12 Mar 2015

Solid Energy job losses 'inevitable'

5:22 am on 12 March 2015

'Inevitable': the word Solid Energy's chief executive, Dan Clifford used yesterday when talking to MPs at a parliamentary select committee about the prospects of further job losses at the state-owned coal company.

Solid Energy's headquarters.

Photo: RNZ / Conan Young

Mr Clifford admitted to MPs yesterday that the stubbornly low price of coking coal, down 40 percent from its peak of a few years ago, meant job losses were a certainty.

"In the current market conditions and movements towards reducing our activity, reductions will be inevitable."

The EPMU represents the majority of the 380 miners still working at the Stockton mine, the company's biggest producer of coking coal.

Assistant national secretary Ged O'Connell is disappointed lay-offs have been announced without any consultation.

"Very, very surprised and disappointed at the manner in which this has been announced.

"I mean speculation will have been increased as a result of this because now they know there are going to be redundancies, it's now (a question of) where and how and do they concern us.

"The next week or so is going to be a very difficult time for them."

Solid Energy has delayed the release of its six monthly results while it continues to negotiate with the banks over it $320 million worth of debt.

The government has already provided money to prop the company up and on Tuesday the Finance Minister, Bill English, said no more funds would be made available.

Mr O'Connell said, after returning $600 million in dividends to the government over the past decade, the government should reconsider.

"It's a worthy investment for the government. You know you're investing here in your communities, in people, in jobs.

"Compare that to flicking a few million to a casino or their own pay packets."

Businesses suffer

Last year's 185 layoffs at the Stockton Mine hit businesses in Westport and those reliant on the mine are uncertain of their future.

Tom Gray runs a printing business in Westport that supplies stationary to Solid Energy and has experienced a 75 percent reduction in the amount of work coming in since the last round of job losses at Stockton.

He said any more would force him to let go the five people he employs.

"In all of my 48 years operating here I've never felt it as tough as this. I actually can't guarantee we would survive another twelve months."

Mr. Gray would also like to see the government step in to ensure Solid Energy's survival.

"Our town is drying out as a result of the way it's been managed and they should pour the money in and keep it going.

"It's the only hope in the meantime, until there's another viable alternative, for out town to survive."

As for the rock bottom price of coal at the moment, the Sydney based-resources analyst, David Lennox, says coal used for electricity generation is in real trouble, because of increased competition from natural gas.

He said the coking coal produced by Stockton did not face the same problem.

"It is a key ingredient in terms of turning iron ore into steel and at this point in time there's no real substitute for coking coal when it comes to producing steel."

Mr Lennox said the fall in the price of coking coal was down to weaker demand from steel manufacturers but that this was forecast to pick up in the medium term.

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