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news Alpha Settles with DoJ on UBB Mine Explosion
The federal government made two major announcements on December 6, National Miner's Day, regarding the investigation into the Upper Big Branch (UBB) mine disaster.The Department of Justice announced it had reached a settlement with Alpha Natural Resources, which took responsibility for the UBB mine when it purchased and merged Massey Energy with its operations earlier this year; and the Mine Safety and Health Administration (MSHA) released the final report on its investigation. Alpha agreed to make payments and safety investments totaling $209 million in connection with the criminal investigation of an explosion at the UBB mine located near Montcoal, W.Va., on April 5, 2010. "Today's agreement represents the largest-ever resolution in a criminal investigation of a mine disaster and will ensure appropri- ate steps are taken to improve mine safety now and will fund research to enhance mine safety in the future," said U.S. Attorney General Eric Holder. "While we continue to investigate individuals associated with this tragedy, this historic agreement—one of the largest payments ever for workplace safety crimes of any type—will help to create safer work environments for miners in West Virginia and across the country."
As part of a "non-prosecution" agreement, Alpha will invest at least $80 million in mine safety improvements at all of its under- ground mines, including those formerly owned by Massey. Alpha will also place $48 million in a mine health and safety research trust, to be used to fund academic and non-profit research that will advance efforts to enhance mine safety. In addition, the com- pany will pay restitution of $1.5 million to each of the families of the 29 miners who died at UBB and to the two individuals who were injured, for a total restitution payment of $46.5 million. Alpha also will pay a total of up to $34.8 million in penalties owed to MSHA, including all penalties that arise from the UBB accident investigation.
This settlement, according to DoJ, is the largest-ever resolution in a criminal investigation of a mine disaster. It addresses only the
± B REAKI NG N E W S
Texas-based VHGI Holdings said its wholly-owned operating company, VHGI Coal, Inc., has extended its binding letter of intent until January 30, 2012, to purchase a coal mine in Indiana. VHGI and Rick Risinger, the sole shareholder of the Lily Group assets, which includes the Landree mine in Green County, Ind., are in the process of obtaining the various bank, third-party and regulatory consents necessary to consummate the transaction. VHGI Coal has already invested approximately $4.5 million in the company to build-out the infrastructure and put the mine into full production by January 2012. When the transaction is completed, Risinger will become president of VHGI Coal.
The company has the rights to mine a total of 2,800 acres, with verified reserves of 21 million saleable tons of coal, with the ability to expand to an
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additional 80 million recoverable tons. "By having this much acreage under direct control of this operation, and with all the permits in place, we could not have crafted a better scenario for us to enter this sector of the energy mar- ket," said Doug Martin, president and CEO, VGHI Holdings. "We see this as an outstanding opportunity to expand VHGI's footprint with an experienced and professional team and to create significant value for our shareholders." The mine has received all necessary regulatory approvals, and is cur- rently in production. The mine is currently shipping and producing approx- imately 130,000 tons of coal since August 2011, and is expanding production starting in January. The mine is strategically located within 150 miles of multiple coal burning electrical generation facilities, and has a rail spur adjacent to the property to facilitate a unit train and trans- portation logistics on-site.
December 2011
corporate criminal liability of the former Massey, not potential criminal charges for any individual. The criminal investigation of individuals associated with Massey remains ongoing. Since acquiring Massey, Alpha has cooperated fully with the authorities and has implemented extensive measures to improve health and safety at legacy Massey operations. "We believe the agree- ments we've reached represent the best path forward for everyone," said Kevin Crutchfield, CEO, Alpha Natural Resources. "We're particu- larly pleased that a substantial portion of the settlement is going toward furthering miner safety, which has always been Alpha's guid- ing principle."
The Settlement and the Plan Moving Forward
• $80 million in mine safety improvements at all of its underground mines, including those formerly owned by Massey;
• $48 million in a mine health and safety research trust, to be used to fund academic and non-profit research that will advance efforts to enhance mine safety;
• $1.5 million in restitution to each of the families of the 29 miners who died at UBB, and to the two individuals who were injured, for a total restitution payment of $46.5 million; and • $34.8 million in penalties owed to MSHA.
• Installation of digital ventilation monitoring systems in all of its under- ground mines;
• A plan to ensure that each of its underground mines meet all legal requirements concerning coal accumulations;
• The use of state-of-the-art equipment to monitor its mines for explo- sive concentrations of coal dust;
• Purchase next-generation rock dusting equipment (pending MSHA approval);
• Installation of oxygen cascading systems to help miners escape; and • Building of a state-of-the-art training facility with a full training cur- riculum to train Alpha miners, which will also be available to other mining companies.
How the $209 million will be distributed:
Remedial safety measures included in the agreement:
VHGI to Buy Indiana Mine