Solid Energy to reduce production at Stockton Mine in New Zealand

8 June 2014 (Last Updated June 8th, 2014 18:30)

New Zealand coal mining company Solid Energy has revealed plans to cut production by a quarter at its Stockton mine on the west coast.

Stockton Opencast Mine

New Zealand coal mining company Solid Energy has revealed plans to cut production by a quarter at its Stockton mine on the west coast.

The company's decision to reduce production to 1.4 million tonnes per annum (Mtpa) for the next two to three years is said to be in response to continuing low international coal prices.

State-owned Solid Energy further proposes to reduce jobs at the open cast mine, which currently employs about 120 contractors in either specialist or part-time roles.

Solid Energy CEO Dan Clifford said that the proposed changes are a necessary response to the depressed export market, which is expected to remain poor for some time.

"On current pricing projections, we have to minimise our losses by reducing costs so that we can keep the mine operating," Clifford said.

"We have to minimise our losses by reducing costs so that we can keep the mine operating."

"While we are planning to continue with reduced production and reduced staffing levels for the next two to three years, we will still be able to meet our long-term customer contracts while retaining our options to respond to changes in the market."

Upon implementation of the proposal, 137 of the total 521 Stockton workforce would be made redundant.

In order to meet long-term export customer contracts, the company plans to stop non-essential development work, mine from lower cost-to-produce pits and carry-out the majority of work during the day, to reduce the impact of weather conditions on the operation.

A number of other productivity improvements have been proposed by the company or are underway, including changes to rosters and training to increase the proportion of employees.

The company's export business has witnessed prices fluctuations from the 2011 high of $330 per tonne, to the quarterly benchmark price for hard coking coal which fell from $143 per tonne in the January to March quarter to $120 per tonne in the current quarter.


Image: About 120 contractors currently are working at the Stockton mine on the west coast. Photo: courtesy of O.Duke.

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