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