NEW YORK — Bankrupt metallurgical coal producer Patriot Coal Corp. has reached a proposed settlement to phase out and eventually stop all large-scale mountaintop mining in the central Appalachia region in West Virginia, the St. Louis-based miner said.

The agreement is part of a deal reached with three environmental groups—the Ohio Valley Environmental Coalition, the West Virginia Highlands Conservancy and the Sierra Club—that sued the company under the Clean Water Act relating to surface mining activities from its West Virginia coal mine operations.

Under the terms of the proposed deal, the deadlines for a number of the company’s compliance schedules have been extended, it said.

"This settlement agreement allows Patriot to defer up to $27 million of compliance-related cash outlays from 2012 and 2013 into 2014 and beyond, which improves our liquidity as we reorganize our company and increases the likelihood that we will emerge from the Chapter 11 process as a viable business," Patriot president and chief executive officer Bennett Hatfield said in a statement.

"Importantly, this proposed settlement allows Patriot to continue mining according to existing permits and is consistent with our long-term business plan to focus capital on expanding higher-margin metallurgical coal production and limiting thermal coal investments to selective opportunities where geologic and regulatory risks are minimized," he added.

The settlement must be approved by both the federal district court in southern West Virginia following a public comment period and the bankruptcy court in southern New York, where the company filed for Chapter 11 bankruptcy protection in July (amm.com, July 10), the miner said.

A version of this article was first published by AMM sister publication Steel First.