New Zealand Mine Blast May Prompt Safety Review, Changes to Resource Laws

A gas explosion at the Pike River Coal Co. mine in New Zealand that’s trapped 29 men underground is set to prompt a review and possible changes to mine safety legislation for the nation’s resources industry.

“Any major incident certainly, more often than not, leads to a major review,” said Bruce Hebblewhite, head of the University of New South Wales’s school of mining and engineering in Sydney. “It’s highly likely there’d be some sort of major investigation or review.”

No contact has been made with the men since the explosion cut communication at about 3:50 p.m. local time on Nov. 19 at the mine about 50 kilometers (30 miles) north of Greymouth on the West Coast of the nation’s South Island. New Zealand, which has an estimated 15 billion metric tons of coal reserves, exports to India and Japan as well as the U.S. and China.

“In highly legislated countries such as New Zealand or Australia, particularly if there were to be a fatality, there would be a broad safety review after such an incident,” said Andrew Harrington, a research analyst at Patersons Securities Ltd. in Sydney who has visited the mine.

Pike River’s Sydney-traded shares slumped 14 percent to 61 cents on Nov. 19 before trading was halted. The company fell 4.4 percent to 88 New Zealand cents by the Wellington close on the same day. The stock was suspended on both stock exchanges yesterday. New Zealand Oil & Gas Ltd., Pike River’s largest shareholder with 29 percent, is also halted.

Prime Minister

New Zealand Prime Minister John Key yesterday told reporters in Greymouth there will be a “series of inquiries” into the cause of the blast. Key visited the mine site to meet rescue workers and families.

Pike River’s Chief Executive Officer Peter Whittall wouldn’t comment yesterday on the mine’s future. The company didn’t know the cause of the explosion or the extent of any damage, he told reporters.

Pike River is part-owned by India’s Gujarat NRE Coke Ltd. and Saurashtra Fuels Pvt. The mine was forecast to produce 320,000 to 360,000 metric tons of coal in the year through June, the company said Oct. 19. That almost halved an April forecast because of equipment and road construction delays.

New Zealand’s West Coast has 13 coal mines, including four underground operations, according to the Ministry of Economic Development’s web site. Mining employs about 6,000 people, according to the government website www.beehive.govt.nz. The industry earned about NZ$1.1 billion ($850 million) in export receipts in 2009.

‘Significant Reviews’

Two gas explosions in mines in the Moura district of Australia’s Queensland state in 1986 and 1994, which killed 12 and 11 miners respectively, led to improved monitoring of gas levels and emergency response procedures, Hebblewhite said.

“They both led to significant reviews of mining practices, of legislation, of training,” he said.

Rescuers at Pike River last night were preparing to deploy cameras and laser imaging gear through a 160-meter hole being drilled into the mine to test air quality.

Samples taken at the mine’s main ventilation shaft still showed high levels of carbon dioxide and methane, preventing rescuers from entering the mine.

Coal provides 13 percent of New Zealand’s primary energy, according to the ministry. Neighboring Australia, the world’s biggest coal exporter, shipped almost A$55 billion ($54 billion) of the fuel in fiscal 2009, according to government data.

Rock Fall

Pike River began construction of the mine in September 2006 and exported its first coal in February this year, a year late after problems with equipment and a rock fall in a ventilation shaft in February 2009.

New Zealand operates 21 coal mines, producing 4.5 million tons, with the West Coast the largest producing region at 2.2 million tons, according to the ministry. Closely held Solid Energy New Zealand Ltd. produces about 85 percent of the nation’s coal, while Sydney-traded Bathurst Resources Ltd. plans to mine about 2 million tons of coal from the Buller field by the end of 2013, the company said on its website.

The Pike River blast has stirred memories of a gas explosion at the Strongman mine in 1967 in the West Coast region that killed 19 men.

Asked if mining should be stopped in the area, New Zealand’s Key said the causes of the explosions at Pike River weren’t yet known, while mining practices since the Strongman incident had evolved.

“We will need to ask ourselves some tough questions and we will do that in due course,” he said. Now is not that time, he added.

To contact the reporter on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net

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