Over 100 more jobs lost at Solid Energy

MICHAEL BERRY AND MICHAEL WRIGHT
Last updated 17:34 08/05/2013
Daniel Tobin

Chairman Mark Ford announces job cuts at Solid Energy's head and regional offices.

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Embattled mining company Solid Energy will shed another 105 jobs, with redundancy costs of $3.5 million, in an effort to stay afloat.

The company plans to slash 52 people from its head office in Christchurch and 53 from its regional offices, cutting its total corporate workforce from 234 to 129.

The cuts were expected to save the company $18m a year.

Solid Energy's full headcount would drop to about 1000 by the end of June, compared with more than 1600 people a year ago.

Just 87 people would be left at its Christchurch headquarters, down from about 313 last year.

The 53 regional cuts will be spread evenly between Auckland, Nelson, Buller, Grey District and Waikato, with one position targeted in Southland. All are support or corporate people, with no mining staff affected, Solid Energy chairman Mark Ford said.

All staff paypackets were being reviewed in light of the "much reduced" business, and the average would fall, he said.

Some may rise, depending on extra duties taken on, he said.

Ford said the job losses were part of a new strategy focusing on its core coal mining business.

"Staff in the company, particularly those who work or report into Christchurch, have had many months of uncertainty and we know that continues to be really difficult for them.

''We've made the decision to move on this change proposal now so that we can start to give these staff some clarity about their future.

"The proposal ... is designed to support a refocused coal mining business which is appropriate for a coal company with our turnover, is consistent with others of a similar size in our sector and which is affordable for the business."

Solid Energy had already cut 400 jobs last year, closed a West Coast mine, halted expansion work on other mines and offloaded non-core assets in a bid to balance its books.

Its Nature's Flame wood pellet business will go on the market shortly.

"Solid Energy is no longer in a position to be the lead sponsor of major capital projects," Ford said.

The company is talking with staff potentially affected by the cuts and will settle on a new corporate structure by the end of the month.

It is expected to confirm its new business model and strategy by the end of June.

VIABILITY QUESTIONED

Earlier today, Finance Minister Bill English floated the possibility of the state-owned coalminer not having a viable future in an interview with Radio New Zealand.

That led Labour's state-owned enterprises spokesman Clayton Cosgrove to question whether the Government was going back on its word to keep the company out of receivership.

While being asked about education journal publisher Learning Media joining the list of troubled Crown-owned businesses, English said Solid Energy was the only one whose long term viability was being debated.

Many state-owned companies were having to adapt and take risks, like the private sector, he said, and when those risks did not come off they were more heavily scrutinised and transparent.

The Government would not continue to prop up businesses without a long term future, he said, while companies such as KiwiRail had the Government's full support, he said.

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"It's possible that there are other businesses - as revealed in the Solid Energy case - where their particular mix might not be viable so we have to look at whether they can be restructured or whether in the long run there's a viable proposition there, but at the moment, Solid Energy is the only business where that's a question."

Opposition MP Cosgrove asked whether the Government had "reversed its position".

In February English had assured that the Government would not let the company fall into the hands of its bankers, saying: "No, we are not going to let it go into receivership."

Cosgrove said English had now signalled the prospect of Government allowing the company to fail.

"He's put on the table, for the first time, allowing it to tip over.

"It's not a new story that Solid Energy is going through a restructuring because this Government knew about its market conditions changing, knew about it for years, did absolutely nothing, were asleep on the couch in the Beehive with their hands nowhere near the wheel and as a result: 400 job losses, $389 million worth of debt."

The Government has been working out a business turnaround plan with the company and its bank for the past few months.

The plan is expected to be hammered out in a month, to be followed by final negotiations between the Government and the bank.

Redundancies are expected as the company changes its make up to suit its new image as a "boutique coking coal producer".

It had been angling toward being a $27 billion natural resources giant, but that was rebuffed by Government.

Last year it was crippled by falling coal prices and has already cut hundreds of jobs as it tries to stay afloat. Chairman Ford has said the company, as it stood, was covering its expenses.

- The Press

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