Pike River mine

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The Pike River mine was a new coking coal mine which was developed by Pike River Coal Limited. The mine opened in 2010 but was closed following a gas explosion which killed 29 workers. The mine is now owned by Solid Energy.

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Background

The first coal from the mine was exported in February 2010. On November 19 2010 an underground explosion ripped through the mine and killed 29 workers. After attempts to recover the bodies failed, the mine was sealed. Pike River Coal collapsed and the company went into receivership. In March 2012 the receivers announced that they had sold Pike River Coal's assets to Solid Energy, subject to the completion of due diligence. The receivers stated that due diligence was scheduled to be completed by March 30 and settlement expected by May, subject to "approvals being obtained". In May 2011, when announcing that it had lodged an expression of interest, Solid Energy stated that it aimed to create a trust fund to recover the bodies of the dead miners and "address the situation of the unsecured West Coast creditors". It also stated that it aimed to bring the mine "back into safe production as soon as possible."

Background

The mine was originally scheduled to begin production in early 2008, and was initially expected to produce around one million tonnes of coal per year for around 20 years, making the mine the second-largest coal export mine in the country, as well as the largest underground coal mine of the country. The estimate for production was reduced to between 320,000 and 360,000 tonnes for 2011. The coal of the mine is described as "New Zealand's largest known deposit of high fluidity and quality hard coking coal", and was expected to earn around NZ$170 million in export income annually.

Various setbacks occurred during late 2007 and early 2008 delaying the start of coal production. While mine operators were originally confident that production would still start in 2008 (having reached within of the coal seam in early 2008), in mid 2009 the mine was still not producing at expected levels, with the target of the first 60,000 tons of coal to be shipped having slipped to early 2010. The mine operators noted that technical difficulties with several mining machines were to blame for the delays, which also forced the company to ask for an extension from its financiers.

Approvals history

The mine has a development and consenting history going back to the 1970s, with the first geologists and surveyors having explored the area in the 1940s. The mine is located approximately halfway between Greymouth and Reefton, close to the Pike Stream, a tributary of the Big River in a region that already has a long history of coal- and gold-mining activity. It is located on Crown land administered by the Department of Conservation, and adjacent to the Paparoa National Park. Because of the status of the land, Pike River Coal Ltd had to obtain the Minister of Conservation's agreement to an access arrangement for mining under Section 61(2) of the Crown Minerals Act 2001.

On 12 March 2004, Minister of Conservation Chris Carter approved the access arrangement for Pike River Coal Ltd. The arrangement included four -wide emergency escape shafts within the boundaries of Paparoa National Park and a requirement for Pike River Coal Ltd to spend NZ$70,000 annually on conservation projects. Carter stated that the "safeguards and compensation" outweighed the inconsistencies with objectives of the Conservation Act 1987 and the relevant management plans.

Due to the location, the conditions of the access arrangement included special considerations for the environment, such as minimising tree felling and a requirement to reinstate all above-ground areas after the cessation of mining. Opponents of the mine strongly criticised the approval of the access agreement, noting that the coal is not intended for domestic use but simply a commercial operation, and thus should not have been allowed to go forward in a sensitive location. Royal Forest and Bird Protection Society of New Zealand also criticised the fact that the Minister of Conservation chose to ignore the report from the Department of Conservation stating that the mine would be damaging to the local environment. Greenpeace Aotearoa New Zealand also criticised the project for furthering the use of fossil fuels instead of developing sustainable alternatives.

Mine operation

In October 2008, coal production started and in November 2008, Gerry Brownlee, the Minister of Energy and Resources and Minister for Economic Development, formally opened the mine. However, production was slow initially, and took until 2009/2010 to reach significant levels.

The coal is mined underground, at above sea level, quarrying coal from the Brunner coal seam, near the Hawaea Faultline. The coal is taken from the mine via a 'drift', a gently-sloping 5 degree tunnel long. This tunnel has taken large amounts of dynamite to create, as the rock is described as being up to four times harder than concrete. Since the coal face will be located higher than the tunnel entrance, removal of material to a processing plant away will be via a [[slurry pipeline (with a 35% solids share.

Another major feature of the underground works is a deep ventilation shaft. After local ground conditions were found to be worse than expected, it was excavated with a Raise borer system excavating the ventilation shaft from a pilot drill shaft. Access to the top of the ventilation shaft is by helicopter only, even during construction, as conservation restrictions do not allow roads to be built to reach this point.

The mine also includes underground excavation for the coal slurry handling facility and mine water storage and pumping equipment, with several large galleries of up to width and height to be excavated. As of 2010, the mine has three main "drives" (shafts).

Originally, once at the processing plant, coal was to be trucked to Greymouth for reshipment at the local port. On 27 November 2007, it was announced that the coal from the mine would be transported to Lyttelton, New Zealand for export rather than the previously proposed shipment via the Port of Taranaki. The company has reserved under contract with now KiwiRail 1.3 million tonnes of capacity for their coal on the Midland Line, New Zealand between Greymouth and Christchurch, which since upgrading by ONTRACK has a total capacity of four million tonnes per annum.

The mine was to have about 150 full-time staff, though in 2007-2008, there were problems filling all positions, partly because of high demand for the same occupations in the Australian and international job markets. In February 2010, Pike River Mine made its first export shipment of 20,000 tonnes of premium hard coking coal to India.

The mine is estimated to have generated about $80 million of economic benefits to the West Coast Region, about $13 million of that in wages.

Mine explosion

On November 19 2010 an underground explosion ripped through the mine. Initial reports indicated that two miners who suffered minor injuries were found when an electrician went into the mine to investigate a power outage. Pike River CEO Peter Whittall said that 27 men were believed trapped underground. After a further explosion days later, the police and mining company announced that there was no prospect of any of the miners having survived. The death toll was 29 men. In the wake of the disaster, the New Zealand Prime Minister, John Keys, announced that a Royal Commission would inquire into the tragedy. "The future of Pike River and actually underground coalmining in New Zealand rests on this. We can't put people into mines that are dangerous," Keys stated.

Key announced that Justice Graham Panckhurst, a sitting High Court judge would head the Royal Commission and that two other Commissioners "with relevant expertise in mining and safety regulation" will also be appointed.

The draft terms of reference specified the that the commission inquire into the "cause" of the explosions on November 19 and November 24 as well as the cause of "the loss of life of the men working in the mine." The inquiry is also likely to be directed to inquire into "the general law (including any specific legislation and regulations), systems, processes, practices and procedures which govern health and safety in underground coal mining and related operations, and how these compare to relevant international jurisdictions", the "nature and effectiveness of the systems, processes, practices and procedures in place at the mine for or related to its operations,management, and safety" and the "administration and implementation (including resourcing) of any relevant legislation, regulations and their associated systems and processes in relation to the mine and the land in which it is situated, including the interaction between other regulatory requirements (such as environmental and conservation) and health and safety, and how these compare to relevant international jurisdictions."

In November 2011 an inquiry revealed that Pike River mine was an accident waiting to happen. An expert told the inquiry that the mine had identified housekeeping, emergency and ignition issues and hazards, but did nothing about these issues.

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