Here are some tips on covering the coal mine disaster in West Virginia that occurred in the last couple of days from a business perspective:
1. The parent company of the mine is International Coal Group, which just went public in November and is an amalgamation of bankrupt and other coal mine operations into one company by well-known New York financier Wilbur Ross. Ross has made similar moves with steel and textile companies. International Coal’s SEC filings can be found here.
I read the S-1 this morning and noted that the risk factors for the business included “unexpected mine safety accidents, including fires and explosions from methane.”
Page 99 of the filing has this background about the Sago mine:
“Spruce Fork Division—Anker West Virginia Mining Company
The Spruce Fork Division currently consists of two active underground mines: Spruce No. 1 and Sago located in Upshur County, West Virginia, near the town of Buckhannon. The Spruce No. 1 Mine is extracting coal from the Upper Freeport seam and the Sago mine is extracting coal from the Middle Kittanning seam. Nearly all of the reserves in the Spruce Fork Division are owned by ICG. The Spruce No. 1 Mine opened in 1997 and we anticipate that its reserves will be depleted sometime during the third quarter of 2005. The Sago mine, which was originally opened in 1999 as a contract mine, closed in 2002, and then reopened as a captive operation in the first quarter of 2004. Sago is expected to reach full production by the fourth quarter of 2005.
Both operations utilize the room-and-pillar mining method with continuous miners and shuttle cars for coal extraction. All of the coal extracted from these mines is processed through the nearby Sawmill Run preparation plant where coal is then primarily shipped by CSX rail, although some coal is trucked to local industrial customers.
We have projected that the Spruce Fork Division will produce approximately 1.3 million tons of coal in 2005. The Sago 3 mine, scheduled for production in 2007, is a replacement for the Spruce No. 1 Mine. The reserves at Spruce Fork have characteristics that make it marketable to both steam and metallurgical coal customers.”
2. The name of the West Virginia mine that was involved in the accident was called Anker West Virginia Mine Co. before it was purchased by International Coal. You can look for accident reports on the Mine Safety and Health Administration web site by clicking here. The mine ID number is 4608791. You will need to enter it into the database to get information.
Bloomberg’s story here is reporting this type of information from the online database: “Federal authorities issued 21 citations last year for a buildup of combustible materials at the mine. The Sago mine had 14 injuries last year, almost twice as many as in 2004, according to the Labor Department, which supervises the Mine Safety and Health Administration.”
DO NOT make the mistake of looking for accident information about this mine on the Occupational Safety and Health Administration website. OSHA does not regulate mines.
In addition, the International Coal filings breaks out the Anker financial performance before it was acquired. The Anker company is prominently mentioned throughout the S-1 linked above. In particular, on p. 65-66 of the amended S-1 linked above, I found this reference: “In addition, as a result of infrastructure weaknesses and short term geologic issues at Anker, the transition period for implementation of various operational improvements has taken longer than originally anticipated.” Boy, I sure would be asking company officials what those “infrastructure weaknesses” and “short term geologic issues” were right now and trying to talk to as many geologists as I could.
3. The West Virginia Secretary of State database can be found here. You can look for background information about the involved companies.
4. The Department of Labor’s Mine Safety and Health Administration has set up a special portion of its Web site to the accident. You can access it here.
