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No government bailout for Solid Energy, Ryall says

Tuesday 25th September 2012

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Embattled state-owned miner Solid Energy won't get a government rescue after a slump in international coal prices eroded the viability of two of its operations and forced it to cut jobs, State Owned Enterprises Minister Tony Ryall says.

The government has turned down a plea for a $35 million bail-out after miners from the Spring Creek and Huntley East operations marched on Parliament in Wellington today.

Ryall told reporters the government won't make a "one-off capital injection for the purpose of forestalling these changes that have been proposed by the board." The mining company's woes were the result of a slump in international coal prices, he said.

"We're not considering any other financial support for Solid Energy," Ryall said. "The decisions they've made now should put the company on a financially viable footing."

Solid Energy yesterday announced it would slash total jobs by a quarter as it put the Spring Creek mine on care and maintenance, cut output at Huntly East and shrank its head office in the face of a $200 million revenue shortfall this year.

Ryall said he couldn't comment on the management of the company, but new chairman Mark Ford was ensuring all processes are in place to maintain an orderly operation. The board will add some new members in the coming months, he said.

"We'll be continuing to look at the company's board and the performance of the company, but you can't get away from the fact that the international coal price has had a very significant impact on the operations of Solid Energy," he said.

The government had previously questioned coal price assumptions when it did a scoping study to sell down its stake in Solid Energy, he said.

Ryall said the partial privatisation programme had nothing to do with the write-down in Solid Energy's value, and that if coal prices bounce back in two or three years as forecast, that's another opportunity to revisit a sale.

Trevor Bolderson, a miner at Spring Creek, told reporters outside Parliament the company was poorly managed and should have been prepared for a drop-off in coal prices.

"For a state-owned enterprise to get itself into the state it has, to the magnitude it has staggers belief," Bolderson said. "The only satisfaction I'll take out of it is if along with my job and my colleagues, who are waiting for me down there, some of the head people at Solid Energy will go along with us."

SOE Minister Ryall said he expects work opportunities in the Christchurch rebuild will open up for the laid-off miners.

Economic Development Minister Steven Joyce used the redundancies to urge environmental groups to drop their objections to Bathurst Resources' Escarpment project on the West Coast which would provide 225 jobs in the region which has been hit by the Solid Energy closure and the Pike River Coal mine explosion in 2010.

BusinessDesk.co.nz



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