Upper Big Branch accident pulls down profits
July 28, 2010 — US coal mining giant Massey Energy Company reported a $88.7 million net loss in Q2 2010, which ended on June 30. The loss was a nearly $110 million turnaround from the same period in 2009 when the company reported $20.2 million in net income. For the first half of 2010, Massey reported a net loss of $55.1 million on $1.26 billion in coal revenue.
The biggest hits to Massey earnings have been pretax charges of $128.9 million in incurred costs, asset impairments and accrued reserves associated with the explosion at the Upper Big Branch mine in April 2010. These charges include estimates for loss of equipment, investigation costs, workers compensation and other compensation and benefits provided to the families of the miners, charges expected to be incurred for litigation, net of insurance proceeds and other related costs.
Excluding the accident-related charges, the company reported a net loss of $1.6 million or $0.02 per share in Q2 2010 and net income of $32.0 million, or $0.34 per share in the first half of the year.
Massey’s Chairman and CEO Don Blankenship said, “This was clearly a difficult quarter for everyone associated with Massey. The tragedy at Upper Big Branch and the ensuing, contentious investigation overshadowed our day-to-day operations and largely occupied the time and attention of management and many of our members. We continue to grieve the injury and loss of our miners. Our efforts to provide for the needs of the families of the injured or lost miners continue as well.”
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