Patriot Coal

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Patriot Coal Corporation is a coal-mining company based in St. Louis, Missouri. The company is a 2007 spin-off of most of the Eastern U.S.A. operations of Peabody Energy. Patriot has 14 mining complexes in Appalachia and the Illinois Basin. The company has 13 active mining complexes in Appalachia and the Illinois Basin, ships to domestic and international electric utilities, and controls approximately 1.9 billion tons of proven and probable coal reserves.

On November 14, 2012 it was announced that Patriot Coal was going to stop all mountaintop removal in Central Appalachia under a historic agreement with Sierra Club, Ohio Valley Environmental Coalition and West Virginia Highlands Conservancy.

At the end of first quarter 2011, Patriot Coal said the Company expects to export 25 percent of its total 2011 shipments to meet growing international coal demand in China and India.

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History

On July 23, 2008, Patriot acquired Magnum Coal Company for $709 million. At the time, Magnum was one of the largest coal producers in Appalachia, with 12 mines mines and 7 processing plants. Magnum had over 600 million tons of proven or probable coal reserves. Lehman Brothers acted as financial advisor to Patriot and Citibank acted as financial advisor to Magnum for the transaction.

Production

In 2010, Patriot sold 30.9 million tons of coal, of which 78% was sold to domestic electricity generators and industrial customers and 22% was sold to domestic and global steel and coke producers.

Revenues

On February 2, 2012, Patriot announced it had a net loss of $38.3 million in the fourth quarter and $115.5 million for 2011, due to low demand. In response, the company said it was idling its Big Mountain mining complex, and reducing production at its Wells mining complex and Rocklick mining complex (which includes the Harris 1 Mine and the Black Oak Mine), all of which are in southern West Virginia.

2012: Bankruptcy protection filing

Citing lower thermal coal prices, rising costs for environmental liabilities, and canceled customer contracts from a milder winter and growing use of natural gas, Patriot Coal filed for bankruptcy in July 2012, saying coal demand was at a 24-year low. The company’s Chapter 11 petition listed $3.57 billion in assets and $3.07 billion in debts. The company arranged for $802 million of financing to continue mining and shipments during the reorganization.

Patriot Coal Mining Operations

Patriot Coal has mining operations in West Virginia and Kentucky, in the Appalachia and Illinois Basin respectively. Patriot uses underground mining and surface mining, including mountaintop removal.

In 2010, 8.26 million of the 24.1 million tons of coal Patriot mined was from strip mining in Appalachia and the eastern Interior (the southern border of Illinois, the western border of Indiana, and the western tip of Kentucky). In its 2010 annual report to the U.S. Securities and Exchange Commission, Patriot stated that at the end of 2010 it controlled 1.2 billion tons of proven and probable coal reserves in Appalachia, "of which 457 million tons were assigned to current operations."

In the Illinois Basin, Patriot has three complexes located in Union and Henderson counties in western Kentucky which produced 6.6 million tons of coal in 2010.the year ended December 31, 2010. Patriot states that at the end of 2010 it controlled 668 million tons of proven and probable coal reserves in the Illinois Basin, "of which 178 million tons were assigned to current operations." Coal from Patriot's shipped primarily to electricity generators in the Midwestern United States and industrial customers for power generation.

Appalachia/West Virginia Operations, as of the end of 2010, were:

• Big Mountain 16 Mine - part of the Big Mountain mining complex, which also includes two unnamed, contractor-operated underground mines located in southern West Virginia
• Blue Creek No. 1 Mine
• Campbells Creek 7 Mine
• the Corridor G mine complex which include the Job 21 Mine and the Hill Fork Mine
• Federal No. 2 Mine
• Hobet 21 Surface Mine
• Kanawha Eagle Mine
• Logan County Complex is also referred to as the Guyan Mine
• Paint Creek complex, which includes the Samples Mine and Winchester Mine
• Panther Mine
• Patriot Surface Mine
• Rivers Edge Mine
• the Rocklick mine complex, which includes the Harris 1 Mine and the Black Oak Mine
• Stockburg 2 Mine
• Wells
• Wildcat Surface Mine

Illinois Basin/Kentucky Operations:

• Bluegrass mining complex
• Dodge Hill mining complex
• Freedom Mine (KY)
• Highland mining complex, including the Highland 9 Mine

Mines formerly operated by Patriot include the:

• American Eagle Mine
• Callisto Mine
• Deskins Mine
• Dodge Hill Mine

Mountaintop removal

Patriot was the second largest producer of coal from mountaintop removal, as of 2010. Patriot mined 7,058,522 tons of coal from mountaintop removal in 2010. About 55% of Patriot's Central Appalachian coal was dug up using mountaintop removal.

