Pike River Coal

Pike River Coal Ltd was a New Zealand mining company established to develop and operate the Pike River Mine on the West Coast of New Zealand’s South Island. The mine was located approximately 46 kilometres east of Greymouth and targeted the Brunner coal seam, a bituminous deposit valued for relatively low ash content and variable sulphur characteristics. The company’s principal commercial activity was the development and intended production of export-quality underground coal from this deposit. Pike River Coal became a publicly traded company on 20 July 2007, when its shares began trading on the New Zealand Exchange. It was also listed in Australia. The company raised approximately NZ$85 million in additional capital during 2007, after more than NZ$100 million had already been invested in mine development. By June 2010, total development expenditure was reported at approximately NZ$288 million. The project required extensive underground infrastructure, transport arrangements, ventilation systems and construction work before it could reach its planned production scale. The company’s ownership structure included New Zealand Oil & Gas and Indian coal-related companies Gujarat NRE Coke and Saurashtra Fuels, alongside public and other minority shareholders. New Zealand Oil & Gas was the largest strategic shareholder around the period of the initial public offering and held related options and securities. Gujarat NRE Coke and Saurashtra Fuels were associated with intended purchases of a substantial portion of the mine’s future production. Pike River Coal experienced substantial financial pressure during its development phase. It reported a net operating loss of approximately NZ$13 million for the year ended June 2009 and approximately NZ$39 million for the year ended June 2010. Although its market capitalisation had at times been around NZ$400 million before the disaster, the mine had not yet achieved the operating performance required to offset its development costs. On 19 November 2010, an explosion occurred underground at the Pike River Mine at approximately 3:44 p.m. Thirty-one workers were underground. Two men, Daniel Rockhouse and Russell Smith, survived and reached the surface, while 29 others died as a result of the explosion and subsequent toxic conditions. Further explosions occurred on 24, 26 and 28 November, making a rescue or immediate recovery operation unsafe. The mine was subsequently sealed rather than re-entered at that time. Peter W. Whittall, who had previously been responsible for mine construction, development and recruitment, became chief executive on 2 October 2010 and served as the company’s principal public spokesperson during the disaster. He succeeded Gordon Ward, who had led the company as managing director and chief executive from May 2007 until 1 October 2010. Trading in Pike River Coal shares and options was suspended at the company’s request on 22 November 2010. New Zealand Oil & Gas announced on 12 December 2010 that the company would be placed into receivership, and PricewaterhouseCoopers was appointed as receiver on 13 December. The company was purchased by Solid Energy in 2012, although responsibility for investigations and later mine re-entry remained with the New Zealand Government. Pike River Coal’s corporate history is therefore closely linked to the mine disaster, the subsequent receivership and continuing public debate over mine safety, accountability, victim compensation and recovery of the victims’ remains.

Pike River Coal was created to develop the Pike River coal deposit on New Zealand’s West Coast. Its operating asset, the Pike River Mine, was situated in rugged terrain approximately 46 kilometres east of Greymouth. The project targeted the Brunner seam, a bituminous coal resource with comparatively low ash content and differing sulphur characteristics. Development involved construction of underground workings and supporting infrastructure intended to enable commercial coal production. The company pursued significant capital raising and strategic investment during the 2000s. In 2007 it raised approximately NZ$85 million in additional capital, while development expenditure had already exceeded NZ$100 million by August of that year. Pike River Coal subsequently became listed on the New Zealand Exchange on 20 July 2007 and was also traded in Australia. Strategic investors included New Zealand Oil & Gas, Gujarat NRE Coke and Saurashtra Fuels, with the Indian companies intending to acquire a significant share of future production. Gordon Ward served as managing director and chief executive from May 2007 until 1 October 2010. He had been involved in leading the Pike River project from its conceptual stages for approximately fourteen years. Peter W. Whittall succeeded him as chief executive on 2 October 2010. Whittall had spent decades in mining and had previously overseen construction, mine development and recruitment at Pike River. His appointment came less than two months before the mine disaster. By June 2010, the company reported that approximately NZ$288 million had been invested in developing the mine. The project remained financially challenging, with reported net operating losses of approximately NZ$13 million in the year to June 2009 and NZ$39 million in the year to June 2010. Pike River Coal had at times carried a market capitalisation of roughly NZ$400 million before the disaster, but its financial position was exposed to delays, development costs and the difficulty of bringing the underground operation to sustained production. On 19 November 2010, an explosion occurred at approximately 3:44 p.m. while workers from Pike River Coal and contracting firms were underground. Thirty-one men were trapped. Daniel Rockhouse and Russell Smith survived and made their way out despite injuries and carbon-monoxide poisoning. The remaining 29 workers died. A pressure wave and debris were observed at the mine entrance, and aerial inspections showed damage around the ventilation infrastructure. Further explosions on 24, 26 and 28 November demonstrated that the mine remained dangerously unstable. Authorities therefore did not re-enter the workings at that stage, and the mine was sealed. The disaster ended the company’s effective operating future. Trading in its shares and options was suspended on 22 November 2010. On 12 December, New Zealand Oil & Gas announced that Pike River Coal would be placed into receivership, and PricewaterhouseCoopers was appointed receiver on 13 December. Solid Energy acquired the company in 2012, although the New Zealand Government retained responsibility for investigation and mine re-entry matters. The company later became associated with legal and compensation proceedings involving the families of the deceased workers. In 2013, Pike River Coal was ordered to make payments to each victim’s family and was fined. The company stated that it lacked the funds to meet the full obligations and made only limited payments. The issue generated further political debate, including calls for government intervention to ensure that families received the amounts awarded. Pike River Coal is now defunct, and its lasting public significance rests less on its commercial coal output than on the disaster, the questions it raised about underground mine safety and oversight, and the long-running effort to recover and account for the victims.

