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Solid Energy goes looking for fresh deposits of coal

By Ray Lilley

Friday 24th November 2000

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State-owned Solid Energy is set to give the green light to a multi-million dollar coal resource proving programme on the West Coast shortly, as it enters the next stage of its financial recovery.

By out-sourcing its coal extraction activities on the Stockton Plateau to Australian mining group Henry Walker Eltin (HWE), Solid Energy will free up capital for testing coal reserves further up the plateau as well as in other parts of the Buller region. HWE, named as preferred contractor this week, will employ all but 10 of Solid Energy's 120 workers at the open-cast mine, which yields more than one million tonnes of mainly export coal a year.

HWE, which already operates Solid Energy's open-cast pit at Rotowaro near Huntly, is working to reach a new collective contract with the Engineers Union to run both the mining and over-burden stripping operations at Stockton.

Another Australian coal miner, Roche Mining, has been short-listed in case a final contract can't be reached between HWE and Solid Energy next month.

Solid Energy Stockton project manager Barry Bragg said the four bids received for the combined out-sourcing project had "confirmed the [capital saving and cash-flow improvement] benefits" of the plan.

It is being implemented as part of a restructuring of the loss-making state coal supplier and exporter.

Reshaping of the Stockton operation includes shortening the aerial ropeway carrying coal away from the pits from 7km to 2km, using a new loading area, cutting the costs of the coal- recovery operation.

The shortened ropeway is expected to have greater reliability as it moves more than a million tonnes of export coal a year down from the plateau.

Mr Bragg said shortening the aerial ropeway and using a single contractor would extend the life of the Stockton mine, from the projected eight years to as much as 20 years.

It also freed up capital which can be used "to pursue other mining opportunities in the region. This could create opportunities for future additional employment in the region."

Already the company has entered a joint venture with Todd Energy, Greymouth Coal, to develop a new West Coast mine at Rapahoe.

Company spokesman Brett Sangster said it will look at other coal reserves on the plateau, as well as in other parts of the Buller region. It was also "looking at every opportunity to extend the life of Stockton."

The state miner cut staff numbers by 121 last year, down to 415, as part of its recovery from losses totalling more than $100 million from foreign exchange losses and the meltdown of export coal prices and markets in the Asian crisis.

The out-sourcing project is expected to cut total staff to below 300.

Early this month, Solid Energy won a TradeNZ export commendation for its two-year 960,000-tonne export contract with Japan's Nippon Steel, the world's second-biggest steel mill.

The largest export contract secured by the company, it contains an intention between the parties to move to a long-term supply contract after 2001, when the $30 million a year contract is due for renewal.

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