In November 2012, Patriot Coal became the first U.S. coal operator to announce they were going to phase out and eventually stop all large-scale mountaintop removal mining. The proposed agreement, which was presented to a federal judge, allows the company to postpone as much as $27 million in expenses into 2014 and beyond. Thus, the likelihood the company can successfully emerge from Chapter 11 protection has improved. The agreement caps the amount of coal that Patriot can mine from surface operations at 6.5 million tons in 2014, falling to 5 million tons in 2017. By January 2018, the amount is limited to no more than 3 million tons a year.

New coal mines

The Gateway Eagle mine in the Rocklick complex and the Workman Branch mine in the Wells complex are both expected to be brought on-line in the second quarter 2011. The Peerless mine in the Kanawha Eagle complex is projected to be operational in early 2012.

Coal exports

At the end of first quarter 2011, Patriot Coal said that total coal exports from the U.S. are on track to reach 100 million tons in 2011, representing a doubling of exports since 2006 and a 25 percent increase over 2010. To meet growing coal demand, Patriot said it is embarking on a multi-year expansion of met coal, with new coal mines and a second continuous miner section beginning production at the Black Oak Mine in 2011.

Patriot, workers, and health care

In 2007 Peabody spun off its union mines and some other operations into Patriot Coal. The spin-off left Patriot with more than $600 million in health care liabilities for over 10,000 Peabody union retirees plus their spouses. The 2012 bankruptcy of Patriot Coal now could impact the workers' health insurance and other benefits. According to UMW President Cecil Roberts, Patriot will use the Chapter 11 bankruptcy reorganization to try to stop insuring its aging retirees; Roberts said in 2007 that the spin-off "was just a paper trick... Peabody intentionally created this." Miners say that while Patriot is bankrupt, Peabody has a lot of money, with record net profits of $1 billion in 2011.

In May 2013, U.S. Bankruptcy Judge Kathy A. Surratt-States said that Patriot Coal can can throw out contracts negotiated with the United Mine Workers of America, and move current "retiree health care to the UMWA Retiree Healthcare Trust, which shall be structured as a Voluntary Employee Beneficiary Association." The ruling specifically approved Patriot's "motion to reject collective bargaining agreements and to modify retiree benefits."

Lobbying

In 2010, Patriot Coal spent $2.15 million on lobbying through the firm American Freedom Innovations, primarily on bills related to greenhouse gas regulations: the American Clean Energy and Security Act of 2009 and the Clean Energy Jobs and American Power Act. Other bills included the Coal Accountability and Retired Employee Act (CARE Act), sponsored by Nick Rahall, which would amend the Surface Mining Control and Reclamation Act of 1977 to "provide for use of excess funds available under that Act to provide for other benefits," specifically funding shortfalls in the United Mine Workers of America (UMWA) Pension Fund.

Political Contributions

Political candidates

In 2010, Patriot Coal made the highest contributions to the following politicians:

• Nick Rahall (D)
• Roy Blunt (R)
• Todd Akin (R)
• Alan Mollohan (D)

Rahall is a staunch opponent of legislation designed to end mountaintop removal mining, saying that a 2010 the bill that would prohibit companies from burying Appalachian streams under mining waste would have passed long ago except that his seniority on several key committees has allowed him to block it. Rahall also voted against the American Clean Energy and Security Act and voted to block the Environmental Protection Agency from reducing greenhouse gases linked to global warming.

Roy Blunt opposes federal cap and trade legislation and supports drilling for oil on the U.S. coastline. On 10 March 2010, Blunt was named by the League of Conservation Voters as one of the "Dirty Dozen" lawmakers who had "consistently sided with Big Oil and other dirty polluters over a cleaner, more sustainable future".

PACs

In 2010, the Patriot Coal political action committee (PAC) received $135,873 and spent $94,152. Contributions from this PAC to federal candidates included 45% to Democrats and 55% to Republicans. They also donated to the following political action committees:

• National Mining Association - $10,000
• All America PAC (Affiliate: Evan Bayh (D-Ind)) - $5,000
• NRSC/NRCC Victory Cmte - $5,000
• Blue Dog PAC - $5,000
• Help America's Leaders (Affiliate: Hal Rogers (R-Ky)) - $2,000

Regulatory and legal issues

Safety violations

From 2000 to 2009, Patriot Coal had 2,779 "significant" violations from the Mine Safety and Health Administration, one death on the job, and nearly $9 million in fines. The company had 3,212 workers by the end of 2010.

In 2010, Patriot Coal had 207 health and safety violations for which the company was issued citations by the MSHA, and over $700,000 in fines.

EPA's Mountaintop Removal Permit

On March 2, 2010 the EPA announced that it had granted a Clean Water Act permit for the Hobet 45 mine in Lincoln County, West Virginia after Hobet Mining LLC, a company owned by Patriot Coal, had agreed to additional "significant protections" against environmental impacts. The permit now must be approved by the Army Corps of Engineers. Opponents of the permit, citing groundwater pollution from mountaintop removal projects, stated that, “Enforceable minimum waste management requirements for dry disposal of coal ash in landfills should include siting restrictions, liners, groundwater monitoring, leachate collection, and financial assurance, closure requirements, post-closure care, and corrective action.”

