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Coal company cites competition from natural gas for bankruptcy filing

Published:Friday | April 1, 2016 | 4:00 AM
In this photo, smoke rises from the Colstrip Steam Electric Station, a coal burning power plant in the United States. Hoping to end the use of coal power in Washington state, lawmakers proposed measures to help the state’s three private utilities eliminate the electricity they get from out-of-state coal-fired power plants.

A coal production company is asking a judge to allow the business to break its contract with a union in order to reorganise its finances.

Alpha Natural Resources filed a petition on Monday with the US Bankruptcy Court in Richmond, asking to be able to modify the company's obligations for retiree health-care benefits, the Charleston Gazette-Mail reported.

The company argues that it needs to cut costs in order to survive an ongoing decline in the coal industry. The company filed for Chapter 11 bankruptcy in August last year, citing increased competition from low-priced natural gas, an oversupply in the global coal market and increasing government regulations.

Company lawyers say that the company spent about $53 million on health-care benefits for union employees last year. Attorneys also argue that the company spent about 34 per cent more on each union employee than on each non-union employee. According to the company's bankruptcy filing, the union represents 11 per cent of its workforce. It also represents 2,600 of its retirees.

The union, United Mine Workers, has said it would fight the company's efforts to break its contract.

"Alpha can file whatever they want and the judge can order whatever he wants, but it's up to us if we work under those conditions," UMW spokesman Phil Smith said on Tuesday.

UMW said in a news release on Tuesday that it plans to hold a rally today (Friday) in Waynesburg, Pennsylvania, to show solidarity with union members.

"We are confronting the ongoing bankruptcy of Alpha Natural Resources and its demand to slash wages, benefits, working conditions and more for our members," UMW President Cecil Roberts said.

The company has asked for a hearing to be held on April 12 to address the issue.

- AP