Monthly Archives: April 2012

The risk culture at Pike River Mine

By Rebecca Macfie – New Zealand Listener| Published on March 10, 2012 | Issue 3748

The commission of inquiry into the Pike explosion has uncovered a company that was deaf and blind to its own failings.

Photo Mark Mitchell/NZH

The balance-of-probabilities explanation of what happened at Pike River coal mine at 3.45pm on November 19, 2010, was delivered bloodlessly in the ninth week of inquiry hearings. Australian mining man David Reece – one of five experts hired by the Department of Labour and police to investigate the disaster – said a slug of methane gas had probably been expelled from the coalface by a large collapse of the “goaf” (the void left after coal has been extracted). As it travelled down the mine, it would have mixed with fresh air to form an explosive concentration. Around the same time, a pump turned on by the surface control room caused electrical arcing in poorly configured underground equipment. The mine exploded.

Even assuming Reece’s explanation of what happened stands up to further scrutiny, it leaves many more burdensome questions still to be answered. Why did Pike’s management systems not prevent the catastrophic combination of two of the most critical risks in underground coal mining – explosive levels of methane and ignition? Why was there not a belts-and-braces­ regime of vigilance, running from the board of directors at the top through the multiple layers of management and down to the workers at the coalface, that would have detected and dealt with those risks long before they were calamitous? Why did no one in a position of authority respond to Pike’s multiple warning signs by saying what needed to be said: shut this mine down?

Some saw the signs of looming disaster, said their piece, then left. Albert Houlden, a former leading hand with Pike’s biggest subcontractor, McConnell Dowell, and a man steeped in the traditions of British coalfields, worried about poor supervision, the lack of teamwork underground and the inexperience of men pressed into tasks beyond their training. He made complaints about various incidents, and left in April 2010 after six months, telling his wife, “That mine is going to go.”

Masaoki Nishioka, a Japanese mining expert hired in mid-2010 to commission Pike’s hydro-mining system – which was critical to the company’s ambitious coal production forecasts – was terrified of the combination of Pike’s gassy coal, its inadequate ventilation and gas-monitoring system, and the lack of an emergency exit. He says he warned middle and senior managers several times (although his evidence on this is disputed), and left after three months, fearing an explosion.

In mid-2009, Harry Bell, a former chief inspector of coal mines, was so concerned at what he was hearing from senior miners about gas management and behaviour underground at Pike that he rang the company’s then general manager, Peter Whittall, to raise his extreme concerns. Whittall told him: “Sometimes your officials let you down.”

These individuals were able to recognise the dreadful signs, but the company itself was deaf and blind to the trouble it was in. Vital information lay fallow in organisational dead ends, rather than flowing systematically to key decision-makers. For instance, news of repeated instances of high methane readings in the main ventilation shaft in the month before the explosion didn’t reach Doug White, the highly experienced and respected Australian who was the statutory mine manager from mid 2010 until the time of the explosion.

As for a series of potentially explosive methane spikes during the commissioning of the hydro-mining system, White told the commission he could not recall knowing about them at the time. He acknowledged there was no documented system of alerting him to such “high potential incidents”. White didn’t know until after the explosion that of the three key sensors measuring gas levels in the air circulating away from the coalface, one was not properly calibrated, one hadn’t been working for over two months and the third was poisoned by repeated high readings and was not sending information to the control room.

In the final weeks of the mine’s life, White, who became Pike’s general manager when Whittall was promoted to chief executive in October 2010, effectively handed the statutory role of mine manager over to a new man, Australian Steve Ellis. Ellis was the seventh person to hold the role in just two years, and at the time did not hold the official qualifications needed to do the job.

After he took over, little time was spent at daily management meetings discussing gas levels, according to former middle manager Gregory Borichevsky. The main thrust, he told investigators, was “achieving target metres and tonnages”.

Underground supervisors were reporting that contraband items such as lighters, cellphones and non-regulation watches – all capable of producing enough ignition to react with explosive methane – were being taken into the mine. But exactly where that information wound up is unclear. One who did not receive it, despite his responsibility for implementing safe procedures at Pike, was health and safety manager Neville Rockhouse.

Until the explosion that took the life of one of his three sons, Ben, and nearly claimed another, Daniel, Rockhouse believed “we did things good” at Pike. But no one had been telling him about gas spikes, sparking machinery, workers bypassing machine-mounted gas detectors, or incidents such as when a spot search of a group of miners was carried out and two-thirds were found to be carrying contraband.

Rockhouse was so busy writing operating procedures and management plans – most of them never signed off by the relevant departmental managers – that he rarely had time to go underground to see for himself what was going on. As he told the inquiry, “You can’t manage what you don’t know.” Sometimes dire warnings were acted on, but only partially. When senior miner Brian Wishart wrote an email in April 2010, listing major failings in Pike’s system of draining methane from the coalface, he closed with an ominous reference to the recent explosion at West Virginia’s Upper Big Branch coal mine, which had killed 29 men. “History has shown us in the mining industry that methane, when given the [right] environment, will show us no mercy.”

