Solid Energy plans to slash jobs to help sell-off, claims MP
As the West Coast nervously waits to learn the fate of Spring Creek mine, a briefing paper has emerged which its backers say shows Solid Energy had adopted an "underlying agenda" to slash jobs and operations in preparedness for the SOE's partial sale.
West Coast MP Damien O'Connor yesterday provided the Sunday Star-Times with a Solid Energy strategic document, dated August 29, which painted a bleak picture for underground operations such as Spring Creek, which is about 15km from Greymouth.
The paper said current and forecast economic developments would see up to $200 million "removed from our future revenues".
The future of Spring Creek was being reviewed, Solid Energy stated, as "the capital required for it to operate on a positive contribution in this environment is challenging".
The state-owned enterprise's chief executive, Don Elder, wrote: "Spring Creek has been consuming $7-9m of cash each month as it moves through a long period of development to the next period of coal extraction, which would be January 2013 at the earliest.
"At expected near-term prices this is not supported by the revenue available from the mine once extraction begins."
Solid Energy is understood to have decided on its stance over Spring Creek's future on Friday.
The Government will be handed the recommendation tomorrow, with an official announcement on the mine expected by as early as Wednesday.
O'Connor said that, after examining the August 29 document, it was evident to him Solid Energy at the time planned to scale down operations in a bid to boost its balance sheet, making mooted share sales in the SOE more attractive to investors.
"The underlying agenda of this whole review and restructure was getting the company ready for sell down," O'Connor told the Star-Times.
"That concerns me because the benefit from an asset sales perspective is to leave as much coal in the ground as you can and reduce the costs on top of the ground. That means getting rid of as many jobs and leaving the coal there.
"The company, as indicated by the leaked report, has been determined to tidy it up for asset sale.
"That will crucify the Greymouth community just so the Government can get a better deal from their asset sales programme. That, in my view, is outrageous."
Elder wrote in his seven-page "CEO's message" in the August 29 document that Solid Energy's underground mines, of which Spring Creek is one, had "in the past decade . . . rarely performed to plan".
"Future underground options look even more challenging," he wrote. "We are reducing our exposure to underground coal mining . . ."
It has been reported that up to $90m was required in capital expenditure on Spring Creek to continue work on the West Coast mine.
But as the Government prepares to deliver the mine's fate - and that of its 200-plus workforce - O'Connor revealed that a delegation of mine employees and Engineering Printing and Manufacturing Union representatives had put together a document stating that the mine could continue with just a $26m spend.
The rescue plan was formulated after several days' consultation with Solid Energy earlier in the week.
O'Connor called on officials deciding the mine's future to listen to the "wisdom of the coalface".
O'Connor said the plan did include job losses.
But he stressed: "Everyone, including all the miners and people in the community, know that change has to occur in the way that the company has been operating Spring Creek mine. There will be pain, but what the union and community want to see is that there will be gain. At the moment, it is all downside."
When asked if he had any inkling on the fate of Spring Creek, and hundreds of jobs, O'Connor replied: "No, but we have to be optimistic."
Earlier this month about 1200 West Coast locals marched in unity through Greymouth calling on the Government to provide Spring Creek with a lifeline.
Since then, O'Connor said "a real and growing fear" had consumed some proud Coasters. "People have hunkered down now, for the last week or two, and no one is spending anything, no one is going out . . . they fear the worst."
Solid Energy did not respond to approaches from the Star-Times for comment yesterday.
Earlier this month, Elder was working with the Spring Creek's workforce and union officials to make a recommendation on a process for underground development work to continue on the mine. But the mine's future remained under review.
Sunday Star Times