Friday 3rd February 2017
|Text too small?|
Solid Energy will shut and seal the Spring Creek mine after failing to find a buyer for the shuttered Dunollie operation on the West Coast.
The failed state-owned coal miner said mining at the site stopped in 2012 when a review found it wasn't economically viable, and after an "exhaustive sales process" didn't shake out any bidders who would have needed to spend "significant capital" to re-open the mine. The site will be sealed permanently, which is expected to take three to four months, and a nearby coal washery at Rocky Creek put up for sale on a standalone basis.
"We had maintained a level of optimism through the sales process that a buyer would recognise the potential for economic redevelopment of Spring Creek mine, however that simply hasn't happened," chief executive Tony King said. "Interest in the site has been muted throughout an extensive sales process and closure is now the only remaining option."
The underground Spring Creek mine was set up in 2007 as a joint venture between Solid Energy and US-based Cargill, but struggled to turn a profit and the SOE bought out its partner in 2012 before putting it in stasis later that year, saying it had lost $100 million and needed a further $70 million to return to full production.
The mine was shut down for several months for safety inspections after the November 2010 Pike River mine disaster and had operations suspended by the then Labour Department in the lead-up to its 2012 mothballing.
Solid Energy said the site was the only asset in its portfolio that didn't attract a buyer, having sold the rest of its mines to three groups last year, which the receivers expect will generate a return of between 45-and-55 cents in the dollar to the stricken coal miner's creditors.
The company was placed in voluntary administration last year after concluding it had no realistic prospect of refinancing $239 million of debt facilities due to mature in September 2016. Its downward spiral began in 2013 when slumping global coal costs exposed its commercial error in carrying substantial debt on its balance sheet to pursue a variety of novel energy projects that a previous board and management believed would give the business a future beyond coal extraction.
No comments yet
MARKET CLOSE: NZ shares fall as Meridian faces declining hydro storage
NZ dollar gains as rising consumer prices deflate chance of rate cut
Treasury Secretary to sit in on RBNZ monetary policy reviews
Cancer test firms Pacific Edge, TruScreen give market some cheer
Bridges denies Ross allegations, welcomes police inquiry
Second round of Overseas Investment Act review juggles competing tensions
Jami-Lee Ross accuses Bridges of corruption, resigns to trigger by-election
First NZ cuts Michael Hill earnings forecast after weak sales
Focus on 'low-hanging fruit' for emissions reduction - Methanex
NZ 3Q inflation higher than expected but driven by one-offs