Alpha Natural Resources (NYSE:ANR) has become very cautious about safety issues in its coal mines in the wake of Massey acquisition. After Massey’s accident at its Upper Big Branch mine in West Virginia in 2010 which resulted in 29 fatalities, ANR is now being held responsible for facing litigation arising from the incident even though its acquisition was completed almost a year later in May 2011. Imperatively, ANR has taken several initiatives to curb the safely issues and settle the suits from the 2010 accident, which will pay off down as the company grows.
Our price estimate for ANR stands at $20, nearly 80% above the current market price, which is depressed due to subdued coal demand across the U.S. on macroeconomic concerns.
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Initiatives and implications of accidents
Upper Big Branch (UBB) mine has added to ANR’s woes ever since it became the part of ANR post Massey Energy acquisition. Recently, a miner who worked at the mine sued ANR. He claims that he was fired because he enforced stringent safety measures in the mine that slowed coal production. 
In addition, there was another incident lately that happened at a Road Fork mine in Wyoming, where a conveyor belt got burnt. This incident prompted Federal mine safety inspectors to assess several other ANR mines for similar safety shortfalls, however, the findings are still withheld. 
The suits from the major Massey accident are largely settled now but an issue or two might prop up to down the road. ANR is still running the UBB mine and has created a research foundation with $48 million in funds to improve coal-mine safety and health in that mine.  In a tribute to the people who lost their lives, the company announced in April that it will permanently seal the UBB mine.
Alpha has started its “Running Right” safety program after Massey acquisition, that trains its employees for mine safety. The proficiency of ANR employees in mine rescue has improved as evidenced by their performance in West Virginia Alliance Mine Rescue Skills Contest. Teams from ANR won the top 7 places. 
ANR’s safety commitment makes it a better place for miners to work which ultimately adds value over time as the risk of a major accident is reduced.Notes:
- W.Va. coal miner sues Alpha Natural Resources over termination he says was unjustified, dailypress.com, May 22, 2012 [↩]
- Former Massey Coal Mines Targeted In Massive Inspection Blitz, wbur.org, May 24, 2012 [↩]
- Three named to post-UBB safety research panel, wvgazette.com, May 14, 2012 [↩]
- Alpha mine rescue teams show their commitment to mine safety, bdtonline.com, May 20, 2012 [↩]