Mining Industry Sophisticated & Regulated, Expert Says

NU Online News Service, March 7, 2:25 p.m. EST

The biggest challenge to the mining industry is not the risks, but an inaccurate 50-year-old “pick and shovel” image, according to an underwriting expert.

Chandler Cox, president and chief executive officer of American Mining Insurance Co. tells NU Online News Service, “Most people have an image of mining like it was 50 years ago—a pick and a shovel—and it’s much different than that. It’s highly automated, highly sophisticated, and a highly regulated industry.”

For underwriters this can translate to a lack of understanding of the true exposures, he notes. Cox spoke on a panel, Feb 28 at the 2012 North American Mining Summit, hosted by Kansas City, Mo.-based insurance broker Lockton.

“When you say mining, what immediately comes to mind for most people are the big disasters,” he tells NU.

Mining exposures can also fall under a stereotype of extreme hazard and danger, he says.

“It depends on what type of mine you’re talking about,” says Cox. “Obviously, a surface mine is very similar to the same exposures as road building, or to the risks of an excavation contractor.”

Underground mining, however, is “a different animal,” he adds. “It depends on how deep the mine is, whether you have to be concerned with methane gas, it depends on if there is an earthquake hazard.”

While underground mining is “high risk,” he explains that it is safer than “farming or the lumber industry,” which have hazards that include sawmills.

The types of safety precautions now used in the mining industry are “light years above where they were 20 years ago,” Cox says. He points out that, “Last year we had, in the U.S. the second fewest number of fatalities ever, since records have been kept.”

While this is good news, “People don’t remember that, they remember the bad numbers,” he says.

The mining industry overall, Cox says, takes safety very seriously. He points out, however, that as in any industry, “you’re going to have a bad apple or two and unfortunately they get all the publicity.”

The vast majority of mining companies in the U.S. “are trying to do the right thing and they have someone looking over their shoulder constantly,” he says.