The explosion that killed 29 miners this month at a West Virginia mine did not result from “willful disregard” for safety, the head of the mine’s owner Massey Energy Inc said on Thursday.
Chief Executive Officer Don Blankenship also acknowledged that eight Massey mines were targets for an inspection “blitz” by the federal Mine Safety and Health Administration (MSHA).
He spoke a day after Massey said it would take a charge of $80 million to $150 million in the second quarter for family benefits and costs of the April 5 blast at the Upper Big Branch mine.
It will make up for resulting lost steel-making coal production by increasing operations at other mines, instituting six-day work weeks and adding more miner sections.
In Thursday’s conference call with Wall Street analysts to discuss first-quarter results, which beat estimates, Blankenship brought up the accident in his opening remarks.
“No one wants to learn what caused the explosion at Upper Big Branch more than we do,” he said.
“The explosion was not caused by willful disregard for safety regulations, as the media would have you believe. We have one of the most comprehensive safety programs.”
He said Massey was cooperating with federal and state agencies and conducting its own investigation. He did not say when inspectors might be able to enter the shuttered mine.
Asked about an MSHA “inspection blitz” on suspected safety violations, Blankenship said: “Eight of the 57 mines you have mentioned are Massey mines.” He did not identify the mines.
“A blitz is where they show up with a team of inspectors, it might be 10 or 12 and they might spread out on shifts.
“They are putting a high level of attention … on the company, but they are also … getting the chance to see what one inspector thinks about another inspector’s views. They might also bring in someone who is more of a ventilation or electrical expert.”
Blankenship said such inspections could result from something reported by an inspector or a worker calling to report what they might have observed.
Massey’s stock, which has dropped over 20 percent from a year high of $54.80 on April 5, was down 2.22 percent at $42.82 in afternoon trading on the New York Stock Exchange.
The S&P Coal and Fuels index was down 0.62 pct.
Although Thursday’s call was ostensibly to discuss first-quarter results, many analysts asked about the impact of the blast, which took place in the second quarter.
Blankenship expressed personal condolences to families who lost loved ones and thanked shareholders for support “in one of the most challenging times in Massey history.”
The reference was pointed, since some investor groups have called for Blankenship to resign in the aftermath of the blast.
On Monday, Massey disclosed that a director had resigned from the board. It gave no reason, but CtW Investment Group, which owns less than 1 percent of Massey’s stock, had said it would vote against the director at the shareholder meeting on May 18.
One analyst on the call asked if Massey was considering buying back stock, given the accident costs and its intention to make more acquisitions following last month’s $960 million agreement to buy rival Cumberland Resources.
“We think the stock is clearly impacted by the tragedy, and we will move through this time, as hard as it is. We have thought about it, but we haven’t really focused on the timing or whether we will do that or not do that,” said Blankenship.
He said the investigation was getting started. “The first order of business will be to make the mine safe for the investigative team. My guess is it will take a long time because it will be quite technical.
“I assume one of the key things will be finding the origination (sic) of the explosion. That will go a long way toward finding causation (sic),” Blankenship said.
The Upper Big Branch mine produced 1.2 million tons of high volatility metallurgical coal in 2009, just over 3 percent of Massey’s 38 million-ton production total. Massey said in February it was ramping up production of metallurgical coal to tap into growing demand from global steelmakers.
Officials said some of the added production started at another mine this week, another section will start by the end of the month and two more should start in mid-May.
On Monday, Massey posted first-quarter financial results that beat Wall Street expectations, even though the net profit fell because power plants used less coal, and rail and sea transportation were disrupted.
For the first quarter, ended March 31, net income fell to $33.6 million or 39 cents per share from $43.4 million or 51 cents per share a year ago. Analysts, on average, had been expecting 27 cents per share, according to Thomson Reuters I/B/E/S.
(Reporting by Steve James; Editing by Derek Caney)