Bloomberg News

New Zealand Coal Mine Victims Get Fraction of U.S. Payout (1)

July 05, 2013

The victims of the worst mining accident in New Zealand in 96 years will get compensation of NZ$110,000 ($86,000) each, a fraction of the payments awarded to the families affected by a similar accident in the U.S.

Pike River Coal Co., which went into receivership after 29 workers at its namesake mine died in an explosion in November 2010, was also ordered to pay a NZ$760,000 fine on nine charges, according to an e-mailed statement today from the Ministry of Business, Innovation and Employment.

The compensation compares with the $46.5 million for the families of the 29 workers killed in a 2010 blast at the Upper Big Branch mine in West Virginia, that was owned by Massey Energy Co. Alpha Natural Resources Inc. (ANR:US), which acquired Massey, agreed to pay $209.3 million in 2011 to end a criminal investigation and civil proceedings relating to the blast.

“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.

Royal Commission

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 today called on the government to pay some compensation.

Unsecured Claim

“It’s now time for the government to stump up with fair and reasonable compensation so that the families can continue their lives beyond this tragedy,” opposition Labour Party parliamentarian Damien O’Connor, who represents the West Coast-Tasman electorate, said in an e-mailed statement.

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 today 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.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net

To contact the editor responsible for this story: Matthew Brockett at mbrockett1@bloomberg.net


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