A way ahead for Solid Energy

JOHN ADAMS
Last updated 09:30 22/02/2013

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OPINION: So, Solid Energy has had to announce one more job loss to complete the series of hundreds of job losses from late last year.

This time the axe has fallen on chief executive Don Elder, who has been encouraged to resign rather than wait to be fired. Given the sad state of business at Solid Energy, Mr Elder's departure is not at all unexpected.

What is the future for Solid Energy, and what responsibilities are now faced by the recently-appointed board and their yet-to-be-appointed chief executive?

Priorities

The first need in the current situation is to get out of the media spotlight. There have been too many press articles about Solid Energy and its woes in recent months. Some quiet time and some space to think would be helpful.

To stay out of the papers, the best advice would be to avoid doing anything controversial.

So, for example, don't appoint a flashy new chief executive on a pumped-up salary. Don't sack any more staff. Don't forge ahead with those dubious projects that are on the books. Hold steady while you get your balance.

A second priority is to get some cash back into the business. Currently Solid Energy is losing money at an alarming rate and no board (or shareholding Minister) will put up with that for very long. We can see that coal prices are currently low (and likely to stay that way) so selling more coal isn't the answer. I suggest following the Government's advice and selling off some assets. But what to sell?

Under the leadership of Mr Elder, Solid Energy has invested heavily in a project to exploit the lignite resources of Eastern Southland. The project hasn't got very far because the potential partners have all pulled out, there's no market for the briquette product, the lignite is as low a grade of coal as can be imagined and there is little support for the scheme from the locals.

But Solid Energy has invested heavily in farmland (for proposed large scale mines) and currently finds itself with substantial agribusiness interests..

Solid Energy should take the opportunity to sell them to release the cash. Get out of farming, get its finances looking better and make a lot of friends in Southland at the same time.

Getting some help

Those priorities are quite straightforward.

The next one might involve something of a culture shift at Solid Energy. If coal is not profitable on the world market, then the Government can't be expected to prop up a state owned miner forever. Solid Energy will need to come up with a plan for a future of energy beyond coal.

Most organisations love to play at planning. It usually just confirms the status quo. But the status quo won't work for Solid Energy. Solid Energy needs to take a long, hard look at its purpose and direction, and that look needs to be informed by an appreciation of the real world, and the reasonably foreseeable future, not by the over-optimistic blandishments so popular with consultants.

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How will the new chief executive at Solid Energy get the advice he or she needs to come up with a plan? I doubt that it will come from in-house.

I doubt that it will come from mining industry consultants - they'll just suggest more-of-the-same.

For Solid Energy to genuinely move into the 21st century it needs advice and guidance from its opponents. That's not the competing coal miners and sellers around the world; it's the academics, pressure groups and campaigners who work to set a new path for businesses like Solid Energy. Some of the most creative and well-informed people on the question of energy are likely to be speaking against Solid Energy at consent hearings.

These are the people who understand that carbon capture and storage is nothing more than a fairy story and should be treated as such, that customers actually want to move away from coal and that Solid Energy is failing to meet their needs.

These are the people who understand about energy return on energy invested and know that biofuels might make some short-term economic sense but, in every other way, are a backward step.

These are the people who look at the low grade lignite of Southland and recognise it for the rubbish that it is, and look at the towns on the West Coast blighted by coal mining and see the profits leaving town while the misery remains.

These are the people who understand about climate change and accept the responsibility to take action, locally and globally, to reduce emissions, and who understand that ordinary people are working toward low-carbon futures and deserve to be supported by industry.

These are the friends Solid Energy needs.

Where to from here?

Some good things have happened recently at Solid Energy, and I hope for more good news soon. I look forward to a month without an article on Solid Energy in the newspapers.

I look forward to a quiet announcement of a modest CEO on a modest salary, an annual meeting attended by members of the public who have a genuine interest in the industry's future, and the threat of the lignite projects being lifted from the communities of Southland and the land sold to genuine farmers for the benefit of future generations.

I look forward to Solid Energy getting back into the black, and to a healthy, well-informed debate about the future of coal mining and energy in this country.

I wish the new chief executive well in his or her position.

John Adams is a former geologist and ex-Southlander who acts as a spokesman for Canterbury Coal Action, which works for a just transition to a coal-free New Zealand.

- © Fairfax NZ News

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