Massey to move miners, make up loss at blast mine

NEW YORK (Reuters) - Massey Energy Co MEE.N said on Friday it will increase coal production at its other mines to compensate for production lost at the West Virginia mine where at least 25 miners died in a blast this week.

It expects to reopen the Upper Big Branch (UBB) mine at some point after an investigation of the blast is completed. Until then, it has plans for UBB miners to work at other Massey mines in the area.

The company also criticized media coverage of Monday's accident, saying references to its safety violations were taken out of context and that Massey's record was consistent with the industry average.

In a letter to shareholders, Massey said it has insurance to cover it against suits that might be brought against it as a result of the blast, but it has no insurance against business interruption at the mine.

The company said it would be able to bring a majority of UBB miners back to work at other mines, but it might not be able to replace 100 percent of the planned UBB production for 2010, according to a filing with the U.S. Securities and Exchange Commission.

The Upper Big Branch mine produced 1.2 million tons of high volatility metallurgical coal in 2009 -- just over 3 percent of Massey's 38 million-ton production total. But Massey said in February it was ramping up production of metallurgical coal to tap in to growing demand from global steelmakers, and the West Virginia mine had increased production recently.

Massey said in the filing it planned to ship about 1.6 million tons of metallurgical coal from the mine for the balance of the year, at an average price of $91.00 per ton.

"We are currently working on plans to mitigate the lost production at UBB by increasing production at other mines," it said. "We have a significant amount of mining equipment available that can be deployed as well as mines where we can produce additional coal similar in quality to that of UBB."

Prior to Monday's accident, the UBB mine had three fatalities since 1998 and a worse-than-average injury rate over the last 10 years, according to federal records.

But in its filing on Friday, Massey said: "Media reports suggesting that the UBB tragedy was the result of a willful disregard for safety regulations are completely unfounded."

It said the company's lost-time incident rate has been better than the industry average for 17 of the past 19 years.

"Media coverage on the UBB incident has referred to safety violations issued to UBB by MSHA (Mine Safety and Health Administration) without placing the numbers in context."

It said 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," Massey said.

Company shares were up $1.42 at $47.55 on the New York Stock Exchange opened.

(Reporting by Steve James in New York and Adveith Nair in Bangalore)