Solid Energy axes 1 in 10 jobs - curbs underground mining
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
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!
