'Perfect storm' over West Coast
Solid Energy's financial crisis threatens further pain for a struggling West Coast, where mining is one of its biggest industries.
The Government revealed on Thursday the state-owned enterprise's debt had ballooned to $389 million.
Late last year, it shed 450 staff, including mothballing Spring Creek Mine, near Greymouth, and making about 220 people redundant.
About 70 contracting jobs were also cut in September at Stockton, New Zealand's biggest opencast mine, near Westport.
Pike River coalmine's November 2010 blast killed 29 men and caused job losses for about 150 workers at the underground mine inland from Greymouth.
Grey District Mayor Tony Kokshoorn said yesterday Solid Energy's downfall was a harsh blow after a dire 2 years for the West Coast mining industry.
It came on top of the world economic crisis, high New Zealand dollar and the Christchurch earthquake, which impacted on key coast industries such as tourism and dairying.
"Everything has come together for the perfect storm for us. Now we have got the collapse of Solid Energy, which is hanging the axe over the West Coast again. We are at a low ebb."
Solid Energy's new chairman, Mark Ford, warned him a few weeks ago the company was in serious trouble but indicated three parties wanted to buy into it.
"The community's feeling is really one of general acceptance that Solid Energy was absolutely poorly run," Kokshoorn said.
Coal prices were cyclical but the company was ill-equipped to cope with fluctuating fortunes.
It was an extravagant spender, which benefited local businesses "but we don't want a boom or bust economy", he said.
Instead, he called for the Government to inject money and seek equity partners to minimise risk.
Ford indicated this week it would become a pure coal company, a move Kokshoorn and Buller District Mayor Pat McManus supported.
They both believed Solid Energy had failed to focus on its core business of coal mining, becoming distracted with developing other energy sources, such as biofuel and wood pellets.
"I think Solid Energy has taken their eye off their core business and frittered away money on other projects," McManus said.
The community was on tenterhooks waiting to see what would happen.
"We'll have to keep our fingers crossed they will get the company back on track again."
Stockton's Engineering, Printing and Manufacturing Union site convener, Dave Reece, said workers feared for their futures but clung to hopes their jobs would be safe because Stockton had always been profitable, unlike Spring Creek.
The workers believed Solid Energy had wasted money, but reluctantly agreed to work fewer hours for three months, which started on January 17, to prop up the ailing company.
EPMU West Coast area organiser Garth Elliott told workers about Solid Energy's announcement on Thursday evening at a union meeting.
"We had been told by Stockton and Solid Energy things weren't good. I think yesterday's announcement was confirming what we thought," Elliott said.
"They're very angry about the whole situation and they feel the brunt has fallen on them."
He blamed the company's mismanagement and criticised the Government for failing to step in sooner.
"I think they have sat on their hands and let it get out of control."
- © Fairfax NZ News