SOE coal company Solid Energy is to cut 140 jobs from its workforce of around 1,400 & reduce operations at its Huntly East mine & close its Spring Creek underground mine on the West Coast after a downturn in demand from major industrial customers.
Staff at Huntly East will reduce from 234 to 171 a loss of 63 positions.
Solid Energy will also cancel $100m of CAPEX scheduled in the current FY as it grapples with a steep fall in INTL coal prices & an anticipated cut in annual revenues of around $200 million.
It will also close its uneconomic bio-diesel plant but will carry on with controversial plans to exploit vast deposits of low quality lignite coal in Southland for briquettes & possible conversion to transport fuels & fertiliser.
While it will pull back from underground mining Solid Energy will commit new resources to underground coal gasification projects but will shift its focus from Huntly to its UCG prospects in Taranaki.
Revenues in FY2011 totalled $829 million as global coal prices peaked up from $690 million in the year to June 2010. Solid Energy will release its results for YE2012 tomorrow. .
Finance Minister Bill English: SOE partial privatisation is on back burner until its performance improves.
CE Dr Don Elder: 'While Solid faced a similar plunge in coal prices & demand in 2008 during the global financial crisis the difference now is that the NZ dollar has stayed persistently strong whereas it fell in line with global market conditions four years ago.
'While many in the industry still expect demand driven by Asia to pick up again strongly sometime after 2013 Solid Energy believes it needs to plan to withstand these market conditions for at least the next 12 months & possibly for 24 months or longer'
Among key decisions is a pull-back from underground mining in favour of lower cost open-cast operations with the Huntly East mine to operate on a reduced schedule & the Spring Creek mine north of Greymouth closing immediately for a review of its operations.
Huntly East needed firmer orders from major North Island customers to justify longer term development.
A planned upgrade to mine ventilation will no longer be necessary & contractors on that project will also cease work.
Full details of all the positions to be axed and the locations will be announced tomorrow's when Solid Energy releases its annual report.
Australia here they come!