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Putin Orders Probe of Mine Blasts as Death Toll Rises

May 11 (Bloomberg) -- Russian Prime Minister Vladimir Putin ordered an investigation into explosions at a Siberian coal mine run by OAO Raspadskaya that killed at least 52 people, saying the whole industry will need to learn lessons from the disaster.

“The situation at the mine and actions of the company officials require the most thorough investigation,” Putin said in a televised government meeting today in Kemerovo province, where the mine is located. “We need to know what caused so many deaths, what led to this big tragedy.”

The methane blast that shook the mine late May 8, followed by a second explosion the next day, has left 38 miners trapped underground, the Emergencies Ministry said. Seventy-nine workers are in hospital and six were flown to Moscow for treatment, the ministry’s local branch said. Hopes for those still in the mine are fading, Emergencies Minister Sergei Shoigu said.

Raspadskaya plunged 23 percent in Moscow, its biggest decline since it started trading two years ago. The stricken mine, also called Raspadskaya, is the company’s largest asset and supplies 11 percent of Russian output of coal used in steel.

The pit will need “several years” to be restored fully, Interfax cited Chief Executive Officer Gennady Kozovoy as saying on the Kemerovo regional administration’s website. The mine accounts for 60 percent of the company’s output.

‘Substantial Damage’

“The explosions were some 500 meters (1,640 feet) below the surface, which suggests the damage was quite substantial,” Vladimir Zhukov, an analyst with Nomura International Plc in Moscow, wrote in a note. “Raspadskaya runs a very low level of inventories and thus a reduction in mined output will directly hit sales.”

Raspadskaya slid 39.12 rubles to close at 131.89 rubles ($4.37). Russian markets were closed yesterday for a public holiday.

Investigators are looking into possible causes of the accident, including improper use of mining equipment, human error and malfunctioning machinery, state-run newswire RIA Novosti said, citing an unidentified official. Putin told Alexander Bastrykin, chief investigator of the Prosecutor General’s Office, to oversee the probe.

“This is not just about Raspadskaya but the entire coal mining industry or any other companies that have potentially hazardous production,” Putin said. Coal mining companies in Russia need to “draw conclusions” from the tragedy, he said.

Previous Disasters

The disaster is the latest to befall Evraz Group SA, which owns 40 percent of Raspadskaya, the country’s largest producer of coal used in steelmaking. More than 100 workers died at the Ulyanovsk mine, run by Evraz’s Yuzhkuzbassugol unit, in March 2007 after a methane detector failed to register fatal gas levels. At least 38 died and seven were injured in a methane explosion at another of the unit’s mines in May of that year.

Evraz, part-owned by billionaire Roman Abramovich, said in December that six workers were killed by a blast at its Yestyuninskaya coal mine in the Ural mountains.

Raspadskaya yesterday matched a government pledge to give about 1 million rubles ($33,000) to each of the families of the dead miners with its own payments of a similar amount. At least 18 of the deceased were rescuers, RIA Novosti reported.

More than 270 miners managed to escape after the first blast. The second explosion led to a collapse of some of the mine’s 230 miles of underground passages, destroying buildings on the surface and killing scores of workers, Shoigu told President Dmitry Medvedev, according to a government transcript.

Hope Fades

Lifesaving efforts involving 677 rescue workers, lifting machinery and sniffer dogs were also hampered by concerns that any attempt to keep the trapped miners alive by pumping oxygen into the mine might cause another blast.

“Judging by the injuries on the retrieved bodies, we have less and less hope of finding anyone alive,” Shoigu said.

Raspadskaya’s Deputy Chief Executive Officer Alexander Andreev, couldn’t immediately be reached for comment today. Evraz spokesman Vyacheslav Kazakov wasn’t available when Bloomberg News called his phone.

The accident may spur coking coal prices to surge in Russia, benefiting most steel producers who own their own assets including OAO Severstal and OAO Mechel, Nomura’s Zhukov said. OAO Novolipetsk Steel and OAO Magnitogorsk Iron & Steel will be the worst affected as they rely on outside suppliers including Raspadskaya for their coal, Zhukov said.

To contact the reporters on this story: Anastasia Ustinova at; Yuriy Humber in Moscow at

To contact the editor responsible for this story: Chris Kirkham at

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