Coal imported as miners laid off
Solid Energy acting chief executive Garry Diack admits the importation of coal when his company is laying off nearly 100 Waikato coal miners is senseless.
"It's offensive," he said, in North Waikato yesterday after the debt-laden state-owned enterprise announced the proposed lay offs of 93 Solid Energy jobs at the Huntly East underground coal mine.
"Importing coal into a region like this, it just doesn't make logical sense."
But with thermal coal prices plummeting to US$78 (NZ$97) per tonne - a fall of 35 per cent over the last 18 months - and export returns hurting with New Zealand's high dollar, Diack said overseas coal mining operations were out-competing New Zealand with a cheaper product.
"Inside the global pricing, they can make it work and, unfortunately, we can't."
He didn't believe anything could have been done to reduce the severity of the cut, which may see 24 management and support staff and 69 miners axed at the mine.
"The cost has dropped so much now that for our key customers importing coal is a viable option. We are subject to full market issues here so we've just got to get our costs of production down lower," he said.
Production will be cut at the mine to 100,000 tonnes this year, a third of last year's output.
Solid Energy chairman Mark Ford said the redundancies would cost the company $5.6 million, but in the long run Solid Energy was expecting savings of around $10m from the restructuring exercise.
Economist and Waikato University professor Frank Scrimgeour said the impact on the regional economy would not be huge, but locally it would be very significant, especially for the households involved. "It becomes very important because there's the two stages. One, the immediate pressure is on expenditure but secondly the question is, do people stay, or do they go go? Do they move to another centre? What we have been seeing for some time is the hollowing out of small towns of the Waikato, downwards pressure on the populations in regional territorial authorities, so each loss of a significant employer adds to the challenge."
He said with the region's economy growing, there was the capacity for the region to absorb that level of shock,
"But we don't want too many shocks like this," he said.
Waikato Chamber of Commerce chief executive Sandra Perry, who lives in Huntly, was "pretty shocked" by the number of cuts.
"That's 93 jobs, that's 93 lost incomes in our community and it's big blow to the whole region.
"It impacts on 93 families, that's children at school and it's wives working. It means some of those families will have to relocate.
"I don't think it's been good for the Waikato, there's promises that have been made to miners who then upskilled only to see more cuts.
- © Fairfax NZ News