Long after the volatile methane gas is vented from the disastrous underground explosion that claimed the lives of at least 25 miners, mine operator Massey Energy
The grief endured from this tragic loss of life is easily converted to ire when we review the safety violations cited at Massey's Big Upper Creek mine prior to this incident. Although the cause of the blast has not been determined, the temptation to link a methane gas explosion with recent violations relating specifically to the mine's methane gas ventilation procedures is too great for the lay observer to resist. More than one-third of the safety violations cited at the mine in 2010 alone were deemed "reasonably likely" to result in serious injury or illness.
The Big Upper Creek mine accounted for about 3% (1.2 million tons) of Massey's overall production volume of 38 million tons. Fools trying to reconstruct the rationale behind the market's 15% slaughter of Massey shares (from Monday's 52-week high to intraday today) need only to consider the degree of very public scrutiny and the potential for punitive damages that Massey faces as a result of the incident.
If this were any other operator, perhaps we might expect a more muted public reaction. But this is Massey, which has been embroiled in legal woes over recent years for issues ranging from Clean Water Act violations to charges stemming from a fatal 2006 fire at Massey's Aracoma mine.
And if this operator had anyone at the helm other than Don Blankenship, perhaps this too might have eased a bit of the looming scrutiny. Blankenship has acquired quite a reputation. He has blasted environmentalists with statements like "the greeniacs are taking over the world," and been photographed vacationing in the Mediterranean with a judge who was presiding over pending litigation against his company. In part because Massey and Blankenship were already quintessential icons for some of the more unfortunate aspects of the coal industry, I expect the lasting impact of this incident upon Massey to be amplified.
In all likelihood, I believe, Massey's recent acquisition of Cumberland Resources will provide sufficient growth to effectively absorb much of the financial fallout from this tragedy, thanks to a hugely bullish price environment for coking coal. However, because potential impacts upon public relations or the regulatory landscape are perhaps more serious, I believe Fools will find relative strength outside of Appalachia for now. Peabody Energy's
To the extent that increased scrutiny carries over to the long-running debate about surface mining (dubbed "mountaintop removal"), we could see operators like International Coal Group
