Solid Energy continues with job cuts

OREANDA-NEWS. New Zealand state-controlled coal producer Solid Energy has made 113 workers redundant, with it facing more financial difficulties because of prolonged weak coal prices.

The 113 jobs will go at its Stockton coking and thermal coal mine in the West Coast region of New Zealand's South Island. Its follows the loss of 137 jobs last June, which cut production at the mine to 1.4mn t/yr from 1.9mn t/yr. Stockton accounts for nearly half of Solid Energy's coal output.

The New Zealand government has hinted that the company may no longer be financially viable, as it is making losses of NZ\$2.1mn (\$1.55mn) a month and its banks have already written off NZ\$54mn of debt owed by the mining firm.

Thermal and coking coal prices have continued to fall during the past year since Solid Energy last cut its workforce and production at Stockton. Argus last assessed high-grade thermal coal prices at \$61.21/t fob Newcastle, Australia for the 6,000 kcal/kg NAR grade, down from \$73.53/t last June. Coking coal prices have also fallen, with premium hard coking coal assessed at \$84/t fob Australia, down from \$113.50/t last June.

These declines were partially offset by a weakening New Zealand dollar against the US dollar during the second half of 2014, but the exchange rate has remained largely stable for the first four months of this year at around US75?.