Solid Energy chief executive Don Elder is staying silent on how long he will stay at the helm of the state-owned coalminer.

Company chairman John Palmer, who departs soon, is also rejecting claims the company is swollen with "fat cats".

Yesterday, the company announced a $40.2 million loss in the year to June after writing down $110.6m from its underground mines, renewables division and coal seam gas project.

Elder was asked how long he intends to remain with the company.

"I love what I do at Solid Energy and it's a bunch of great people to work with," he said. Elder has been in the top job since May 2000.

In May, Solid Energy chairman John Palmer told the shareholding ministers he would be standing down as chairman. Two months later the coal price "fell off a cliff", pushing the company into a massive restructuring.

Mark Ford took the chairmanship yesterday.

Palmer said that if he had known then how the price would slip and the company-wide review needed, he would have moved on within weeks.

"I leave the company today with some regret about the situation [of the company] and the decisions it has to face in the next couple of years, but also proud of what has been achieved and the footprint that has been left."

The company was well-placed to broaden its revenue by converting deep coal into gas, and lignite into a higher quality product.

He disputed criticism that the company had become swollen by "a whole lot of fat cats" with large salaries.

The company's 2011 annual report showed more than a quarter of its 1400 staff earned more than $100,000. Elder was paid $1.36m and another 20 staff took home more than $300,000.

Palmer said 80 per cent of staff earning more than $100,000 were in the coal side of the business, and only 12 per cent were from the Christchurch headquarters.

As part of the restructuring, 65 head office staff will be cut - more than a quarter of the 200 staff there.

A 2011 Ernest & Young report on Solid Energy had shown it had been, financially, the best-performing government-owned business, he said.

The company's performance had not been "just good luck", and the company was not suffering now because of bad management.

The situation showed how cyclical a commodities business was and reinforced the reason why Solid Energy should be partially privatised, he said.

"The Government should not hold all the risk for this business."

He conceded the company should not have invested in Biodiesel NZ, and wood pellet company Nature's Flame should have been better managed. Both businesses were written down by more than half.

But he believed Nature's Flame was viable, although not in Solid Energy's hands because of high costs and "ambitious" expected prices.

- © Fairfax NZ News

Comments