Dark Days for a Coal Baron
(FORTUNE Magazine) - Wilbur Ross, as an investor in bankrupt companies, has seen plenty of tough days in his 40-year career, but none like the first week of 2006, when a still unexplained explosion rocked the Sago coal mine in West Virginia, killing 12 miners and critically wounding a 13th. Ross's firm, W.L. Ross & Co., controls 13.7% of International Coal Group (ICG), which owns Sago. Ross, 68, made a fortune welding together the nation's largest steel company, International Steel Group, from the shells of giants like Bethlehem and LTV, then selling it for $4.5 billion in 2004. He moved on to coal, buying four companies over the past two years to form ICG, now the nation's eighth-largest producer, which went public in November. Ross spoke with FORTUNE's Andy Serwer.
How did the Sago accident affect you?
The only thing comparable was when I was 18 and my father died, leaving my mother a widow with me and my younger brother and sister. It brought all that back to me.
Did you follow the tragedy as it unfolded?
I was in constant communication with Ben [Hatfield, International Coal's CEO]. We decided right away that the company should have one voice, and that voice should be Ben. We didn't want to hide behind a PR firm. Also, this was a highly technical situation, and Ben understands that best.
And when the miners were said to be alive ... ?
The miscommunication was gut-wrenching. We set up a fund to provide financial support for the miners' families.
Didn't the mine have safety violations?
Mines are inspected every three months. Sago was inspected some ten days before the tragedy. Yes, they found violations, but not enough to close it down. Also, there was an inspector on-site at the mine who could have closed it. And the fire boss who checks for safety [he died in the accident] didn't find anything untoward when he went in. I don't believe there was any negligence on our part, but if we discover there was human error, it will be dealt with severely.
Does the accident change your take on the coal business?
Obviously we didn't anticipate anything horrible like this, but our fundamental position is unchanged. Coal is an essential national resource. The U.S. has more BTUs of coal than the rest of the world has oil. Coal generates a majority of our electric power. All the companies in ICG have been in bankruptcy, and we have invested hundreds of millions of dollars. We aren't scrimping. We are expanding. Sago produced 350,000 tons of coal last year, and we had planned on 900,000 tons this year. We likely won't make that target, but if and when it's safe to reopen, we plan to hire more miners.