CORRECTION: Removes reference that Patriot Coal is a subsidiary of Peabody Energy.

The largest coal producer in the United States, Peabody Energy Corp., announced it had reached an agreement with Patriot Coal Corp and a labor union in providing USD310 million for retiree health care benefits.

Peabody had set payments until 2017 in order to fund a group that would determine the future benefits for Patriot retirees as well as the settlement of all claims related to the bankruptcy of Patriot. This was confirmed by Peabody through a statement from its St, Louis, MS headquarters.

According to the statement issued by Peabody Chief Legal Officer Alexander Schoch, "We are pleased to resolve the uncertainty among Patriot retirees by providing substantial funding for the newly established Voluntary Employee Beneficiary Association."

Other preconditions of the agreement include approval by the bankruptcy court and as well as the requirement for a reorganization plan for Patriot be put in place. 

According to Peabody, it had spun off its operations and reserves in the Central and Northern Appalachian region and the Illinois Basin in order to establish Patriot Coal in 2007. Patriot Coal filed for Chapter 11 protection back in 2012.