8 May 2013

Cash-strapped Solid Energy plans more cuts

6:53 pm on 8 May 2013

Solid Energy is proposing to axe 105 more jobs in a bid to refocus the company on its core mining business.

The State-owned enterprise has debts of nearly $390 million and the Government has questioned its viability. In February this year chief executive Don Elder resigned, shortly before the Government revealed the company's serious difficulties.

Solid Energy chair Mark Ford said on Wednesday that 52 of the jobs are based in the Christchurch corporate office and the remaining 53 are at regional sites.

The company is consulting with affected staff and expects to confirm the cuts by the end of May.

Mr Ford said the cuts are part of a review of its business model and strategy, which it is working on with the Treasury. He is not ruling out further losses, as international coal prices remain low.

Mr Ford said Solid Energy is selling other parts of the business, as well as surplus assets. Its Nature's Flame wood pellet business would go on the market shortly.

The state-owned coal miner estimates the cuts will cost between $3 million and $5 million in redundancies, but will save the company about $18 million a year.

In September last year, Solid Energy announced redundancies at its coal mines at Spring Creek on the West Coast and Huntly East in Waikato with the loss of 440 jobs.

A regional councillor in Huntly said she is despairing at Wednesday's decision. Shelley Lynch said the Waikato town is already hurting after the last round of cuts and any more will make matters worse.

Ms Lynch said job losses have enormous flow-on effects for the local economy, including small businesses and school enrolments. She was aware that Solid Energy would be releasing more staff, but did not know how many until now.

English warns Govt support has limits

Finance Minister Bill English has again warned that the Government's support for the coal company is not unlimited.

Mr English told reporters at Parliament on Wednesday the Government is waiting to see whether talks with Solid Energy's banks will come to some agreement and it has to be a viable business to survive.

"We don't expect taxpayers to carry all the costs of restructuring Solid Energy; we would expect others who are involved in the company to contribute.

"If it's not viable, we're not going to create a business that doesn't exist just so we can subsidise it."

Mr English said it could be several months before Solid Energy's future becomes clear.