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Upper Big Branch Mine Reopening Planned Despite Ongoing Investigations

TIM HUBER   07/28/10 04:31 PM ET   AP

Upper Big Branch Reopening

CHARLESTON, W.Va. — Massey Energy plans to resume extracting coal by constructing a new entrance to its Upper Big Branch mine within months, despite continuing investigations of the explosion that killed 29 men there in April, the company's chief executive said Wednesday.

Massey also wants government permission to restart two sections in the far southern reaches of the Raleigh County mine, CEO Don Blankenship said during a conference call with analysts. That area was untouched by the blast and Blankenship estimated it could produce 600,000 tons annually.

"We have the permits from an environmental viewpoint that are necessary to do that and we are going to activate that effort," Blankenship said. "Absent the government stopping us for some unknown reason, which I don't know what that would be, then I suspect that we will be able to access the reserve with that facility in the next five to six months."

The federal Mine Safety and Health Administration took control of the mine April 5 and won't allow production in active areas until it cancels that order, spokeswoman Amy Louviere said. "We would probably allow new entries to be driven provided they were not connected into UBB."

Massey has struggled to replace the high-priced metallurgical coal produced at Upper Big Branch. So-called coking coal is a key ingredient in steel. Shipments fell 1 million tons short of expectations in the second quarter, despite adding shifts and opening new sections in existing metallurgical mines.

Massey lost $88.7 million, or 88 cents per share, in the quarter. The results include $128.9 million in pretax charges tied to the explosion.

Massey estimates legal fees for the blast will total up to $8 million per quarter. The company also expects higher capital expenditures to replace equipment and to open new mines.

Investigators suspect a combination of methane and coal dust caused the explosion, though they only began searching for clues underground in June.

Massey believes that search is nearly done.

"I think we're drawing closer to having a conclusion and probably will within a couple months," Blankenship said.

Massey has been floating a theory that a crack in the mine floor opened unexpectedly and flooded the mine with such a vast quantity of methane that it overwhelmed ventilation equipment and sensors designed to shut off mining equipment before gas hits explosive levels.

MSHA and other regulators have discounted Massey's theory.

Richmond, Va.-based Massey operates mines in West Virginia, Kentucky and Virginia.

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Filed by Jeff Muskus  |