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Peabody, Consol Have More Than Double Massey's Total of Safety Violations

Peabody Energy Corp. and Consol Energy Corp. operate the two coal mines that lead the U.S. in violations, with more than double the total of Massey Energy Co.’s operation where 29 people were killed this month.

The mines controlled by Peabody, the largest U.S. coal producer, and Consol have collected more than 1,300 citations since January 2009, according to the U.S. Labor Department’s Mine Safety and Health Administration. Massey’s Upper Big Branch mine, site of the worst mine disaster in 40 years, had 639 violations.

The April 5 explosion at Upper Big Branch has brought calls to reform mine-safety laws. President Barack Obama ordered a crackdown on safety violations nationwide after meeting yesterday with Labor Secretary Hilda L. Solis and Joe Main, the MSHA administrator.

“Citations are not an indication of a mine’s safety performance or an indication of the mine’s environment for safety,” Joseph Cerenzia, a Consol spokesman, said in a telephone interview today. “These mines listed are very large operations.”

The crackdown will add to costs, said Pearce Hammond, an analyst at Simmons & Co. International in Houston.

“We will have more regulation, more scrutiny, across the board and it will be more pronounced in underground mining,” he said. “ The thing that all investors look at is total unit costs.”

Peabody Cites Improvement

Peabody’s Air Quality No. 1 coal mine in Knox County, Indiana, tops the U.S. in citations, with 1,419. The company’s operation in Saline County, Illinois, has accumulated 1,217 citations, according to MSHA data. Consol’s McElroy mine in Marshall County, West Virginia, has collected 1,380 citations.

Peabody “initiated an aggressive continuous improvement process last year to improve its compliance record” that included working with MSHA, said Beth Sutton, a company spokeswoman. She said the Indiana mine’s safety rate in 2009 was “45 percent better than U.S. underground peers.”

In October MSHA notified Peabody of “a potential pattern of violations” at the mine, a step that can lead to more scrutiny. The company reduced the number of significant and substantial violations and was notified that a pattern of violations no longer exists, according to a March 15 letter from MSHA.

Significant and substantial violations are those that are “reasonably likely to result in a reasonably serious injury or illness under the unique circumstance contributed to by the violations,” Amy Louviere, public affairs director for MSHA, said in an e-mail yesterday.

Seven Consol Mines

Consol mines account for seven of the 20 mines in the U.S. with the most citations. Massey, Patriot Coal Corp. and International Coal Group Inc. also have mines among the top 20 in violations. Upper Big Branch was not on the list.

Drummond Co., a closely held coal company, leads the nation in the amount of most lost-time injuries, which includes deaths, since January 2009 with 85. Alpha Natural Resources Inc.’s Emerald Mine No. 1 is second with 61, according to MSHA.

Alpha, which acquired the Emerald mine last year, is “redoubling our safety efforts at the Emerald mine and we’re seeing positive results,” Ted Pile, a company spokesman, said in an e-mail. “Since the merger last July, the lost-time accident rate has dropped nearly 40 percent and is now below the national average rather than above.”

Lost-Time Injuries

Peabody’s Willow Lake Portal operation in Saline has 55 lost-time injuries. Walter Energy Inc.’s No. 7 and No. 4 mines in Tuscaloosa County, Alabama, were sixth and 11th on the list.

Walter has improved its safety program and reduced incident rates at the two Alabama mines to below the national average, Michael Monahan, a company spokesman, said in an e-mail.

Patriot’s Highland 9 mine in Waverly, Kentucky, and Federal No. 2 in Monongalia County, West Virginia, combined for 83 lost time injuries, MSHA said. Patriot resumed output at Federal after shuttering it in February due to conditions that could have led to an explosion.

All violations aren’t equal, said Phil Smith, a spokesman for the United Mine Workers of America. He said citations can range from leaving tools in the wrong place to methane buildups and that the union wants more scrutiny and regulation.

“Some of these companies will spend $200 million for a piece of equipment but they scream bloody murder when they have to spend $10 million on safety issues,” he said.

Hammond said he expects productivity to fall at mining operations as enforcement increases.

“If a policeman is riding right behind you, you don’t get as quickly from Point A to Point B,” he said.

Steve Bradley, a spokesman for Drummond, didn’t have an immediate comment.

To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net.

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