15 Aug 2013

Solid Energy cuts jobs at Huntly East mine

8:35 pm on 15 August 2013

Solid Energy is shedding more than half the workforce at its Huntly East mine.

Management told employees on Thursday that Huntly East underground mine will stay open but job numbers will fall from 193 to 86.

The state-owned coal company plans to make 93 jobs redundant and not fill 14 current vacancies. There will be a four week period of consultation before staff are told which jobs will go.

Production will be reduced by two thirds but despite this, the company says it has a good future. Most of Huntly's coal goes to the Glenbrook steel mill.

Chairman Mark Ford says the job cuts will result in a cost saving of $5.6 million, with that figure to double over time.

He says Solid Energy, which owes about $390 million, continues to review all parts of its business in response to the downturn in the international coal market and its high levels of debt.

Mr Ford says the company has to reduce costs at Huntly East.

"All our North Island customers and both our main ones - New Zealand steel and Genesis - are able to import coal. That is what we're competing against and so international prices are the benchmark for our domestic prices," he says.

"Huntly East mine is wearing the lion's share of this reduction because of vastly reduced volumes in the future and market prices are so much lower than they were two years ago."

Development at Huntly East will stop and production will be cut to a third of last year's to about 100,000 tonnes.

Solid Energy's interim chief executive Gerry Diack told Checkpoint the move will keep the mine open for another five years.

PM comments

Prime Minister John Key says the Government is not ruling out the prospect it will have to put money into Solid Energy.

But he says the Government also expects the bankers to take their fair share of any potential losses.

In August last year, about 70 workers lost their jobs at Huntly East, along with 60 contractors who were also dropped. Engineering, Printing and Manufacturing Union members were told in February of more potential job losses this year.

The other coal mine owned by Solid Energy in the area, Rotowaro west of Huntly, is open cast and thus less expensive to operate than Huntly East.

Miners stunned

Mine workers were floored by Thursday's news, saying they are unsure what their future holds now.

Brian Lynch, a maintenance worker and EPMU convenor for the mine, told Checkpoint workers are on full pay for the next four weeks but the atmosphere is glum.

Fitter Ross Vernon, a fourth generation miner, says he's looking at the possibility of work in Australia.

But Mr Lynch says the work situation is not much better in Australia, with 4,500 mining jobs lost in Queensland in the last year or so.

He, along with Ray Urquhart who's the union's lead organiser, says workers are a bit gutted.

Hamilton man Rowan Hodgson, who has worked at the mine for two years, had this to say: "I just think that it's typical, classic. The white collar man stuff things up and the poor old blue collar man pays for it."

Tuakau man Darren O'Connor says the future for him is uncertain. "I've got a mortgage, we've just got another baby, it's going to be pretty difficult if I do lose my job."

Labour says Government responsible

Labour Party state-owned enterprises spokesperson Clayton Cosgrove says he blames the Government, not Mr Ford, for the redundancies.

"Ministers Key, Ryall and English knew about this company's troubles some years ago. They had it under close monitoring and they've got mountains of paper on it. They stood there like bystanders, goggle-eyed, doing nothing, taking no action."

He also accused Solid Energy of wasteful spending, saying information released to him reveals the company spent $36,464 in the past four years on branded corporate merchandise such as sunhats, umbrellas and sports bags.

The information shows, however, that such spending dropped from $18,495 in 2009-10 to just $1,173 in the past financial year.