Improved Mine Safety Unlikely to Reduce Costs

Jan. 24, 2006 — -- In the wake of two deadly mining tragedies already this year, the mining industry has begun a self-examination that it hopes will make miners safer. But industry sources say steep financial costs may necessitate government oversight to significantly improve safety.

The cost of developing and implementing new safety measures would likely be high, and one mining insurance executive said upgrades could have little effect on mining companies' overall costs: They'd likely spend more to outfit mines and miners with improved safety measures while their liability costs would remain mostly unchanged.

"I don't know that it would have a big effect on their insurance costs," said Chandler Cox, president of American Mining Insurance Company in Birmingham, Ala. "There's no doubt that it would be a good thing to make mines safer, but fatalities are already on a downward trend."

The number of deaths due to accidents in U.S. coal mines has fallen sharply in the past 15 years, from 67 in 1990 to just 22 last year, according to the National Mining Association, an industry trade group. But the number of deaths is already at 14 this year after two incidents in West Virginia, including the deaths of 12 miners in early January following an explosion at the Sago Mine in the northern part of the state.

"Year-over-year, the record of accidents has been falling. But in the wake of the Sago tragedy we agreed that safety needed to be reassessed," said Carol Raulston, spokeswoman for the NMA.

The group has put together an independent safety and rescue commission to evaluate possible upgrades in accident-prevention technology and emergency response.

The industry has dramatically improved safety since the early 1990s. Air-monitoring systems and safer drilling machinery have both helped. And when accidents happen, miners have a better chance of surviving than they did two decades ago.

Some miners carry locating equipment called personal emergency devices, which send one-way, low-frequency signals to help rescuers pinpoint the location of trapped miners. Costing about $150 apiece, PEDs are relatively cheap, but they work only in mines that are 300 feet deep or shallower. Many mines are much more profound, including the two West Virginia mines where the recent accidents occurred.

Because of their limitations, PEDs are used only in about 25 of the more than 300 U.S. coal mines. Raulston said the newly formed safety commission would examine the possibility of developing more powerful PEDs, but it is not known how much the technology would cost or how effective it could be.

Modern day miners also carry oxygen sources, known as self-rescuers, that use a chemical process to pump oxygen through a mask in the event a miner is trapped. But self-rescuers provide only one hour of air for miners engaged in physical activity. There have been discussions within the industry about adding extra oxygen storage units inside mines, but these might not be helpful in situations in which mines collapse, and trapped miners cannot tap the extra oxygen.

Any upgrades to existing technology would also need to focus on portability. Current PEDs can be clipped onto helmets or clothing, and self-rescuers, which are about the size of a box of envelopes, can hang off a belt. Making either item larger could make them too cumbersome to carry around.

"You have to wonder how much they can strap on without impeding their work and making it hard to move around," Raulston said.

Insurance companies are wary of lowering premiums for an industry that would still have workers drilling and blasting hundreds of feet below ground. Researching, constructing and implementing new technology like longer-range PEDs could be very expensive, while there is no guarantee that the improved versions would make miners safer.

And working at such depths under stone and coal would still always involve dangerous variables. One accident, like the Sago tragedy, could leave companies open to potentially huge liabilities.

So do the mining companies have a financial incentive to make safety upgrades?

"I'm not sure that they do," said Cox. "Mining companies want to keep their workers safe, but it's a dangerous business, and you're not going to prevent all accidents."

Currently, insurance rates do not vary much among mines because federal regulations have ensured a certain level of safety across the industry. Cox said it is unlikely that technology upgrades would sharply lower insurance costs. The improvements in the past 15 years have made mining far safer than it has ever been, but accidents do happen, and insurance companies will always be wary of liabilities.

"The one thing it could do is attract more insurance companies, which could add competition so you could see some price effect from that," Cox said. "But it would probably take some kind of government regulations to give them a real incentive."

A U.S. Senate committee has scheduled hearings on mine safety, and congressional hearings on the subject began yesterday in Washington.

State regulations could also be in line for an upgrade, as West Virginia legislators began meeting this week to discuss bolstering state mining regulations.

Raulston said the mining industry is committed to improving safety, regardless of the cost. The NMA, she said, is resolute about helping the newly formed committee develop more effective safety and rescue measures.

"The industry has committed to whatever the committee needs," she said.