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Australia the model for NZ's Pike River regulatory response

21 November 2012

This article first appeared in the November issue of ALB magazine.

Australia is a constant presence in the Royal Commission’s inquiry into the Pike River coal mine tragedy in which 29 miners died in an accident which was – quite literally – waiting to happen.

  • The Commission’s terms of reference required it to compare New Zealand mining law and practice with other jurisdictions. 
  • The Commission, which included Stephen Bell, the Commissioner for Mine Safety in Queensland, chose Queensland and New South Wales as the most appropriate comparators.
  • And, among the Commission’s 16 recommendations is that an expert taskforce be appointed to develop an effective regulatory framework for underground coal mining which draws on the Queensland and New South Wales frameworks as exemplars of best practice.

The Commission’s findings are devastating and will demand a proportionate response.  The Commission sketches the background to the disaster in a few broad strokes, as follows:

“The mine was new and the owner, Pike River Coal Ltd (Pike), had not completed the systems and infrastructure necessary to safely produce coal.  Its health and safety systems were inadequate.  Pike’s ventilation and methane drainage systems could not cope with everything the company was trying to do: driving roadways through coal, drilling ahead into the coal seam and extracting coal by hydro-mining, a method known to produce large quantities of methane".
“There were numerous warnings of a potential catastrophe at Pike River.  One source of these was the reports made by the underground deputies and workers.  For months they had reported incidents of excess methane (and many other health and safety problems).  In the last 48 days before the explosion there were 21 reports of methane levels reaching explosive volumes, and 27 reports of lesser, but potentially dangerous, volumes.  The reports of excess methane continued up to the very morning of the tragedy.  The warnings were not heeded."
“The drive for coal production before the mine was ready created the circumstances within which the tragedy occurred."

“A drive for production is a normal feature of coal mining but Pike was in a particularly difficult situation.  It had only one mine, which was its sole source of revenue.  The company was continuing to borrow to keep its operations going.  Development of the mine had been difficult from the start and the company’s original prediction that it would produce more than a million tonnes of coal a year by 2008 had proved illusory.  The company had shipped only 42,000 tonnes of coal in total.”

The workforce was found also to have routinely bypassed safety devices and worked through dangerous conditions so that they could make their bonuses.

Clearly, this culture of production over safety would not have been allowed to persist had there been adequate regulatory supervision but the evidence to the Commission was of systemic failure. 

Two factors were in play:

  • a progressive running down of the mining inspectorate such that at the time of the disaster it had only two inspectors (a request for a third, made earlier that year, having been declined) and
  • a “light touch, high trust” regime in which Pike was lightly regulated because it was judged to be a best practice and compliant employer.

In 1992, New Zealand replaced the unitary system established by the Coal Mines Act with a new legislative matrix in which the granting of permits, the assessment of environmental effects and the regulation of health and safety were all administered by separate entities under separate Acts.

The then new Health and Safety in Employment Act placed primary responsibility for HSE on the employer.  The Commission does not fault this policy approach but says that it was unfortunately interpreted by the Department of Labour as somehow reducing its responsibility to administer the Act.

The Government has already taken a number of steps to address the issues which allowed the Pike River collapse to occur.  It has:

  • created a specialist High Hazards Unit to administer the petroleum, geothermal and mining industries
  • provided additional funding for HSE administration, and
  • appointed a taskforce to overhaul New Zealand’s HSE system.

A key theme of the taskforce’s work is how much New Zealand should align with the Australian Model Work and Safety Act 2011, including whether a new “due diligence” duty should be created on directors and company officers to ensure that their business is in compliance with all of its statutory obligations in relation to HSE.

The Government is also moving in the new Crown Minerals (Permitting and Crown Land) Bill to require an HSE evaluation during each exploration permit application for any complex, hazardous or high return mineral activities.  The permit operator will need to demonstrate that it has the capability and systems to meet the HSE requirements in all relevant legislation - the Health and Safety in Employment Act, Marine Transport Act, Resource Management Act and the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act.

The Commission notes that New Zealand has had five serious mining tragedies before Pike River and that the lessons from the past, learnt at the cost of lives, have not been retained.  Preliminary indications are that this time it will be different and that we will learn from the mistakes at Pike River.

Chris Dann is a senior associate at Chapman Tripp and is a member of Chapman Tripp’s energy and resources team.

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