S&P curiously upgraded Massey Energy stock from a “hold” to “buy” this morning, and without unquestioningly reported that Massey would be shielded from lawsuits and had plans to make up for the lost coal. Turns out that Massey filed a shareholder statement with the SEC on Thursday .
In the statement, Massey assures its shareholders that its insurance will cover any lawsuits from the mine explosion, and accuses the media of exaggerating its poor safety record.
Coal mining is subject to inherent risks. For some of these risks we maintain third-party insurance coverage and for some we are self insured. [...] We do have third-party insurance coverage that applies to litigation risk. We believe this coverage will apply to litigation that may stem from the UBB explosion.
The safety of our members has been and will continue to be our top priority every day. Media reports suggesting that the UBB tragedy was the result of a willful disregard for safety regulations are completely unfounded. Our lost-time incident rate has been better than the industry average for 17 of the past 19 years, improving significantly in recent years. These improvements have been achieved through concerted effort and significant investment.
Media coverage on the UBB incident has referred to safety violations issued to UBB by MSHA without placing the numbers in context. Since January 2009, UBB has had less than one violation per day of inspection by MSHA, a rate consistent with national averages. We do not condone any violation of MSHA regulations, and we strive to be in compliance with all regulations at all times. Most of the citations issued by MSHA to UBB in the last year were resolved on the same day they were issued.
This is nonsense. Massey is contesting two-thirds of the fines leveled against the company, or $1.1 million of the $1.7 million in fines assessed by the Mine Safety and Health Administration.
As I noted earlier today, Blankenship proclaimed it was “very difficult” to obey “nonsensical” safety rules. In 2001, Blankenship said he “doesn’t pay much attention to the violation count,” and a few years later, issued a memo to employees telling the ignore any order – including safety – except to “run coal” because “coal pays the bills.” He even said mine safety regulations were “as silly as global warming.”
For Massey Energy to pretend that safety it its “top priority every day” flies in the face of all available facts. S&P bought into Massey’s nonsense statement, while investors start to call for Chairman and CEO Don Blankenship’s resignation.