Faltering Solid Energy's Elder resigns

Former Solid Energy chief executive Dr Don Elder arrives to deliver the news of the company's sweeping restructuring, at Dunollie, near Greymouth last September. The local Spring Creek mine and adjacent processing site lost 220 jobs. Photo by the Greymouth Star.
Former Solid Energy chief executive Dr Don Elder arrives to deliver the news of the company's sweeping restructuring, at Dunollie, near Greymouth last September. The local Spring Creek mine and adjacent processing site lost 220 jobs. Photo by the Greymouth Star.
In a shock announcement yesterday, the longtime chief executive of beleaguered state-owned enterprise Solid Energy, Don Elder, tendered his resignation, effective immediately.

Dr Elder, who has been at Solid Energy's helm since 2000, said discussions had been ''under way for some time'' and, while stepping down immediately, he was available for a period to assist with the transition.

Garry Diack, previously Solid Energy's group manager organisational development and performance, becomes the interim chief executive.

Dr Elder has been a passionate and outspoken proponent of coal and lignite extraction, and of the potential to turn billions of tonnes of southern lignite into briquettes, diesel and fertiliser.

A sustained anti-lignite and coal campaign by environmentalists has been gaining public attention during the past two years.

Since last August Solid Energy has been under increasing fire after global coal prices slumped more than 40% and the revelation of the likelihood of a $200 million decline in Solid Energy's revenue this year.

Dr Elder, on a $1.1 million salary last year, was criticised for not foreseeing the coal price collapse, and spending millions on Solid Energy's failed biofuels business.

Environmental group Coal Action Network Aotearoa, which has called for Dr Elder to be sacked in the past, welcomed his resignation yesterday and called on the company to shut down its lignite operations in Southland, where it has a recently commissioned $25 million lignite briquetting plant.

Coal Action spokesman Tim Jones said in a statement Solid Energy should cut its losses, walk away from the lignite project and ''leave Southland's coal in the hole'' - the group's rallying cry.

''Don Elder has pushed forward with his uneconomic and environmentally ridiculous plans for exploiting the dirty lignite proposals in Southland, which have been hampered by delays and the departure of key partners,'' Mr Jones said.

The global price slump sparked a widespread restructuring at Solid Energy, which cost 445 jobs across the country by October and the mothballing or closure of several mines, with thousands more service jobs affected in the wider communities.

The board has been working through a quiet cleanout since the closure of Spring Creek. By November, deputy chairman John Fletcher had resigned with six months of his term still to run, while Michelle Smith left a year early. The first to go was former chairman John Palmer, who was replaced by Mark Ford, leader of the Government's Auckland super-city merger.

Solid Energy's predicament saw it moved to the rear of the Government's proposed sale of state-owned enterprises, highlighting for would-be investors the dangers of commodity suppliers' reliance on global prices.

Dr Elder said in a brief statement yesterday his decision was consistent with his belief that the company had a strong future, once it worked its way out of the impacts of the market downturn. Last November Solid Energy finished a forgettable financial year, its after-tax profit plunging 146% to a loss of $40 million and no repeat of last year's $30 million dividend. Revenue for the year to June was up 18% at $978.4 million, cash flows were up 10% at $142.2 million and coal sales up 13% at 4.6 million tonnes, but to counter plunging coal prices, Solid Energy booked $110 million in impaired asset charges (on its closed or restructured assets), which slashed the previous full year's profit of $87.2 million to a loss of $40.2 million.

 

- Additional reporting Greymouth Star

simon.hartley@odt.co.nz

 

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