Sago Mine shut down

Sago Mine shut down

Company cites rising costs, slump in prices
By Ken Ward Jr.Staff writer

International Coal Group confirmed Wednesday that it has idled its Sago Mine, the Upshur County operation where 12 workers died last year in West Virginia’s worst mining disaster since 1968.

In a prepared statement, ICG blamed Monday’s shutdown on high production costs and weakening coal prices that “made the Sago Mine unprofitable in the current coal market.”

“A small crew will remain employed at the Sago Mine to maintain the mine infrastructure in idle status and keep it available for restart should market conditions improve,” the Scott Depot-based company said.

The remaining Sago workers have been offered jobs at other operations of ICG subsidiary Wolf Run Mining, the company said.

ICG had previously cut the workforce at the mine from about 85 in early 2006 to 48 at the end of December, according to disclosures filed with the U.S. Mine Safety and Health Administration.
Production last year was down by more than a third over 2005, to about 323,000 tons of coal, according to MSHA data.

The mine was idled from the day of the fatal explosion, Jan. 2, 2006, through March 15.
“Sago was down for a long time relative to the accident,” said Roger Nicholson, an ICG senior vice president and general counsel.
One miner was killed by the methane explosion, and 12 others became trapped deep inside the mine south of Buckhannon. Eleven of those workers died from carbon monoxide poisoning before rescue crews reached them more than 40 hours after the blast. One miner, Randal McCloy Jr., survived, and continues what his doctors say is a miraculous recovery.

The disaster was the beginning of the West Virginia coal industry’s most deadly year since 1981. Nationwide, the industry also marked a low point, with 47 deaths, the most since 1995.

Sago has prompted numerous investigations, public hearings and reignited congressional interest in pushing MSHA for tougher mine safety enforcement.

Last year, Congress passed and President Bush signed the most significant rewrite of the nation’s mine safety laws since 1977, requiring better mine rescue equipment and planning. Lawmakers cited numerous problems that led to the failed effort to rescue 11 of the 12 trapped Sago workers.

Investigations by longtime mine safety expert Davitt McAteer and the state Office of Miners’ Health, Safety and Training have blamed the methane ignition on a lightning strike. United Mine Workers concluded in its own report that friction between loose mine roof rocks and metal roof supports was a more likely cause.

The Sago disaster — along with another sealed-area explosion at the Kentucky Darby Mine — has also forced the coal industry to reassess its tendency to seal off mined-out areas and not keep checking them for methane. West Virginia regulators and MSHA are both under the gun to write tougher rules for seal construction later this year.

On Wednesday morning, Kanawha Circuit Judge Charles King appointed Charleston lawyer Nick Casey to serve as a special commissioner to decide discovery disputes between lawyers in the 15 lawsuits filed by Sago victim families and by McCloy.
King said the commissioner would be needed to help sort out the process of lawyers exchanging documents and scheduling depositions during the investigative phase of the cases.

Separate suits have been filed on behalf of McCloy and on behalf of the estates of 11 of the 12 miners who died in the disaster. Section foreman Martin Toler Jr. is the only victim for whom a suit has not been filed.
Three other suits have been filed on behalf of Sago victim family members other than those filed by estate administrators, court records show.

Defendants in the cases include ICG and Wolf Run Mining, along with ICG founder Wilbur Ross and various Sago suppliers and contractors.
King said Wednesday he would schedule a hearing later on motions by Ross to be dismissed from cases in which he is personally named as a defendant.

In its announcement of the mine being idled, ICG blamed high production costs on “adverse geologic conditions.” Nicholson said the mine’s yield was poor, meaning the amount of rock in its product was rising relative to the amount of coal.

In early February, ICG announced it was delaying developing of its planned Tygart No. 1 longwall mine in Taylor County for at least a year. Company officials cited “the weak market environment.”

And in late December, Allegheny Energy, the sole customer of ICG’s Sycamore No. 2 Mine in Harrison County, sued ICG for alleged breach of a coal supply contract. Sycamore had been idled after encountering adverse geologic conditions and unmapped abandoned gas wells.

Last year, ICG reported a net loss of $9.3 million, compared to a net income of $31.8 million in 2005.
The company’s total coal sales were 4.8 million tons in 2006, compared to 4.2 million in 2005.

In late October 2006, the Raven Complex in Knott County, Ky., opened a new, state-of-the-art preparation plant. ICG’s new Beckley Complex is slated to begin production in the third quarter of 2007.

And in January, ICG completed its $5 million purchase of certain assets of bankrupt Buffalo Coal Co. ICG bought coal reserves, a preparation plant, and a rail load-out near Mount Storm.