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Politicians weigh in on Pike River Mine asset sale

Monday 31st October 2011

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The sale of Pike River Coal's assets is attracting comment from election candidates but state-owned coal miner Solid Energy is mum on a report that it is teaming up with China's Shanxi Corp to buy New Zealand's largest known deposit of high fluidity hard coking coal.

"I have no idea where the report came from," said Solid Energy's chief executive Don Elder. He did not deny the report. Fairfax Media said the venture was among four players making offers.

The Overseas Investment Office, which considers asset purchases by foreigners worth more than $100 million, has not received any applications.

West-Coast-based Labour MP Damien O'Connor said the report that Shanxi was a bidder was a clear indication of interest overseas investors had in New Zealand's valuable coal resources.

"The fact that this successful and growing Chinese company is state-owned should tell us why kiwis should continue to own Solid Energy," O'Connor said.

He is opposed to government plans to partially privatise state-owned assets, including Solid Energy.

Green Party MP Kevin Hague was also disappointed at the report. He said anything other than 100 percent New Zealand ownership meant assets were being used for the benefit of overseas investors.

Solid Energy had also made a commitment to retrieve the bodies of the mine workers so he was concerned there might not be the same assurance from a joint bid.

Mine receiver John Fisk of PricewaterhouseCoopers was not available for comment. The receiver said on Sept. 23 that final binding bids were expected in the near future.

Twenty nine workers were killed after an explosion in the mine on Nov. 19 last year. Mining stopped and the company was placed in receivership in December.

The mine's assets include a 58.5 million tonne resource of premium high fluidity hard coking coal of which 17.6 million tonnes is estimated to be saleable. The coal is in the Brunner Coal seam and the Paparoa coal seam below is seen as a providing "potential upside" for the mine.

The mine's assets also include licenses, permits and an access agreement with the Department of Conservation.

Solid Energy operates the underground Spring Creek Coal mine nearby in a joint venture with the coal division of Cargill, a privately owned United States conglomerate that has sales of US$119.5 billion annually.

The joint venture announced in 2007 was Cargill's first coal investment in this country. It purchased 49 percent, while Solid Energy retained 51 percent and operates the mine.

Cargill was seeking to better serve its Asian customers and Solid Energy said it brought experience in global trading from that joint venture.

BusinessDesk.co.nz



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