Coal Age

APR 2013

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news continued Continued from pg 5... fell by 6.7%. Company officials credited falling coal exports, representing 93% of revenue, to the decrease. Last year's exports—representing 75% of sales—fell by $300 million, or 10.5%, to $2.57 billion. And while domestic sales rose by $865 million, 4% over 2011, they were insufficient to compensate for the shortfall, the company added. Indonesia Mining Association: Coal Exports to Rise 6.5% in 2013 Coal exports from Indonesia, a top exporter of coal, are forecast to increase by 330 million metric tons (mt) this year—up 6.5% yearon-year, according to the Indonesia Coal Mining Association (ICMA). Jakarta has lifted an export ban on low-grade coal since sector has suffered low prices amid the slowdown beginning in 2008, according to Bob Kamandanu, chairman of the ICMA. In the meantime, Kamandanu doesn't expect to see the export ban reinstated for at least two years. In addition, Kamandanu's forecast for Indonesia's coal output is close to 400 million mt this year—up from a prior forecast between 370 million and 375 million mt based on weather patterns. "The first two months of the year there was a lot of rain and production was less than 30 million mt," he said. El Cerrejón Rail Line Bombed in Colombia A bombing attack on March 14 rocked Colombia's largest coal mine, knocking 17 railcars off a rail line mere days after the end of a worker strike in the country's western Guajira province, according to officials at El Cerrejón; there were no reported injuries. The stoppage by the company, a joint venture between Anglo American, BHP Billiton and Xstrata, concerned a month-long wage dispute. For their part, company officials didn't assign blame to any of the armed groups in the region for the assault. Prior to the attack, Cerrejón and the coal miner's union Sintracarbón reached a preliminary agreement to put an end to the strike that started February 7, the parties said in separate statements. The strike caused losses of around 129 billion pesos ($71 million) for the regional and national economy, according to Cerrejón, which said "significant progress" has been made to reach an agreement. The company expects the new labor agreement to be signed at the next meeting. The text of the new collective contract is being presented to workers for their approval. Workers were initially asking for a 7% pay hike but lowered this to 5.8%, according to a Bloomberg report. The negotiations also involved health and education benefits for workers. More Than 3,500 mw of Coal-fired Generation Slated for Retirement in Canada The coal-fired generation fleet in Canada has seen the same fate as its American counterpart due to many of the same reasons, including competition from more affordable natural gas-fired generation and unfavorable legislation. Between 2013 and 2019, 3,581 mw of capacity generated at 11 coal units is slated for retirement in Canada. The Canadian government has issued an emissions rule on new and existing coal-fired plants that will come into effect July 1, 2015. Coal-fired generation brought online after July 1, 2015, and units older than 50 years will be limited to emitting no more than Continued on pg 8... 6 www.coalage.com Others were more positive, including Committee Chairman and Oregon Democrat Ron Wyden who said he plans a nomination vote "as quickly as possible." UMWA Cries Foul as Patriot Seeks to Change the System Already facing bankruptcy, officials at Patriot Coal Corp. are seeking to change collective bargaining agreements with United Mine Workers of America (UMWA) representatives through a further filing in St. Louis federal court to avoid output disruption. Proposed modifications by the St. Louis-based company include a voluntary trust association for workers providing healthcare for union retirees with altered wages and benefits for other employees. The move follows four months of talks between Patriot subsidiary representatives and UMWA officials. Patriot has also filed a suit against Peabody Energy seeking confirmation from Peabody officials that they will continue to fund retirees' benefits despite the latter's previous assurances; Patriot officials maintain benefits for 3,000 people are in danger. Despite "regret," said Patriot officials, these moves will save "more than 4,000 jobs." Union officials, however, offered a strident rebuke. The moves are "totally unacceptable, unnecessary and put thousands of retired coal miners, their dependents or their widows on the path to financial ruin, worsening health conditions or even death," said UMWA President Cecil Roberts. Similar to many coal operators reeling from hostile Washington regulations and competition from natural gas, Patriot has been left out in the cold; indeed, many other coal companies have followed its initial July 2012 bankruptcy filing. Without the relief, "all these jobs will be lost and it will no longer be possible to provide healthcare for more than 23,000 employees, retirees and their dependents," company officials added. "Our labor and retiree benefit costs cannot be sustained," said Patriot CEO Ben Hatfield, alluding to financial discrepancies between 1,600 union and 1,300 non-union workers. "All of our employees and retirees are being asked to make sacrifices to help Patriot emerge from bankruptcy—these include reductions in compensation and benefits for salaried, union and non-union employees." Patriot also seeks amendments for UMWA-related retiree healthcare liabilities totaling $1.6 billion. Proposals include transitioning UMWA healthcare to the trust, allowing retirees long-term benefits; the voluntary trust could be funded, in part, by unsecured claims of a stake in the reorganized company, suggested officials. Other funding sources potentially include profit-sharing agreements reaching $300 million and cash contributions of $15 million. Other approaches encompass allowing the company to pay out benefits until July—time enough for fund establishment. In addition, the trust would be administered by the UMWA or the UMWA Health and Retirement Funds. This would allow Patriot to continue extending coverage for its full workforce and eligible families, and the more than 2,300 people receiving care via 1992's Coal Act. Last year, Patriot spent $14 million on liabilities related to the legislation, also known as the Coal Industry Retiree Health Benefit Act. Ohio Valley Coal Files Court Motion Against Patriot Coal over Unfunded Liabilities The Ohio Valley Coal Co. and The Ohio Valley Transloading Co. have filed a motion in eastern Missouri's U.S. Bankruptcy Court April 2013

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