Solid Energy plans to reduce production at its Stockton mine in Buller from 1.4 million t to approximately 1 million t from July, resulting 113 redundancies.
This proposal is considered necessary due to Stockton’s losses, averaging NZ$2.1 million a month in this financial year, and this is expected to continue to deteriorate.
The price for metallurgical coal has continuously decreased since mid-214. The benchmark price was US$120/t and the current spot market is US$83/t.
Solid Energy CEO, Dan Clifford, explained that the mine has found cost savings and efficiency gains since the mid-2014 change, but these improvements are more than cancelled out by the continuing decline in the export price.
“Through our regular face-to-face meetings with the teams at Stockton, staff members have had a good understanding from the last restructure that another change would be needed if the market hadn’t started to recover by now,” Clifford said. “In fact, it has continued to fall, with recent spot market trades at under US$90/t and market analysts are now projecting pricing at approximately these levels for another 12 to 18 months.”
“After the efforts that have been made at Stockton to find more efficiencies, this news will not be welcome,” Clifford continued. ”But in this market we simply have to pare back the operation to a size that minimises those losses, while still allowing us to maintain relevance in the international market.”
Solid Energy also outlined a change proposal at its idled Spring Creek mine in the Grey District. This would lead to reducing the mine’s maintenance team by six roles. Mining operations ended in late-2012. Continuing to maintain the site is the preferred decision and the company believes this can be safely attained with a smaller team.
The changes presented would reduce annual costs by NZ$36 million. The cost of the changes, including redundancy and payments for accrued leave, is projected to be approximately NZ$4.3 million.
Adapted from press release by Harleigh Hobbs
Read the article online at: https://www.worldcoal.com/mining/07052015/reduced-operations-stockton-opencast-mine-2241/