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'Sombre day' as Solid Energy announces job cuts

Published: 12:51PM Monday September 24, 2012 Source: ONE News

Upset Solid Energy employees today heard the company intends to cut about 25% of 1880 jobs across all its operations.

The state-owned company confirmed that 440 jobs would be lost through a restructuring of its business, including mining operations at Huntly East and Spring Creek on the West Coast.

"A lot of sad boys in there - a lot of angry miners too," reflected miner Darryl Sweetman, after today's meeting between Spring Creek staff and management. "They're not happy, not happy at all - off to Aussie, I suppose."

All but essential underground work would remain suspended at the Spring Creek coal mine near Greymouth, leading to a reduction from 254 staff to just 32. After two months, the mine would be put into "care and maintenance" with a staff of 20 maintaining its infrastructure.

Huntly East would reduce development and coal extraction to ensure the mine's immediate viability, resulting in 63 lost jobs from a workforce of 234. Normal operations would be cut to just five days a week.

"Everyone knows what's going to happen now," says Engineering, Printing and Manufacturing Union spokesman Brian Lynch. "They know that in two weeks' time, it'll be D-Day for them - everyone will get a letter and 63 of them won't be coming back to work."

One hundred and sixty three of the job losses would be in the areas of corporate, supporter services and development, accounting for more than half those roles.

"This is a very sombre day for this company," said Solid Energy chairman Mark Ford. "There's no signs of an early price recovery, Solid Energy's balance sheet is highly geared already, our competitors are taking drastic action and we must."

The job cuts come as coal prices fall well below what they need to be to justify keeping their facilities operating at full strength. Spring Creek has a break-even threshold of $180-200 per tonne, but currently yields $120 a tonne.

"In recent years, [Spring Creek] has performed below expectations as a result of more complex geology being encountered, higher costs and slower development progress," said Ford.

"The mine has also struggled to meet the company's and wider public expectations about operating safely."

The company intends putting its proposals through a short consultation process before implementing them.

"We absolutely understand the potential impact of this proposal on the local community and the wider district," said Ford.

"We will do all we can to identify future employment opportunities for affected staff and we have already had some very promising discussions, which we hope to confirm in the near future."

Parlimentary protest

Meanwhile, a group of West Coast miners left Greymouth this morning heading for Wellington to call for Government support in keeping their jobs. The group is expected to have a presence at Parliament at midday tomorrow.

A miner told ONE News that the group has "placards all ready so we're going to go up there and stir a bit of crap". An estimated $70 million is needed to continue developments at Spring Creek mine.

Solid Energy is one of four energy companies in the Government's partial assets programme, and some workers at the mine believed the cut backs were about repositioning the company for sale.

Staff had even come up with their own scheme for cutting costs, but Solid Energy chief executive Don Elder said closer analysis showed there was still a $30-70 million shortfall.

West Coast Labour MP Damien O'Connor threw his support behind the workers, saying the Solid Energy decision was "pre-determined and made weeks ago".

"Just last week, the Government said it was 'an absolute priority' to work with Solid Energy to make Spring Creek financially successful," said O'Connor.

"It had a moral and ethical obligation to consider closely and carefully the proposal from the miners and management that was only finalised last Thursday.

"The decision today indicates that neither Solid Energy or the Government were genuinely concerned about job losses. As company review documents reveal, this whole sorry saga has been about tidying Solid Energy up for listing on the stock exchange and providing investment opportunities for the few New Zealanders who can afford to buy shares.

"This cynical restructure of the company - which also affects miners in Huntly and corporate staff in Christchurch - will gut the town of Greymouth, and destroy the spirit of a community that has relied on what it now knows were empty promises from Solid Energy and from the Government."

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