• 2013

  Compensation and fine

  [1]Pike River Coalen.wikipedia.org

  The company was ordered to make payments to victims’ families and was fined following proceedings connected with the mine disaster.

• 2012

  Acquisition by Solid Energy

  [1]Pike River Coalen.wikipedia.org

  Solid Energy purchased the company, while the government retained responsibility for investigation and mine re-entry activities.

• 2010

  Peter Whittall becomes chief executive

  [1]Pike River Coalen.wikipedia.org

  Peter W. Whittall succeeded Gordon Ward as chief executive on 2 October, after previously overseeing construction, development and recruitment at the mine.

• 2010

  Pike River Mine disaster

  [1]Pike River Coalen.wikipedia.org

  An explosion on 19 November trapped 31 workers and resulted in the deaths of 29. Subsequent explosions prevented immediate re-entry.

• 2010

  Trading suspended

  [1]Pike River Coalen.wikipedia.org

  Trading in Pike River Coal shares and options was suspended on 22 November at the company’s request.

• 2010

  Receivership

  [1]Pike River Coalen.wikipedia.org

  The company entered receivership in December, with PricewaterhouseCoopers appointed receiver after a decision announced by New Zealand Oil & Gas.

• 2007

  Capital raising and public listing

  [1]Pike River Coalen.wikipedia.org

  Pike River Coal raised approximately NZ$85 million in additional capital and began trading on the New Zealand Exchange on 20 July. It was also listed in Australia.

A publicly listed New Zealand underground coal-mining developer focused on producing bituminous coal from the Pike River deposit for domestic and export-related industrial customers.

• Coal

  Pike River Mine bituminous coal

  The company’s principal offering was bituminous coal intended to be extracted from the Brunner seam at the Pike River Mine. The deposit was described as having relatively low ash and variable sulphur content. Commercial development was interrupted before the mine could achieve a stable long-term operating profile, and the mine disaster ended Pike River Coal’s operating business.

• 2010

  Pike River Mine disaster

  The explosion at the Pike River Mine killed 29 workers and led to sustained scrutiny of mine safety, operational controls, emergency preparedness and regulatory oversight. Further explosions prevented an immediate recovery operation and made the disaster the defining event in the company’s history.

  Source

Read more

• 2010

  Decision not to re-enter the mine immediatelyStrategy

  Background

  After the initial explosion, conditions underground remained uncertain and dangerous. Additional explosions occurred on 24, 26 and 28 November.

  Action taken

  Authorities and response leaders decided that immediate re-entry was unsafe and the mine was sealed.

  Aftermath

  The decision shaped the subsequent investigations, compensation proceedings and government-led efforts to determine whether and how the mine could later be re-entered.

  Source

• 2010

  Request for suspension of share tradingOther

  Background

  The company faced major uncertainty after the mine explosion and the loss of most of the underground workforce.

  Action taken

  Pike River Coal requested suspension of trading in its shares and options on 22 November.

  Aftermath

  The suspension preceded the company’s receivership in December 2010.

  Source

• 2010

  Receivership following the disasterOther

  Background

  The disaster severely affected the company’s operating prospects and financial position.

  Action taken

  New Zealand Oil & Gas announced the decision to place Pike River Coal into receivership, and PricewaterhouseCoopers was appointed receiver.

  Aftermath

  The company ceased to function as an independent operating coal producer and was later acquired by Solid Energy.

  Source

1. 1Pike River Coalen.wikipedia.org