Monday, 28 November 2011
CASE 365 - Massey Energy
Massey Energy Company was a coal extractor in the United States with substantial operations in West Virginia, Kentucky and Virginia. By revenue, it was the fourth largest producer of coal in the United States and the largest coal producer in Central Appalachia. By coal production weight, it was the sixth largest producer of coal in the United States.
Massey's mines yielded around 40 million tons annually. The company controled 2.3 billion tons of proven and probable coal reserves in Southern West Virginia, Eastern Kentucky, Southwest Virginia and Tennessee or about a third of all Central Appalachian reserves.It employed approximately 5,850 people and operated 35 underground mines and 12 surface mines.
It was also one of the most polluting companies of the previous century. In early 2008, the company agreed to a $20 million settlement with the U.S. Environmental Protection Agency (EPA) to resolve thousands of violations of the Clean Water Act for routinely polluting waterways in Kentucky and West Virginia with coal slurry and wastewater. Although this was the largest Clean Water Act settlement, the violations were estimated to have fines on the order of $2.4 billion. Over 700 miles of rivers and streams in the coalfields have been buried by the waste rock left over from mountaintop removal, a method of strip mining coal which requires the blowing up of mountain tops, removing from 500 to 800 feet (240 m) of mountaintop in the process. This method of coal mining has created some of the worst environmental disasters in the Mississippi area in regards to the poisoning of waterways, the flooding of local communities, and the destruction of the biodiversity of the Appalachian Mountains in West Virginia, Virginia, Kentucky, and Tennessee.
In October 2000, a Massey Energy subsidiary in Martin County, Kentucky accidentally released 306 million gallons of coal slurry waste from an impoundment into two mountain streams, Coldwater Creek and Wolf Creek. The Martin County sludge spill was called the worst ever environmental disaster in the southeastern United States by the EPA. The spill smothered all aquatic life in the streams and left residents with contaminated drinking water. Cleanup costs for the spill were approximately $50 million.
In January 2011, it was announced that Massey Energy company would be bought by competitor Alpha Natural Resources for $7.1 billion. More than 99% of Massey shareholders and 98% of Alpha shareholders voted in favor of the acquisition and courts in Delaware and West Virginia refused to block the shareholders' vote.
Massey Energy owned and operated Upper Big Branch Mine where 29 miners were killed in April 2010.
Sale of Massey to Alpha
On June 1, shareholders of Alpha Natural Resources agreed to buy Massey Energy for $7.1 billion, making it the nation's largest metallurgical coal company. Some shareholder groups had tried to block the sale claiming that Massey managers had engineered the sale of the company to protect themselves from liabilities and had arranged new management jobs with Alpha.
There are 23 coal mining sites run by Massey Energy. There are sixteen sites located in West Virginia, five in Kentucky, and one in Virginia. Locations in West Virginia: Delbarton, Elk Run, Greun Valley, Guyandotte, Independece, Logan, County, Mammoth, Marfork, Nicholas Energy, Progress Energy, Rawl, Republic Energy, and Stirrat. Locations in Kentucky: Long Fork, Martin County, New Ridge, and Sidney. Locations in Virginia: Knox Creek