New Zealand underground coal mine could cease production

Solid Energy recently had a voluntary administration and the creditors’ vote last month to begin a programme to sell assets over the next two-and-a-half years pursuant to a Deed of Company Administration – this process includes determining if any assets are un-saleable.

Following this, the company is considering potentially end production at its Huntly East mine in Waikato, New Zealand, due to the company seeing the underground coal mine as not profitable and unsalable.

CEO, Dan Clifford, stated: “In September 2013, Solid Energy undertook a major restructuring at Huntly East Mine. The company said it would keep the mine going in a small way, at least-cost, because at that time the view of industry analysts was that the market would start recovering in a year or two.”“In fact, the situation has continued to deteriorate and Huntly East mine is now deeply unprofitable, costing in the order of $500 000 a month to keep open … Because the company does not need the mine’s production to meet our current or expected customer demand, and because there is no prospect the mine can be run profitability, we have determined it has no chance whatsoever of attracting a buyer. We therefore must act to stem these losses.”

The company has put this forward to staff members at the mine. They have ten days to offer feedback on this potential ceasing of operations. Following consideration of the feedback, a final decision will be made on 22 October.

Solid Energy Board Chair, Andy Coupe, has indicated the ceasing of production at Huntly East would end nearly 140 years of underground coal mining in the Huntly district.

Coupe continued: “Directors recognise that if this goes ahead as proposed, it will be the end of an era, and not just for our staff members at the mine. Many, many people have connections to Huntly’s underground coal mining history and mining in the past has played a very important part in the economy of the region. This is but one of many difficult but important decisions that directors have had to make in recent months.”

“This decision, however, should not be read as the end of underground coal mining in New Zealand. This individual mine has been in work for almost 40 years and over that time the working faces have moved further and further from its portals and deeper underground. So while this mine has no prospect of returning to profitability, that is not to say that underground coal mining may not be profitably done again in the future with a different set of conditions.”

If, after considering employees’ feedback, the decision is implemented, all but three staff members’ roles would be removed and the employees made redundant. The company would re-employ a small group of people on fixed-term contracts to undertake the mine closure work.

Edited from press release by Harleigh Hobbs

Read the article online at: https://www.worldcoal.com/coal/08102015/new-zealand-mine-could-be-ending-production-2981/