West Virginia hearings on Patriot Coal's selenium levels

On September 1, 2010, Patriot Coal was found in contempt of court by Judge Chambers and ordered to clean up selenium pollution at the two mines in West Virginia. Chambers ordered Patriot subsidiary Apogee Coal to install treatment systems and comply with discharge limits by March 1, 2013, and ordered Patriot subsidiary Hobet Mining to submit a selenium treatment plan by Oct. 1, 2010, and comply with pollution limits in its operating permit by May 1, 2013. The coal producer estimates the it will cost $50 million to comply with the judgment, plus $3 million in annual operating costs. Chambers also ordered Patriot to post a $45 million letter of credit to guarantee the treatment systems are installed.

According to Patriot Coal's 2010 10Q report: "The lack of proven technology to meet selenium discharge standards creates uncertainty as to the future costs of water treatment to comply with mining permits."

On January 18, 2012, Patriot Coal agreed to a settlement that will end litigation over selenium pollution from West Virginia mountaintop removal mines. The settlement covers 43 different water pollution outlets at Patriot’s Hobet 21 Surface Mine complex along the Boone-Lincoln border, the Samples Mine complex in the Cabin Creek area, and the Ruffner Mine in Logan County. Under the deal, Patriot would treat pollution from the 43 outlets, and its Jupiter Holdings LLC would surrender permits it got from the Army Corps of Engineers in 2007 to build four valley fills at its Jupiter Callisto surface mine in Boone County. The deal also requires Patriot to pay $7.5 million in civil penalties, to be allocated between the federal government and the West Virginia Land Trust for land preservation projects within the Kanawha River and Guyandotte River watersheds.

Citizen Action

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Mountain Top Removal- Kayford Mountain, West Virginia

In May 2009, six activists were arrested after they chained themselves to a dump truck at a Patriot Coal-owned mine on West Virginia's Kayford Mountain to protest mountaintop removal.

In October 2010, more than 50 people from the groups Mountain Justice and Climate Ground Zero went to Patriot's mine on Kayford Mountain for a non-violent protest, including politicians and long-time mountaintop-removal opponent Ken Hechler and U.S. Senate Mountain Party candidate Jessie Johnson. They planted trees in protest of mountaintop removal coal mining.

In June 2010, concerned citizens rallied in downtown Lexington Kentucky to express their anger at PNC Bank for financing mountaintop removal coal mining. Local activists were joined by members of the group Mountain Justice and residents from mountaintop communities, who spoke out about the direct impacts on their community, health and environment. Since January 2008, PNC has become the number one U.S. financier of mountaintop removal coal mining, providing more than $500 million in loans and bonds to six companies practicing mountaintop removal: Massey Energy, Patriot Coal, Alpha Natural Resources, International Coal Group, Arch Coal and Consol Energy. The six companies are collectively responsible for almost half of all mountaintop removal coal mining in Appalachia. in November 2010 PNC announced that it would no longer fund projects associated with mountaintop removal coal mining. PNC’s decision left UBS and GE Capital as the only major banks that support mountaintop removal.

July 2012: 20 arrested after shutting down coal mine in West Virginia

It was reported on July 28, 2012 that 20 protesters associated with the Radical Action for Mountain People's Survival (RAMPS) Campaign, managed to shut down Patriot Coal's Hobet Mine in the US state of West Virginia for approximately three hours on Saturday, July 28, 2012. Most of the activists were charged with trespassing. Bail was set at $25,000 each.

The RAMPS Campaign is calling for an end to strip mining in the Appalachian region because of its health and environmental consequences.

Industry affiliations

Patriot Coal is a member of the:

• National Mining Association.

Personnel

Key members of the Patriot Coal's Management Team, as of July 2011, include:

• Richard M. Whiting, President and CEO. Total compensation, 2009: $3.14 million
• Charles A. Ebetino, Jr., Senior Vice President & Chief Operating Officer
• Mark N. Schroeder, Senior Vice President & Chief Financial Officer

Contact Information

Patriot Coal Corporation
12312 Olive Boulevard
St. Louis, Missouri 63141
Phone: (314) 275-3600
Web: http://www.patriotcoal.com

Articles and Resources

Related GEM.wiki articles

• Existing U.S. Coal Plants
• West Virginia and coal
• Kentucky and coal
• United States and coal
• Global warming

External Resources

• Patriot Coal 2010 10K Report EDGAR, filed February 2011.

External Articles

Wikipedia also has an article on Patriot Coal. This article may use content from the Wikipedia article under the terms of the GFDL.