Sugar refinery blast losses still unclearPosted On: Feb. 17, 2008 12:00 AM CST
PORT WENTWORTH, Ga.The full extent of the insured losses from the Feb. 7 sugar refinery explosion in Port Wentworth, Ga., which killed and injured dozens of workers, is unclear.
Firefighters were finally able to extinguish the flames at the Imperial Sugar Co. refinery late last week. The explosion and fire killed at least eight employees and injured about 40 others.
While an exact cause of the explosion has not been determined, combustible sugar dust is a likely possibility, a spokesman for the U.S. Chemical Safety Board said.
The Washington-based CSB, which is charged with examining industrial chemical accidents, is among local, state and federal agencies investigating the incident.
According to Sugar Land, Texas-based Imperial Sugar reports, it is one of the nation's largest processors and marketers of refined sugars. In 2007, it reported $360 million in total assets.
The company says it conducts operations primarily at two refineries: the Georgia refinery and one in Gramercy, La. The Georgia refinery accounts for 65% of Imperial Sugar's production, Imperial Sugar reported.
"Damage to either of these refineries, or prolonged interruption in the operation of the facilities due to our dependence on ocean-going raw sugar deliveries, or for repairs or other reasons, would have a material effect on the company's business, financial condition, results of operations and cash flows," Imperial Sugar stated in its 2007 10-K report.
Richmond, Va.-based Hilb Rogal & Hobbs Co. places coverage for Imperial Sugar. The brokerage declined to comment on its client's insurance arrangements.
According to the Georgia State Board of Workers' Compensation documents, New Hampshire Insurance Co., a unit of New York-based American International Group Inc., provides workers compensation coverage for Imperial Sugar. AIG declined to comment.
According to Imperial Sugar's 10-K, in 2007 it purchased property coverage, and listed an increase in its insurance coverage costs as among several reasons why its margins decreased during 2007.
Imperial Sugar did not return calls seeking comment on the explosion.
Although the cause of the explosion is still under investigation, government researchers have found that combustible explosions have caused significant damage in recent years.
Experts agree that the infrequency of dust explosions often renders them a low safety priority, but incidents can be severe.
In a November 2006 report, the CSB identified 281 combustible dust incidents occurring over 25 years that killed 119 workers and injured 718 others. At least four of those happened since 1995 and each "caused damages costing many hundreds of millions," the CSB reported.
According to the report, 24% of the dust explosions occurred within the food industry, several of which took place at sugar plants.
In conjunction with its report, CSB called on the U.S. Occupational Safety and Health Administration to adopt National Fire Protection Assn. standards so there would be a consistent, nationwide effort to address dust explosion hazards.
Otherwise, enforcement has been left to state and local officials, resulting in a "patchwork of adapted and adopted voluntary standards that are challenging to enforce," CSB said.
OSHA, so far, has not adopted NFPA standards, however, in October 2007, it issued a directive emphasizing inspections of workplaces handling combustible dust.
Chemical dust explosions occur when the right combination of finely ground particles find an ignition source. They can occur at companies that handle rubber, plastic, chemical, metal, lumber, and wood products, according to OSHA.
Many companies still have not addressed the potential for combustible dust hazards because of cost concerns and the infrequency of explosions, said Bill Stevenson, vp of engineering at CV Technology Inc., a Jupiter, Fla.-based engineering company specializing in mitigating plant explosions, who also sits on NFPA committees that establish standards addressing combustible dust risks.
Engineers say that while dust explosions can cause severe losses, the exposure can be mitigated with attention to plant hygiene and safety practices that prevent fugitive dust from accumulating around equipment and machinery.
But even companies that implement sound risk management practices can have trouble keeping dust from accumulating, especially when their facilities are dispersed.
"There is a challenge for companies to do a good and consistent job with risk controls, especially for large organizations that have multiple locations where the exposure may exist," said Jim Johnson, a managing director for safety solutions at Liberty Mutual Group in Boston.