The Pike River Coal Mine Disaster

Case Study

The company

That would soon change. The 1980s ushered in a dramatic expansion in the overseas market for West Coast coking coal. Around the same time, the Pike River Coal Company (Pike) was established to hold exploration rights to the area. Over the next decade and a half, Pike would further explore the area and acquire the necessary authorizations to mine its coalfields.

Although Pike was formed to explore the coalfields and launch a profitable coal mine, no one at the company had particular expertise or experience in the coal business. For one, Gordon Ward, Pike’s first managing director, was an accountant by trade.

Undaunted, Pike would recruit highly-qualified managers and well-regarded consultants from New Zealand and Australia. More noteworthy still, Pike would strike upon a savvy PR strategy, pitching its very inexperience as a strength. Without a deep-rooted history in coal mining, Pike, so it argued, was unfettered by prior operational and management errors. Instead, it was free to launch a safe, world-class coal mine, which would uphold the latest environmental practices.

The PR campaign aside, the actual development of the mine was troubled from the start. Construction delays, often due to lapses in pre-work geological and geotechnical investigation, led to cost overruns. Management constantly had to return to investors for more money. That dynamic, in turn, increased the pressure to open the mine quickly.

When coal extraction final began, the mine was still beset with a whole host of problems, ranging from the ventilation to hydro-mining to the machinery. As analysts would later report, although the mine was open for business, it was essentially still in “start-up” mode. Not entirely operational, the mine required further funding. Tired of the delays and constant pleas for money, the board fired Gordon Ward in 2010, replacing him with Peter Whittall.

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