Solid Energy losses likely to continue

Debt-laden state coal miner Solid Energy is likely to continue posting losses on its key coking coal operations for the next 18 months at least, its executives told MPs this morning.

Acting chief executive Garry Dyack also confirmed the company has discussed the sale of West Coast mines with the Indian Government.

Mr Dyack along with acting chairwoman Pip Dunphy and other senior executives were before Parliament's finance and expenditure committee just days after reporting a $40 million annual loss.

Ms Dunphy confirmed chairman Mark Ford, who replaced John Palmer just a few months ago, has now stepped down due to ill health. Mr Ford oversaw sweeping job cuts and a crucial refinancing deal between the company, its banks, and the Government.

The company was on the brink of collapse early last year after making risky investments in alternative energy projects and after failing to anticipate and react to falling coal prices.

Under questioning from National MP Chris Tremain, chief strategy officer Bill Luff said the price at which the company's hard coking coal output was sustainable was US$140 - US$150 a tonne.

At present the spot price was about US$119 a tonne although Mr Dyack indicated Solid Energy received somewhat more than that under its supply contracts. Mr Luff said while the company expected prices to recover to US$200 a tonne by 2021, there was "little or no change" expected over the next 12 to 18 months.

Mr Dyack later told reporters that could derail an expected reduction in debt over the next two years and also force the company to draw on as yet unused credit facilities extended by the Government which total $130 million.

Responding to questions from Green MP Catherine Delahunty, Mr Dyack confirmed the company had discussed selling West Coast mining operations with the visiting Indian Steel Minister recently.

However he suggested that was not unusual. The company had dealt with Indian interests for more than 20 years and they had "always" expressed interest in purchasing coking coal mining assets in this country.

Mr Dyack said the company was not still in discussions about selling mines to Indian interests, but the matter was a "Government to Government" issue which was being handled by ministers. He did not know whether those discussions were continuing.

- By Adam Bennett of the New Zealand Herald

Add a Comment