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Massey Says Increased Federal Mining Inspections Reduce Coal Productivity
Massey Energy Co., the owner of the West Virginia mine where 29 people died in April, said increased scrutiny from government inspectors reduced productivity at its operations during the second quarter.
Massey’s coal production was about 500,000 tons lower than expected in its deep mine operations due to reduced productivity amid “distractions” from the Upper Big Branch accident, temporary shutdowns and increased inspections, Baxter Phillips, the company’s president, said today on a conference call with analysts.
Massey said in a statement yesterday that shipments during the quarter dropped below its projections by about 1 million tons, of which 700,000 tons were lost due to lower productivity and temporary shutdowns. Three export shipments were delayed to July from June, accounting for about 220,000 tons of the shortfall, the company said.
“Certainly investor focus is on Massey’s ability to focus on this year’s tragic events and achieve their targets in what could be a very robust coal market,” said Michael Dudas, an analyst at Jefferies & Co. Inc. in New York. “They’re set up to do so, but with anything in Central Appalachia it’s going to be a challenge.”
Massey rose 65 cents, or 2.2 percent, to $30.30 at 11:38 a.m. in New York Stock Exchange composite trading. The shares have fallen 45 percent since the fatal blast on April 5.
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The coal producer yesterday reported a net loss of $88.7 million on costs associated with the disaster and lowered its sales estimate for the year. Massey lost 88 cents a share, compared with a profit of $20.2 million, or 24 cents, a year earlier, the company said.
Massey, based in Richmond, Virginia, took a pretax charge of $128.9 million in its second-quarter and first-half results for the accident.
The company said it expects to ship 39 million to 40.5 million tons of coal this year, down from a previous estimate for as much as 43 million tons.
Chief Executive Officer Don Blankenship, 60, said he may seek to access other section of the reserves mined at Upper Big Branch that weren’t affected by the explosion.
Massey said in April that it planned to increase output at other operations to fill the void left by Upper Big Branch. The company began production at a surface mine in Pike County, Kentucky, in May and said it would start output at its Buchanan, Virginia, mine this month.
To contact the reporter on this story: Mario Parker in Chicago at mparker22@bloomberg.net
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