcies. But the bottom line is that retirees are going to get about half the money they were supposed to get in their health benefits fund (referred to as the Voluntary Employees Beneficial Association, or VEBA).
Back in 2013, just a few years after Peabody spun off Patriot Coal, the latter company filed for bankruptcy protection. As part of the bankruptcy, Patriot Coal agreed to put $145 million into a fund for its coal miner retirees, in order to pay for their health benefits. It emerged from that bankruptcy intact, but in May 2015 filed again. The second time, it was not so lucky.
After Patriot Coal ceased to exist, the miners still had millions in health benefits promised to them. That's when the UMWA began to negotiate with Peabody to recover some of the money owed to the retirees.
A statement released by Peabody Tuesday said that "while Peabody has met its obligations under this agreement, Patriot breached the agreement, which left unclear Peabody’s ongoing funding requirements to the VEBA."
Regardless of their position that the situation was Patriot Coal's mess, Peabody agreed to pay $75 million -- quite a bit better than nothing, but $70 million less than the original agreement from just three years ago.
"When you thought you’d have $145 million coming and you end up with $75 million, you can’t call that a win, but you can’t call that a loss, either," said Smith.
Peabody lost $302 million in the third quarter of 2015, and $149 million in the quarter before that.
Here's the company's stock over the last 10 years:
Here's the stock over the last five days: The price dropped by nearly 5 percent when the agreement with the UMWA was announced Tuesday.
