Solid Energy confirms redundancies

New Zealand state-owned coal miner, Solid Energy, has confirmed over a quarter of workers at the Stockton mine will lose their jobs.

Plans of the redundancies had been mooted in the last days, but this announcement confirms that 132 of 521 positions will be cut at the Stockton coal mine.

Newly appointed chief executive Dan Clifford said the moves on their own were "not quite" enough to return Stockton to profitability on an earnings before interest, tax, depreciation, amortisation and movements in the value of financial instruments basis.

"There are more efficiencies that we need to continue to work through", Clifford continued. The announcements were, however, a "big step forward in getting to a cash neutral position" in the export-oriented coking coal part of the business, which accounts for about half of Solid Energy's workforce.

The mine is reducing annual coal output by 0.5 million t for the next two to three years.

“On current pricing projections, we have to minimise our losses by reducing costs so that we can keep the mine operating," said Clifford, whose previous employer, Australian miner Glencore Xstrata is also reducing production and its workforce as Australian metallurgical coal mines go through similar adjustments, brought on in part by lower economic growth in China, which kept steel demand alive after the global financial crisis.

“We feel for the staff and their families, and for the wider Westport community, who will be affected by this, but by reducing activity we believe we can keep the operation viable with the continued benefits for the community," said Clifford in a statement. The redundancies will target 35 management, technical, support and administration roles, and 102 miners' jobs.

An additional 70 or so contractor roles will be lost as the mine brings activity in-house, leaving around 50 contractors on-site instead of 120 today.

Non-essential development work will stop, mining will focus on lower cost pits, and most mining will occur during daylight hours. Changes to rosters and training to increase staff ability to perform multiple tasks are also under way.

"While Solid Energy’s domestic business has been stabilised, the export business has continued to see falling prices from the 2011 highs of US$ 330/t," said Clifford. "Even more recently the price has continued to decline with the quarterly benchmark price for hard coking coal falling from US$143/tonne for the January to March quarter, to US$ 120/t for the current quarter while the spot price has been sitting at about US$ 113/t for the last two months.”

“While we are planning to continue with reduced production and reduced staffing levels for the next two to three years, we will still be able to meet our long-term customer contracts while retaining our options to respond to changes in the market,” Clifford concluded.

Solid Energy is proposing a two-week consultation period with Stockton employees, followed by confirmation of the structure and a selection process for contested and vacant roles with the aim of implementing the new rosters by the end of July.

Read the article online at: https://www.worldcoal.com/coal/06062014/new_zealand_miner_confirms_job_cuts_943/