Pike River Coal Mine compensation pales in comparison to UBB settlement

July 8, 2013

Compensation for the 29 miners killed in the worst mining accident in New Zealand in nearly a century pales in comparison to that being paid to families of those killed in Upper Big Branch Mine explosion in the United States.

Bloomberg reported that the families in New Zealand will be paid NZ$110,000 or US$86,000. The Pike River Coal Co., which went into receivership after the November 2010 explosion, was also ordered to pay NZ$760,000 fine on nine chargers according to a statement emailed to Bloomberg from the Ministry of Business, Innovation and Employment.

Alpha Natural Resources, which acquired Massey Energy, then owner of the Upper Big Branch Mine in West Virginia, where 29 workers were killed in April 2010, agreed to pay $209.3 million in 2011 to end a criminal investigation and civil proceedings in addition to $46.5 million for the families of the victims.

“The U.S. is out on its own in terms of inflated large awards of damages, reparation, that sort of thing,” said Andrew McIntyre, a partner at law firm DACBeachcroft in Wellington. “We tend to be far more conservative. For a death in these sorts of circumstances where the culpability is quite high, and taking into account the ability to pay, NZ$110,000 would be about right.”

Including the payments to two survivors of the New Zealand blast, Pike River was ordered to pay $3.3 million. Given the company went into receivership because it couldn’t meet its debts, the Press newspaper cited Judge Jane Farish, who made the ruling, as saying the payments may need to be met by shareholders and directors.

The men died after a blast on Nov. 19, 2010, at the mine near Greymouth on the west coast of New Zealand’s South Island. The workers were trapped and probably died in the first explosion, while blasts over the following five days frustrated efforts to reach the men, and their bodies remain in the mine.

A Royal Commission report on the tragedy in November found the company lacked the systems and infrastructure necessary to safely produce coal. Ventilation and methane drainage systems were insufficient and “numerous” warnings of methane build-up to explosive volumes weren’t heeded, it said.

Labor Minister Kate Wilkinson resigned after the report and Prime Minister John Key apologized to the families on behalf of the government. His political opponents called on the government to pay some compensation.

The reparation payments are an unsecured claim against the company and if there isn’t enough money to pay secured creditors, as is the case with Pike River, then there will be nothing to distribute to the families, receiver John Fisk told the Press.

Pike River was found guilty in April of nine breaches of health and safety laws including those relating to ventilation and methane management. The ruling ended a two-day sentencing hearing before Judge Farish that included the reading of victim impact statements.

Pike River Chief Executive Officer Peter Whittall separately faces 12 charges relating to health and safety breaches.


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