There was a flurry of activity as a result, including bringing in a consultant with expertise in methane drainage. But the consultant’s key recommendations – to increase the capacity of the system to deal with gas volumes – had not been implemented by the time the explosion occurred. Other measures that might have helped lessen Pike’s risks were blocked. In mid-2010 White budgeted $800,000 to install a tube-bundle system – a highly accurate gas monitoring system that’s regarded as standard equipment in modern underground coal mining. But Whittall took it out of the budget.

The highly respected Harry Bell was contracted to provide extra training for the workers (who were crying out for it); he did one session in October 2010, but only three workers turned up to the second session because others couldn’t be spared from the coalface.

Up and down the line, people operated under dangerous assumptions. When asked about the disconnection of the critical methane sensor near the hydro-mining area, monitoring engineer Daniel du Preez told investigators he was new to coal mining and had assumed “management is there and they decide it’s fine, then it’s fine probably [sic]”.

White assumed (wrongly) that the gas sensors were being regularly calibrated, and that Ellis was keeping a close eye on gas levels. There was no integrated management information system that would have automatically drawn his attention to glaring problems.

The board of directors – none of whom had any experience in underground coal mining – assumed if there were any serious safety concerns the company’s managers would let them know. Chairman John Dow spoke of the “church and state” separation between governance and management; it wasn’t for the board to be poking around in operational detail.

For instance, they didn’t check whether gas monitoring was sufficient, whether the electrical system was intrinsically safe or whether the risks of major new processes such as hydro-mining had been thoroughly assessed. When White did address the board, four days before the explosion, Dow recalled him expressing “comfort” with the gas levels, which were a “nuisance” rather than a concern. And even when warnings were sounded that might have put the board on high alert, not much seems to have come of it. In August 2009, for instance, Pike’s then contracts manager, Les McCracken, made an unsolicited approach to Dow to express concerns about the training, morale and cultural mix of staff at the mine.

Dow responded by contacting an experienced mining consultant, Dave Stewart, who did a series of audits in March and April 2010. Stewart saw a range of problems, including deficient gas monitoring, poorly designed ventilation, the lack of an effective emergency exit and a “dysfunctional” culture. His reports went to the management, but the board never saw them. Even more surprisingly, the board didn’t receive an insurance review carried out in 2010 that raised several red flags, including a lack of key risk assessments, a low standard of methane and strata control and poor general housekeeping.

Pike’s board – like most company boards – claimed to put health and safety at the top of its priorities. In fact, it did no such thing. Its health, safety and environment committee didn’t meet in the 13 months before the explosion, and although Dow said the whole board was taking an interest in health and safety, board minutes show it was not at the top of the agenda. Further, the board overtly rewarded production over safety, linking 75% of the chief executive’s bonus to production and budget targets, and only 10% to safety.

Even if the board and senior managers had been alert to the perils by the latter part of 2010, they may have been too burdened by Pike’s short deluded history to have done much about it. Based on scanty geological information, Pike’s promoter, New Zealand Oil & Gas, had chosen to mine one of the most difficult coal seams on the West Coast. It had attracted investors with grandiose production forecasts of over a million tonnes a year of coal – more than twice the annual yield from its nearest comparable mine, Spring Creek.

The project was launched in the middle of an international mining boom, making it difficult to recruit experienced people. Pike River Coal was repeatedly caught out by the geological complexity of the area, and its 2.3km access tunnel cost 100% more than budgeted and took two years longer to complete than planned.

The company selected machinery that didn’t work, causing further production delays and endless frustration to those on the job. It chose an unconventional mining method – hydro-mining, which uses a high pressure water jet to carve the coal out – which carried a unique set of risks, and then employed people with no experience in the system to run it. It chose to install its main electrical ventilation fan – the lungs of the operation – underground, where it was inherently vulnerable to the very hazard it was supposed to control.

By 2010, Pike had invested $350 million in a hole in the Paparoa Range that had yet to produce commercial quantities of coal. It was burning through $4 million a month, and was losing the confidence of its shareholders. The company’s leaders had convinced investors to throw another $70 million of capital at the venture, which they believed would see the mine through to steady-state production and release it from its agonising start-up troubles.

Who, in such circumstances, would be brave enough to declare the place a time bomb and order it shut? Not the workers, many of whom were inexperienced, were accustomed to flagrant health and safety breaches and incidents not being followed up, and were busting to earn the pre-Christmas production bonus they’d been offered. Not the managers, who failed to see the whole frightening picture, and – judging by the private emails of White describing Whittall as a liar and a “dodgy git” – worked in a climate of blame and mistrust at the top. Not the board, who, in the absence of news to the contrary from management, assumed the place was a bastion of modern health and safety practice. And not the regulator – the Department of Labour’s mining inspectorate – which had been stripped of authority, skill and resources over two decades of deregulation.

By November 19, 2010, Pike’s workers walked – as they had so many times before – into the maw of a fatally flawed ­organisation.