Some 200 jobs will be lost in a Solid Energy shake-up announced today, and another 240 staff at Spring Creek Mine on the West Coast face an uncertain future.
The company will also cancel $100 million of capital expenditure scheduled in the current financial year as it grapples with a steep fall in international coal prices and an anticipated cut in annual revenues of around $200 million.
Seventy-five jobs will go from the state-owned energy company's coal operations, including 63 from Huntly East Mine; 65 jobs will be lost in "non-operational" areas, mostly from Solid Energy's head office in Christchurch; and the ventilation upgrade at the Huntly East mine will cease, resulting in the loss of about 60 contracting jobs, although a company spokeswoman said some of these workers may be redeployed to other positions.
The decision will also affect about 240 jobs at the Spring Creek Mine, a blow for a community still reeling from the Pike River Mine disaster nearly two years ago which cost the region 150 jobs and 29 lives.
"Work at Spring Creek Mine will cease almost immediately as the review is completed," Solid Energy said today.
Spring Creek contributes $37 million a year in wages and services to the Greymouth economy.
Mine staff were informed of the decision at a packed meeting at the Runanga St John Hall this afternoon.
The announcement also indicates a shift away from underground mining, towards the safety of open-cast mining and coal seam gasification.
Grey District Mayor Tony Kokshoorn was shocked but said there was a glimmer of hope.
"Just a few months ago Solid Energy got Pike River Mine for a song and mothballed it, and this will be the final kick in the guts if they close Spring Creek completely.
"Their loyal workforce and West Coasters deserve better than this."
Solid Energy chief executive Don Elder said the review would involve many complex issues and interaction with different stakeholders, but he did not put a timeframe on it.
"Solid Energy will advise the outcome of this review as soon as possible," he said.
"We believe Spring Creek still has potential if the international market turns around, as does Huntly East, if we can secure satisfactory long-term contracts with our major North Island customers to support future investment."
Changes were designed to absorb the impact of the global coal market downturn by introducing operating efficiencies to preserve and generate cash, while retaining core capability and future options for growth, Dr Elder said.
Solid Energy will close its uneconomic bio-diesel plant, but will carry on with controversial plans to exploit vast deposits of low quality lignite coal in Southland for briquettes and possible conversion to transport fuels and fertiliser.
While it will pull back from underground mining, Solid Energy will commit new resources to underground coal gasification projects, but will shift its focus from Huntly to its UCG prospects in Taranaki.
Opencast mining at the Stockton mine, on the plateau above Westport, will be "optimised to generate additional cash."
Finance Minister Bill English has already said the state coal company's partial privatisation is on the back burner until its performance improves.
Labour Party leader David Shearer said the job cuts were a "disgrace".
"What we're seeing today is the real impact of National's failed economic policies which hinge on asset sales and mining. With Solid Energy's announcement, we can see that mining our way to prosperity isn't the answer."
- Additional reporting BusinessDesk
