New Zealand’s 2010 Pike River Coal Mine tragedy has led to criminal prosecution of the mine owner and the creation of a new dedicated health and safety regulator in New Zealand.

Facts

The Pike River underground coal mine is located in the Paparoa Range near Greymouth on the West Coast of New Zealand’s South Island.

On 19 November 2010, the mine exploded, killing 29 men. The explosion was caused by the ignition of a substantial volume of methane gas, which is found naturally in coal and ignites readily when it comprises 5% to 15% in volume of air.

The mine owner, Pike River Coal Ltd (Pike River Coal) was severely criticised for its safety failures in connection with the incident in the subsequent Royal Commission into the Pike River Coal Mine Tragedy (Royal Commission)

On 18 April 2013, the Greymouth District Court also convicted Pike River Coal of nine criminal charges under the Health and Safety in Employment Act 1992 (NZ) (Act). The company’s CEO, Peter Whittall, has also been charged with twelve offences under the Act but is yet to face court.

What went wrong?

The Royal Commission found that while Pike River Coal set out to develop a safe, world-class mine, inadequate geological exploration, overly-optimistic forecasting, significant delays, debt and escalating costs led the company to abandon safety precautions in its drive for production.

Pike River Coal’s board was principally focused on the drive for coal production and did not treat health and safety risks as its main concern. For example, it accepted the mine manager’s advice that methane gas levels in the mine were “more a nuisance and daily operational consideration than a significant problem or barrier to operations.” The board failed to critically assess this advice.

The Royal Commission also observed that management was also caught up in the culture of “production before safety”. Risks were either not noticed or not responded to. Crucially, in the 48 days before the explosion, there were 48 reports of dangerous methane volumes, 21 of which demonstrated methane at explosive levels. Management ignored all of these warnings.

Similarly, while Pike River Coal recognised the need for good training programs for its relatively inexperienced workforce, training was deferred in the push for production. A lack of education and insufficient underground supervision resulted in reckless behaviours, such as workers bypassing safety devices on machinery so work could continue uninterrupted.

In convicting Pike River Coal on nine criminal charges under the Act, Judge Jane Farish of the Greymouth District Court emphasised that the disaster was the result of an accumulation of errors and omissions over several years.

The company is yet to be sentenced but with each charge carrying a possible maximum penalty of NZ$250,000, the total penalty could reach NZ$2,250,000.

Pike River Coal has been in receivership since December 2010 and may not be in a position to pay any fine that may be imposed by the Court.

New Occupational Health and Safety Regulator

The Royal Commission censured not only Pike River Coal, but also the regulatory framework that allowed it to operate an unsafe mine. The Royal Commission found that inadequate national safety legislation and regulations failed to provide sufficient guidance for mining operators who were largely self-regulated.

This meant that Pike River Coal had been able to obtain a permit to develop the mine with little or no scrutiny of its initial plans and minimal on going scrutiny. At the time of the incident, New Zealand had only two mining inspectors who were poorly trained and unable to cover the many workplaces for which they were responsible.

In response to the Royal Commission, the New Zealand Government has announced the creation of a new dedicated health and safety regulator. It is hoped the regulator will help improve New Zealand’s poor health and safety record and bring it into line with comparable developed nations.

Bottom line for employers

While health and safety regulations and “red tape” may seem onerous for some employers operating in high risk industries, the Pike River tragedy illustrates that poor workplace practices unchecked by adequate prescriptive regulations and guidance from a central regulatory body can lead to poor self-regulation and ultimately, catastrophic loss of life.

Employers should insist on strong, visible leadership on safety at all levels. This may involve a review of existing safety governance policies and procedures, regular reporting protocols, as well as adequate information, training and consultative mechanisms to ensure a robust health and safety capability across the organisation.

Most importantly, this tragedy reminds all employers that even in times of extreme financial pressure where productivity is seemingly paramount, the safety of all its workers and others who are likely to be exposed to risks from their operations must always be prioritised.

Multinational employers are subject to different safety legislation and standards in the different countries in which they operate. A “best practice” approach that adopts the most rigorous safety standards should be universally applied by employers who operate across different jurisdictions. As part of its due diligence though, employers should always seek legal advice prior to commencing operations overseas. This preliminary legal advice should extend to any industry-specific laws or regulations that operate in the chosen country that will assist them to avoid any unwarranted attention from any local regulatory agencies or other groups.