Snails cause Solid Energy slide

SANDRA COX/The Press

BLACK POWER: overburden is removed at Solid Energy's Stockton mine in Buller. The SOE lost 200,000 tonnes of sales in the half-year to December 31 2007, because of having to comply with wildlife permits for moving snails. The snails' habitat is near the mine, Solid Energy's largest on the West Coast.

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Solid Energy expects to be back in the black for the full year after posting a $2.7m interim loss.

The state-owned coal miner blamed the loss largely on the row with environmental activists over the endangered giant snail.

There will be better news in the June 2009 year when Solid Energy expects to benefit from soaring international coal prices and increased production.

Chief operating officer Barry Bragg said it is expecting prices for a tonne of coal on a long-term contract to leap to at least $US200 ($NZ256), from the $US95 it is receiving for contracts that will expire in a few weeks.

Bragg said long-term contract prices were benchmarked off prices struck by Australian coal producers and their Japanese steel mill customers. Their negotiations were dragging because they could not agree on price.

These international coal prices were expected to boost Solid Energy's profit.

The company is targeting an increase of 20 per cent in production in the June 2009 year, coming from the new West Coast mine at Spring Creek, 51 per cent-owned by Solid Energy.

Bragg said Solid Energy could produce nearly 5m tonnes in the June 2009 year with up to 900,000 tonnes coming from Spring Creek.

The SOE had lost 200,000 tonnes of sales in the half-year to December 31 2007, because of having to comply with wildlife permits for moving the Powelliphanta Augustus snail, he said.

That was a big part of the reason for the loss of $2.7m. The snail's habitat is near Solid Energy's largest mine -- Stockton -- on the West Coast.

The company would have made a profit of $10m to $15m in the first half if it had been able to produce a planned 1m tonnes (mt) of coal from Stockton instead of the 800,000 tonnes it produced, he said.

Solid Energy's revenue fell 14 per cent  to $240.4m. Export sales fell nearly 25 per cent to 843,000 tonnes while domestic sales eased to 1.21mt. State-power firm Genesis Energy is its largest customer, followed by New Zealand Steel.

Other problems to hit interim earnings were the high New Zealand dollar and escalating costs, Solid Energy said. Skill shortages and a tight labour market were acute.

Its trading costs rose 8 per cent to $211m.

Bragg said Stockton was on track to produce 1mt in the second half and Spring Creek was expected to produce about 350,000 tonnes in the half.

If all things remained the same, and Stockton produced 1mt, second-half profit could be $15m.

The coal miner expected to get the higher coal prices in the fourth quarter of the year when it might do one or possibly two shipments before the June 30 balance date.

- © Fairfax NZ News