Solid Energy jobs on the line
VERNON SMALL, KATE CHAPMAN AND MARTA STEEMAN
Jobs of staff working at ''non-core'' areas of Solid Energy are on the line as the beleaguered company confirms it has those ''assets'' on the block.
New chairman Mark Ford, appointed to rescue the state-owned coal miner, said today the new board was taking the company back to being a ''pure coal'' operation and selling non-core parts of the company.
Those that would ''suffer'' were in those areas and at head office.
Yesterday the Government revealed the financial crisis of the company whose debt has ballooned to $389 million.
Solid Energy has already shed 450 staff late last year, 25 per cent of its workforce.
Non-core assets include lignite projects in Southland, the hundreds of hectares of farmland it has bought for the lignite underneath, its underground coal gasification technology and its coal seam gas developments.
Asked about job losses he said ''If we go back to a pure coal producing company we need miners, so those skills aren't going to be displaced.
''There may be refinements based on what I call this ''optimisation'' but in the end it's the non-core that will suffer and the overheads, the head office and those sort of people,'' Ford said.
The board is also scrutinising its coal mining operations for savings and Ford was not indicating whether any more miners' jobs could be axed in mining.
In November 220 workers were made redundant at Spring Creek underground mine near Greymouth and about 63 at the underground Huntly East mine in Waikato.
Regarding savings at the mines Ford said they were ''absolutely'' possible.
''We're going to have got to work with the unions. It's got to be collaborative,'' he said.
''All my advisers tell me we can do things better. And that doesn't mean just extending hours and cutting pay, it's technologically better, workplace rotations, better blending (of coal). A whole series of improvements could occur.''
''We have to be very careful. We've got to go through a consultation. Staff are not just commodities you trade, they are real people and I have to look after those people.''
GOVT MUST STAND UP - UNION
Any Government bailout of Solid Energy must not further devastate already struggling mining communities, the Engineering, Printing and Manufacturing Union said.
National secretary Ged O'Connell said the Government was more than happy to take strong dividends from Solid Energy when times were good, and now needed to recognise that the mines were more than a cash-cow.
"They're the economic lifeline for thousands of working families."
Communities on the West Coast and in the Waikato were looking for assurances from the Government, he said.
"The West Coast and Huntly have taken a hammering over the last couple of years and there's only so much these communities can be expected to take.
"If the Government can bail out finance companies to protect investors then it can step in now to protect working Kiwis and their families."
The Government was right to be talking about a bailout, as the company was too important to the economy and the wellbeing of mining communities to be allowed to fail.
Solid Energy's predicament was due to the high New Zealand dollar making it hard to compete internationally, poor management decisions, "and a culture of excess at the top", O'Connell said.
Coal miners from the company's Huntly East mine will hold a union meeting at the Huntly Workingmen's Club at 1.30pm today.
Solid Energy is on the verge of collapse as a result of mismanagement by the Government, Labour says. And taxpayers face bailing the business out as the risk of failure puts 1200 jobs in jeopardy.
Finance Minister Bill English cannot say if the company, once a jewel in the crown of the Government's asset sales programme, is now worth anything.
In a shock announcement yesterday, English and State-Owned Enterprises Minister Tony Ryall said the company was in distress and in discussions with its banks.
But they said they would not let it fail.
"No, we are not going to let it go into receivership," English said.
Staff now face two or three months of "unavoidable uncertainty" before they would know their fate. Meanwhile, employees and suppliers would be paid.
Labour's state-owned enterprises spokesman, Clayton Cosgrove, said National's "epic mismanagement" had turned it from an export-award-winning company into a basket-case.
"Solid Energy appears on the verge of collapse. This must be the first time any government has overseen such a massive failure in a state-owned asset . . . The big loser? Yet again, the taxpayer."
Problems first came to light when the company, which bought Pike River Coal last year, was put under the microscope by officials preparing it for partial sale.
But English said he had no reason to think ministers had been deliberately misled.
English said the best advice was that there was a viable core business in the company.
"Who contributes to its recovery is a matter that will be discussed over the next month or so between the company, the banks and Treasury."
He could not rule out a Government bailout and would not rule out its value, put at $2.8 billion by Solid Energy and $1.55b by the Government's advisers in 2011, now being zero.
The Government replaced most of the board in November and long-serving chief executive Don Elder resigned his $1.1m job two weeks ago.
Asked if Elder received a golden handshake, English said he had been paid his contractual entitlements but referred queries to the company.
A spokeswoman said providing specific details would be a breach of a confidentiality deal agreed with Elder and would also breach the obligation to protect his privacy.
But the company has disclosed performance-related bonuses of more than $23.5m over the past two years to 950 employees.
Elder's voicemail message yesterday said he was out of cellphone range until February 20; he did not return calls.
In recent weeks Solid Energy has sold its bio-energy business to management and put 920 hectares of Southland farmland on the block.
- Fairfax Media
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