Belief expressed in Stockton mine future

Two West Coast mayors hope Solid Energy's debt crisis will not have too much impact on Buller's Stockton mine.

Buller Mayor Pat McManus is worried for the Coast, given Solid Energy's financial position, but believes Stockton mine could help the company's recovery.

''The one comfort we've got, of course, is the Stockton mine's always been a pretty good performer for Solid Energy and I expect the Stockton mine will lead them in their recovery.''

He said a number of things had probably contributed to the company's debt, including the dramatic drop in the world coal price.

In hindsight, investing in business like biodiesel and lignite at the expense of Solid Energy's core business had had a big impact.

''Their ventures into some of the non-core activities, if you like, have probably been their undoing, at the end of the day. They're not in a position to ride out the lows.''

Mr McManus said Solid Energy should have acted more quickly to indications the world price of coking coal was shrinking.

It was traditional for big companies to be slow to react to the market, whereas smaller operators seemed to be able to make adjustments quickly.

Solid Energy now needed to get its core business operating profitably again. He hoped the world coal price would rise to help that happen.

''I just hope they don't have a knee-jerk reaction and slice the working population.

''We know we've got a good workforce in Stockton, so it's imperative we keep the bulk of them here.''

He hoped a Government bail-out of the state-owned enterprise would not be necessary.

''The Government's not going to let their own business fall over if it's got a chance of becoming profitable again.''

Grey District Mayor Tony Kokshoorn was also hopeful about Stockton's ability to get through Solid Energy's debt crisis.

''I think places like the Stockton Plateau should be all right because it's high-grade coking coal and the only way you make steel is with coal.

''And with world demand rising again, naturally my advice to Solid Energy is concentrate on your coking coal at Westport and certainly move forward with your opencast mining, which is high-grade coal, in Greymouth as well.''

He believed Solid Energy should have focused on those areas all along.

''That's where they went totally wrong. They got overstaffed, they got top heavy in the head office in Christchurch - 300 workers there is just crazy.''

The company diversified into biofuels and wood pellets - ''flowery-type projects that were never really going to be possible in the shorter or medium term''.

''Because of that, the fact they took their focus away from their coking coal, which made them the best money, they got themselves into terrible cash flow problems, so now we have to pay for that.''

He believed most Coasters would say the excesses of Solid Energy over the past five years needed to be curbed.

There was no question that former chief executive Don Elder was to blame for the current crisis.

''He should have realised that coal is cyclical, it's always been cyclical. They've had the ups and downs in the past. He should have planned for that but they didn't and that was in the end to the detriment of many workers on the West Coast.''

The good thing was the Government was talking about a bail-out.

Mr Kokshoorn said Solid Energy chairman Mark Ford had recently told him Solid Energy definitely had parties interested in buying into Solid Energy or parts of it.

''So there are options, and I think we need to be buoyed by that.''

He understood three prospective partners were in the wings and if the Government injected enough cash it could be back to business as usual, because the best-grade coals were on the West Coast. Sadly, there was probably more restructuring to come, which would have an impact on the Coast, but it depended on the type of equity Solid Energy could raise.

By Kim Fulton, of the Westport News.

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