6 Mar 2014

Solid Energy confirms India's interest

9:23 pm on 6 March 2014

Troubled coal company Solid Energy has confirmed the Indian government has expressed interest in buying some of its mines but has told a select committee that is a matter for the New Zealand Government to consider.

India is Solid Energy's largest export market, ahead of Japan and China, and is keen on securing its coal supplies.

Representatives of the state-owned company appeared before Parliament's Commerce Committee on Thursday morning for its regular financial review.

Solid Energy interim chief executive Garry Diack told MPs that India was interested in acquiring some of the company's assets, but that was a matter for ministers to consider.

However Steven Joyce, answering parliamentary questions on behalf of the Energy and Resources Minister Simon Bridges, said the sale of assets was a matter for the company.

Later, Mr Joyce told reporters it would have to come to ministers if the sale was substantial, but nothing is in the pipeline.

Mr Diak told MPs he is confident the coal company has a good future and it no longer has a culture of largesse. He said the company still faces challenges, with the spot price for coal hovering around $US119 per tonne.

"If that spot price does turn into real market pricing, then it will put additional pressure on us and we will have to consider ... reducing our costs further."

Both Mr Diack and interim chairperson Pip Dunphy agreed the company had borrowed too heavily in the past, which meant it got into greater difficulties when the international coal price fell in 2012.

In October last year, the Government put in place a bail-out package designed to keep Solid Energy afloat for three years. It also removed it from the list of state-owned enterprises up for partial sale, because of its financial position.

The committee was also told company chairman Mark Ford was to step down because of ill health. Mr Ford took over the chairmanship in 2012 after the retirement of his predecessor, John Palmer.