Lessons for boards and senior management from the Pike River Coal Mine tragedy

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16 January 2013

“Protecting the health and safety of workers is not a peripheral business activity. It is part and parcel of an organisation’s functions and should be embedded in an organisation’s strategies, policies and operations. This requires effective corporate governance. Governance failures have contributed to many tragedies, including Pike River.”
“The lessons from the Pike River tragedy must not be forgotten...that would be the best way to show respect for the 29 men who never returned home on 19 November 2010, and for their loved ones who continue to suffer.”

Report of the Royal Commission on the Pike River Coal Mine Tragedy

 

On 19 November 2010 at the Pike River coal mine in New Zealand (Mine) 29 men tragically lost their lives in a workplace accident.  Ten days later, the New Zealand Prime Minister announced the government’s intention to establish a Royal Commission (Commission) into the tragedy.

Almost two years since the accident, the Commission released its Report of the Royal Commission on the Pike River Coal Mine Tragedy (Report).  The Report confirms that the tragedy was a process safety[1] accident, being an unintended escape of methane followed by an explosion in the Mine.  It occurred during a drive to achieve coal production in a mine with leadership, operational, systems and cultural problems.

Whilst the Report contains 16 recommendations aimed at both the government and industry, the focus of this article is
on the lessons for boards and senior management.

Whilst none of the lessons are new, it is timely to re-visit them in light of the tragedy.  The lessons are also relevant to officers who have obligations under model work health and safety (WHS) laws.[2]

Some of the key lessons for officers identified in the Report include:

  1. Do not place production over safety – in the drive towards production, the directors and executive managers paid insufficient attention to health and safety, and exposed the company’s workers to unacceptable risks.  There were numerous warnings of a potential catastrophe at the Mine.  In the 48 days preceding the tragedy there were 21 reports of methane levels reaching explosive volumes.  The warnings were not heeded.  The drive for coal production before the Mine was ready created the circumstances within which the tragedy occurred. Mining should have stopped until the risks could be properly managed.
  2. Provide WHS leadership – the Board did not provide effective health and safety leadership and protect the workforce from harm.  It was distracted by the financial and production pressures that confronted the company.  Health and safety should be a core objective of any organisation, not a thing apart or a matter left to the health and safety manager.
  3. Directors must not only lead but monitor management and hold it to account – the Board wrongly assumed that management would draw the Board’s attention to any major operational problems.
  4. Assess risks at a range of levels – risk assessment takes a number of forms and typically operates at different levels of a company.  In Pike’s circumstances, one could reasonably expect to see three interacting levels of risk assessment: corporate, mine site and specific proposal.  The Board had no effective framework for ensuring that there was a systematic assessment of risk throughout the organisation.  The Board commissioned no third parties to carry out such an assessment.
  5. WHS planning is important – directors should ensure that there is a comprehensive health and safety management plan, check that plan is fit for purpose and regularly reviewed, provide adequate resources and time for that plan to be implemented and obtain independent evidence of the effectiveness of that plan.
  6. Have an understanding of the hazards and risks associated with the operations – the Board received monthly reports containing a health and safety update, but these reports didn’t cover hazards that would be relevant to a catastrophic event such as an explosion.  The Board or its committee never saw a report received in July 2010 which identified serious concerns about hazards existing in the Mine and recommending a comprehensive risk assessment.
  7. Board WHS reporting needs to be adequate – the information provided to the Board on health and safety comprised mainly personal injury rates and time lost through accidents.  It was not much help in assessing the risks of a catastrophic event faced by high hazard industries.  The Mine had not developed more comprehensive measures which would have enabled it to measure what was being done to prevent catastrophes, such as the analysis of high-potential incidents and the steps taken to prevent their recurrence.
  8. Review WHS performance and compliance – directors should rigorously review their organisation’s compliance with health and safety laws and assure themselves that risks are properly managed.  The Board did not ensure that health and safety was being properly managed
  9. Seek assurance and verification – the mine manager attended a board meeting four days before the explosion and told the directors that gas management was more a nuisance and daily operational consideration than a significant problem or barrier to operations.  The Board was not well placed to assess this assurance.  The Board did not verify that effective systems were in place and that risk management was effective.
  10. Managers should access the best practice guidance available on leading health and safety in the workplace – the executive managers at the Mine did not properly assess the health and safety risks that the workers were facing.

Corrs is able to provide a range of WHS legal advice to assist boards, directors and officers to understand and comply with their legal obligations including WHS Legal Briefings for directors and officers, due diligence audits for officers and directors, and advice on the preparation of annual action plans for directors and officers to assist them to comply with those obligations.


 [1] Process safety refers to the prevention of the unintended escape of toxic substances, flammable material or energy from a plant or other workplace.

 [2]  The model laws have been introduced in the ACT, NSW, the Commonwealth, Queensland, Northern Territory, Tasmania and South Australia.


The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.


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