Mothball of mine will 'gut' Greymouth

Bad news . . . Spring Creek miners congregate outside a meeting yesterday at Dunollie, near...
Bad news . . . Spring Creek miners congregate outside a meeting yesterday at Dunollie, near Greymouth. Photo Greymouth Star
Greymouth will bear the brunt of the job cuts announced yesterday by Solid Energy as the coal producer mothballs Spring Creek mine because of the unaffordability of maintaining its development.

Staff numbers will drop from about 254 to 32. After two months of underground work at the mine, required to set it up for care and maintenance, a staff of about 20 would maintain the mine's infrastructure.

The decision would also affect the jobs of up to another 130 people employed by contractors - many of whom had been on the site as part of the development project.

Solid Energy chief executive Don Elder told Spring Creek staff the company had completed its review of the mine's viability and concluded that it could not afford the ongoing costs of the operation.

Solid Energy chairman Mark Ford said if the proposal went ahead, the company would assist affected staff to find employment and would retain capability in Greymouth to explore opportunities. The company was in discussions with the Stronger Christchurch Infrastructure Rebuild Team and with mining workforce companies in Australia, he said.

An angry West Coast MP Damien O'Connor said news that more than 200 Spring Creek miners would lose their jobs confirmed that the "outrageous decision" was predetermined and made weeks ago.

"The miners, their families and the West Coast community were told that the Spring Creek review was genuine. They managed to find $60 million in savings when the management of Solid Energy had failed 14 separate mine plans to keep the costs under control."

Just last week, the Government said it was an "absolute priority" to work with Solid Energy to make Spring Creek financially successful, Mr O'Connor said. It had a moral and ethical obligation to consider closely and carefully the proposal from the miners and management that was only finalised last Thursday.

The decision indicated that neither Solid Energy nor the Government was genuinely concerned about job losses.

Mr O'Connor accused the Government and the company of tidying Solid Energy up for listing on the stock exchange and providing investment opportunities for those New Zealanders who could afford to buy shares.

"This cynical restructure of the company ... will gut the town of Greymouth and destroy the spirit of a community that has relied on what it knows were empty promises from Solid Energy and the Government." Mr Ford said the company "absolutely understood" the potential impact of the proposal on the local Greymouth community and the wider district.

"We will do all we can to identify future employment opportunities for affected staff and we have already had some very promising discussions which we hope to confirm in the near future."

Spring Creek mine had not been profitable for some time.

Since Spring Creek Mining Company was set up in 2007, it had lost more than $100 million.

It had been in a development phase since the end of 2011, with minimal coal production, and had cost the company $50 million during that time. Spring Creek would not have returned to full production until early next year and to reach that point, a further $40 million to $70 million would have been needed, Mr Ford said.

"In recent years, the mine has performed below expectations as a result of more complex geology being encountered, higher costs and slower development progress. The mine has also struggled to meet the company's and wider public expectations about operating safely."

Options for the mine that were considered included different mine plans and full closure, Mr Ford said.

The company believed the mine still had potential in a stronger international market for steel-grade coal, particularly as a blend-stock for some of Stockton's production, or as a specialty product. Placing the mine into care and maintenance would allow options for the future which included waiting for the market to recover,reviewing future options to restart the operation and selling or closing the mine, he said.

Solid Energy's total workforce would reduce to about 1360 compared with 1800 at the start of the year.

Mr Ford announced that jobs would go throughout the state-owned enterprise, including 163 corporate, support services and development jobs, as well 67 jobs at Huntly East.


At a glance

• 440 jobs to go, most of them in Greymouth

• Spring Creek mine is mothballed

• Huntly East mine's production reduced

• Reducing capital expenditure by $100 million

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