A US conservation group has reached a deal with bankrupt Patriot Coal to acquire some of its assets in a landmark move that involves restarting coal mining and earning carbon credits from planting trees.
The Virginia Conservation Legacy Fund (VCLF) has agreed to acquire for free mining permits and equipment to restart one mine, pick-up $176 million-worth of clean-up liabilities and a $109 million pension and healthcare bill from former workers.
The new company formed under the deal intends to sell 4 million tonnes of coal a year from a West Virginia mine and employ other former miners on restoration projects. All 683 employees are intended to be kept in work.
“In VCLF, we have found an experienced partner who will responsibly manage our remaining assets consistent with the highest environmental standards, and we believe this proposed transaction is in the best interest of Patriot and its stakeholders,” said Bob Bennett, Patriot’s President and CEO said in a statement.
Tom Clarke, CEO of VCLF, said the deal “allows us to increase Appalachian employment through the reclamation and reforestation of thousands of acres of land. Continued mining at Federal will allow us to launch our “compliant fuel” program which bundles reforestation carbon credits with coal sales, effectively reducing carbon emissions, as required under the new emission standards”.
The fund has linked with forestry group GreenTrees to start a massive treeplanting operation at the remaining sites and hoping the resulting carbon credits could be used to comply with the EPA’s Clean Power Plan.
Clark believes this deal can serve as an example to other investors concerned about climate change to take over US coal mines struggling amid weak global prices that will also be hit by the EPA’s rules.
The group’s offer still needs to be cleared by the bankruptcy court for Patriot, which has already struck a separate deal to sell most of its other assets to fellow miner Blackhawk.
By Ben Garside – email@example.com