No sale in place for Solid Energy

Last updated 16:11 06/03/2014

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The Government is scotching claims that it has struck a deal to sell parts of Solid Energy to Indian buyers, but says parts of the troubled mining company will be offloaded.

Meanwhile, Labour's West Coast-Tasman MP Damien O'Connor said he would support foreign buyers investing in inactive West Coast mines, even though he likened it to asset sales.

In front of a select committee, acting Solid Energy chief executive Garry Diack said today he had met the visiting Indian Minister of Steel Beni Prasad Verma during a recent visit.

But no commitments had been made and it was not Solid Energy's place to do that.

Investors from India had "always" expressed an interest in buying mines and permits, Diack said.

They wanted to ensure they had long-term access to the coal and had put forward options from localised mine-investment rights through to a major investment in Solid Energy itself.

"We receive their requests and desires but we don't engage" in discussions over ownership, Diack said.

A newspaper article after the steel minister's visit quoted an Indian minister saying: "We are looking forward to the government of New Zealand allocating mineral assets to Indian public sector companies on a government-to-government basis."

But the Government played down the comments.

"There's no serious proposition of them buying Solid Energy assets," Finance Minister Bill English said, adding that he had not had contact with the Indian politicians.

"There's been quite a few people who have indicated an interest ... With Solid Energy we're working away with the company to avoid ongoing losses and with the coal price low that's turning out to be pretty difficult, but avoiding losses will likely include the buying and selling of some parts or aspects of the business."

Solid Energy was marketing farms for sale in Southland. 

English said the publicity over the company's financial problems would attract possible buyers.

"I wouldn't be surprised if they read in the paper of the financial problems Solid Energy has that they've been thinking of ways to secure the supply of what's reasonably high quality coal," English said.

"Going back 12 months we've had various approaches to the Crown to buy the company cheap. We haven't proceeded with any of these."

O'Connor said that if the approach of the Indians meant there could be investment into the closed Spring Creek mine near Greymouth then he supported it.

"Unfortunately we had part sales of electricity assets ... this would be along the same lines. For a region like the West Coast and for Greymouth, they desperately need the jobs."

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Diack told the select committee the export price of coking coal was about US$118 (NZ$140) and a sustainable level for the business would be at US$140 to US$150 a tonne. It was the "$64,000 question" when the price would reach the US$140 level.

There was excess volume in the world market and demand was weak.

"We are forecasting little or no upward change in the next 12 to 15 to 18 months."

Prices were expected to rise over the next five or six years and reach $US200 a tonne by 2021.

- Fairfax Media

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