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Don Elder resigns from Solid Energy

Published: 11:40AM Monday February 04, 2013 Source: ONE News / BusinessDesk

Solid Energy's Chief Executive, Dr Don Elder, has announced his resignation from the company today.

In a statement, Solid Energy said that discussions have "been underway for some time," but Elder will remain with the company for a period to help assist with the transition.

Elder said that as the company worked its way out of the major global market downturn in 2012, including significant restructuring, the Board would be considering many future changes. 

Accordingly, he said it was appropriate, and the right time, for the future direction of the company to be led by a new Chief Executive, and he would support this fully in any way sought by the company.

Chairman Mark Ford said that under Elder's leadership since May 2000, Solid Energy had grown and developed substantially and achieved many successes.

Solid Energy is one of four energy companies in the Government's partial assets programme.

Elder's departure had been likely ever since last August, when he announced a shock $40 million loss in the year to June 30, the mothballing of the Spring Creek underground coal mine near Greymouth and an end to plans to extend the Huntly East mine in the absence of new contracts with its main customer, the New Zealand Steel mill at Glenbrook.

Writedowns of $151.7 million were included in the result, with further post-balance date writedowns yet to be declared.

He blamed the result on an "extreme downturn" which hit international prices of coking coal as demand from China turned down in the first half of last year, but critics also saw a pattern of Solid Energy concentrating too heavily on a range of loss-making "new energy" initiatives that had been intended to take the company away from its traditional reliance on coal production.

However, many of the 440 positions lost in a restructuring announced in September were at head office, where a large team had been established to pursue a variety of non-core businesses that Elder hoped would one day transform Solid Energy from a pure coal play to a multi-fuel producer.

The Treasury's Crown Ownership Monitoring Unit had already been gunning for Solid Energy after a $1 billion gap emerged between the company's calculation of its value and an independent valuation.

The company was taken off the list for partial privatisation as the extent of its problems became public, creating a further headache for the already unpopular government programme.

Elder's vision for Solid Energy was that the net impact of its activities would be a positive for the environment, despite its core business being coal extraction.

The company had extensive environmental remediation projects, but came unstuck in a series of investments in areas such as wood-fire pellets and bio-diesel, as well as being hit by the coal price downturn.

It drew heavy criticism from environmentalists and the Parliamentary Commissioner for the Environment for its plans to turn huge deposits of low-grade, high carbon emitting lignite coal in Southland into diesel, urea and burnable briquettes.

The closest the company came to fruition on those plans was the commissioning of a $29 million demonstration briquette plant in Mataura.

The Board will soon begin the recruiting process to find Elder's replacement.

Meanwhile, Garry Diack, previously the company's Group Manager Organisational Development and Performance, will be the interim CEO.

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