Pike River Coal Ltd and Enron IncPosted: December 18, 2014
15 December, 2014
The Editor, The Greymouth Star
As I was finishing reading “Tragedy at Pike River Mine” by Rebecca Macfie (AWA Press, 2014), it occurred to me there was a fundamental aspect of the Pike River Coal Ltd mining project which was similar to the Enron Inc experience from the nineties in the USA.
Enron Inc. was an energy company which expanded rapidly showing huge profits before it suddenly collapsed in a heap. The main appeal of Enron to the stock market and to ratings agencies (Moody’s, Standard and Poor’s, and Fitch) was that Enron executives were so enthusiastic, so positive of success. The actual state of finances of Enron, including exposure to levels of high risk in the $billions, was missed or viewed as being of lesser importance. Enron had been rated ‘investment grade’ as close as four days before bankruptcy (December, 2001).
Similarly, Pike River Coal had from the beginning claimed it was a modern company, which “will have the advantage of not only being a greenfield site, but a greenfield organization.” This meant they thought it was an advantage that the company didn’t have mining experience; they could develop something new and better, appropriate for Pike River. Although in following years there were continuing problems with production estimates not being met and safety plans not implemented, that would have to be ignored when making public statements because their new ‘reality’ was characterized by an Enron-like optimistic glow springing from a disengaged world view.
published 18 Dec., 2014