6 Jun 2014

Job cuts needed to sustain mine - CEO

5:21 pm on 6 June 2014

Solid Energy says jobs at its Stockton coal mine had to be cut in order to keep the West Coast site running.

At meetings in Westport and at the mine site on Friday, the company announced on Friday that nearly 140 workers and 50 contractors are to be made redundant, meaning hundreds of workers in Westport face an uncertain future.

Mine workers gathering for the meeting on Friday.

Mine workers gathering for the meeting on Friday. Photo: RNZ / Nicola Grigg

If the proposal as outlined is implemented, 137 people from the total Stockton workforce of 521 will be made redundant. That includes 35 management, technical, support and administration jobs and 102 mining jobs and 50 of the current 120 contracted staff.

Solid Energy said it needed to reduce production at the West Coast export mine by a quarter from 1.9 million tonnes a year to 1.4 million tonnes in the next financial year.

Friday's announcement is just the latest of cuts that have been made over the past two years that have seen the beleaguered state-owned enterprise reduce its staff of 1600 by half.

The mine is currently losing about $130,000 a day and Solid Energy's new chief executive Dan Clifford said the jobs have to go. He said the mine would keep losing money, even with the job cuts, because of a low international coal price.

"Our objective here is to reduce our costs, and by doing that we're minimising the losses. If we didn't do this, the losses under the current format would've been unsustainable."

Mr Clifford said if the coal price did not lift, more jobs may be cut or the mine may eventually be sold.

The chief executive was unapologetic that he didn't personally deliver the news on Friday. He said the mine manager told those gathered in Westport while he spent that day talking with community and business leaders.

Many workers told Radio New Zealand on Friday they were not surprised by the news, but had expected greater numbers of job losses to be announced.

Buller District mayor Garry Howard said the cuts are not as bad as many feared, and he is glad it's not a complete shutdown.

"We certainly didn't want to see that because then it's hard to start up again. They're retaining markets, so that's an important thing that they've got customers to work with.

"We just need as a district to diversify what we're doing and we're really keen to try and push for secondary processing, rather than just primary extraction."

Mr Howard said people still feel very confident about the future of the district, but acknowledged the job losses would be a big hit for the West Coast, with many workers at the mine very well paid and the money they earn flowing through the rest of the local economy.

However, he said the community wanted Solid Energy to do well - because if it failed, they may lose the entire mining industry.

Solid Energy's Stockton coal mine.

Solid Energy's Stockton coal mine. Photo: PHOTO NZ