Massey's Aftershocks 

In the wake of a blast that killed 29 miners, Richmond's Massey Energy faces an uncertain future.


Massey Energy's dull, gray building on the edge of Richmond's downtown belies its notoriety these days. Under the tough-guy leadership of Don Blankenship, Massey has won a reputation as vicious competitor in the coal industry as well as the scourge of environmentalists opposing Massey's devastating mountaintop removal practices in Central Appalachia.

Yet at 3 p.m. on April 5, Massey was literally hit with a blast that will forever change the company and perhaps its long-term viability.

A methane gas explosion at its underground Upper Big Branch Mine in Raleigh County, W.Va., killed 29 Massey miners. It was the worst U.S. mine disaster since 1984 and underlined big questions about Massey's safety record and the competence of regulators. Last year, federal regulators fined Massey more than $382,000 for safety violations at the mine. The day of the explosion, two more safety citations had been issued.

Among the dead are fathers, ATV enthusiasts, deer hunters, sports fishermen and three members of the same family, including Timmy Davis Sr. and his nephews Josh Napper and Cory Davis. One miner, Benny R. Willingham, 61, was a month from retirement with plans to take his wife on a Caribbean cruise.

“We hope that regulators and legislators take the lessons learned from this tragedy to heart and then take strong measures to ensure that such a loss of precious life never again befalls our miners and communities,” says Vernon Haltom, co-director of the activist group Coal River Watch. Haltom lives a few minutes from the mine, which is about 30 miles south of West Virginia's capital city, Charleston.

The mine is one of many Massey facilities along Raleigh County's Route 3 that winds its way along the Coal River and a CSX rail line past towns with such names as Montcoal, Naoma, Pettus and Whitesville.

Environmentalists have targeted Massey's mining practices all along the route. High up are some of Massey's mountaintop removal mines in which hilltops are shorn off with giant shovels. Waste is shoved into river valleys or put into billion-gallon impoundments filled with toxic sludge held back by earthen dams to keep it from crashing down on clapboard houses in the valley. Coal silos that serve the Upper Big Branch mine tower are yards from the red brick Marsh Fork Elementary. The school is regularly covered with coal dust and Massey had just announced a $l million donation to built a new school farther away.

The Coal River Valley highlights Massey's recent success and promise for growth. During the past year, Massey has received a huge boost from growing demand for metallurgical coal, used to make steel, in Asian markets that are quickly rebounding from the global recession.

Buoyed by rising demand for metallurgical coal, Massey's stock had zoomed up about 400 percent to the mid-$50 range since last year. Massey announced in January the development of a new mine for metallurgical coal at an extension of its Marfork mine a dozen or so miles up Route 3 from Upper Big Branch. The mine would produce 2 million tons of coal a year and employ more than 500 miners.

Massey last month announced the purchase of Abingdon-based Cumberland Resources Corp. for $960 million. The deal gives Massey 416 million tons of coal reserves in southwestern Virginia and eastern Kentucky, at least half of which are believed to have metallurgical properties. “We believe this is an excellent fit for Massey,” Blankenship says.

Disaster investigators are likely to focus on whether Massey cut corners in safety to position itself for this recovery. Media reports following the April 5 blast quote current and retired miners accusing Massey of such shoddy practices as erecting curtains to keep out coal dust only when officials knew inspectors were coming and forcing miners to go after coal that couldn't be mined.

Blankenship, who became chief executive in 2000, was revealed in lawsuits to be a demanding boss who insisted on being faxed production reports from each of Massey's 47 mines every two hours and who berated a maid for mixing up an order from McDonald's. Testimony from a deadly mine fire revealed a Blankenship memo stating that production trumped all endeavors at Massey mines.

The question now is how the April 5 disaster will affect the company and Blankenship. Immediately after the blast, Massey shares tumbled 17 percent. Ratings agency Standard and Poor's has put Massey on a credit-watch list, noting that the blast will put the mine out of service for a long time and it could cost the company 1.2 million tons of metallurgical coal, forcing additional losses of at least $50 million, perhaps more. Moreover, Massey could face millions of dollars in losses from lawsuits and fines.

The next shoe to drop will come at the company's annual meeting in Richmond in mid-May. Its board of directors, which includes such notables as a former director of the National Security Agency, Bobby Ray Inman, has loyally supported Blankenship in the past. In recent years, however, the board reportedly has asked Blankenship to tone down his profile, which has included making millions in contributions to West Virginia politicians and judges and being photographed in the French Riviera vacationing in 2006 with a prominent mountain state supreme court judge.

Blankenship recently got lots of publicity for holding a debate with environmental activist lawyer Robert F. Kennedy Jr. over ecology and global warming.

Will the Massey board of directors keep Blankenship after this most recent disaster? That could prove the key question. Analysts say that the Upper Big Branch blast will force West Virginia to tighten its regulation of safety issues which could make it harder for Massey to make money and win markets by being the low-cost producer. Fines and lawsuits loom.

On Wall Street, traders are already setting up Massey stock for short trades.

Last year, contributing editor Peter Galuszka and photographer Scott Elmquist traveled to Raleigh County, W.Va. Click here to read the May 2009 cover story, Massey's Dark Side."


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