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Coal

Mine safety crackdown will hurt production--Arch CEO

* 5 pct industry-wide drop in production possible

* Tougher safety rules seen after recent W.Virginia blast

NEW YORK, April 19 (Reuters) - The West Virginia mine blast that killed 29 miners this month is likely to bring more stringent safety inspections resulting in lower mine production, the head of Arch Coal Inc ACI.N said on Monday.

“I think the pressure to be very aggressive ... will certainly be there,” said Chairman and Chief Executive Officer Steven Leer.

“We are anticipating that. You will see a lowering of productivity as we move forward, just from those kinds of activities,” he told Wall Street analysts.

One analyst pointed out that after tighter regulations were introduced three years ago, there has been a 5 percent industry-wide decline in productivity.

“I think 5 percent is as good as any other number out there,” Leer said. “But it really depends on the investigation (and) the time frame, but the pressure is going to be there.

“It will be very difficult for the industry to raise their numbers moving forward.”

Leer raised the issue of mine safety during a conference call to discuss Arch's first-quarter financial results, which were released on Monday -- two weeks after the explosion at the Upper Big Branch mine operated by one of Arch's competitors, Massey Energy MEE.N.

Arch, America’s second-largest coal producer, has said 2009 was its safest year on record, with no deaths and four of its mines reporting no lost-time accidents in an inherently dangerous industry.

And even though last year was the safest ever in the U.S. mining industry, with just 18 coal mine deaths, the Massey blast renewed calls for even tighter rules and higher penalties for violations.

Arch’s Leer kicked off Monday’s call with a reference to the Upper Big Branch accident. “First, I would like to express our deepest sympathies to the families of the fallen miners in the accident two weeks ago in West Virginia.

“As fellow citizens and miners we would like to recognize and honor the contributions those miners made serving our nation.”

Later, Leer was asked what areas of mining operations were likely to be targeted for more stringent inspection by federal mine safety authorities probing the Massey blast.

“If they find something that can be changed or should be changed or some specific causes, obviously I would anticipate that will be the focus of the regulatory environment.”

But Leer said safety regulations, which were already tightened in 2006 after 12 men died in the Sago mine disaster in West Virginia, were open to interpretation.

“The big mines are inspected every day, and you know we would like all safety rules to be black and white issues, but the reality of it is a lot ... have interpreted numbers in them.

“There’s grey areas ... what is the correct interpretation of too much dust or too much something on the floor?

“I think with the terrible tragedy in West Virginia we have to assume that the regulatory environment from a safety perspective is going to be very rigorous,” Leer said. (Reporting by Steve James; Editing by Gary Hill)

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