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| − | {{#badges: CoalNewZealand|Navbar-NZcoal}}'''Solid Energy New Zealand Limited''' '''(Solid Energy)''' is a New Zealand government-owned coal company and is the country's largest coal producer and exporter. Its core business is the mining of coking coal for export markets and thermal coal for New Zealand industrial customers. From 2005, the company’s plans for expansion led it to take on more and more debt, and by 2012, at a time of falling coal prices, it became apparent that it was getting into major financial difficulties. In 2015 Solid Energy was placed into voluntary administration, and its creditors agreed to an orderly sell-down of the company and its subsidiaries. | + | {{Moved to GEM}} |
| − | | |
| − | ==Background==
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| − | ===Overview of company history===
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| − | State-owned coal mines have a long history in New Zealand. The 1901 Coal Mines Amendment Act allowed the State to open and work coal mines and to set aside Crown land required for coal mining. “State Coal Mines” was established as a government trading enterprise and by 1950 was the largest coal producer in New Zealand. In 1987 the state-owned enterprise Coal Corporation (Coalcorp) was formed from State Coal Mines, inheriting many of its assets and liabilities. Coalcorp was rebranded as Solid Energy in 1996.<ref>Royal Commission, [http://pikeriver.royalcommission.govt.nz/vwluResources/Chronology-1-NZ-Mining-and-Coal-Production-Profile/$file/Chronology-1-NZ-Mining-and-Coal-Production-Profile.pdf "Chronology One - New Zealand Mining and Coal Production Profile"], accessed March 2013</ref>
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| − | | |
| − | Three years later the company was undergoing a period of financial distress and when Don Elder was appointed as Chief Executive in 2000 it was intended that he would wind it up. Instead the situation was turned around and from then until 2012, Solid Energy significantly increased its total revenue and generated reasonable levels of profitability that were used to underwrite a strategy of diversification. <ref>NZ Herald [http://media.nzherald.co.nz/webcontent/document/pdf/201324/solid.pdf “Deloitte Report – Review of Monitoring of Solid Energy Ltd”, pp. 10-11], accessed July 2013</ref>
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| − | | |
| − | Solid Energy operates a number of South Island coal mines located both on the West Coast (Stockton and Reddale) and in Southland (New Vale). On the North Island the company's largest mines are the Huntly East mine and the nearby Rotowaro Opencast Mine.
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| − | | |
| − | From 2004–2012 the company pursued the development of unconventional coal projects: the Huntly Underground Coal Gasification Pilot Plant; a coal seam gas demonstration plant on the Huntly coalfield; the pilot Mataura Lignite Briquetting Plant in Southland; and studies on a lignite to fertiliser project and a coal to liquid fuels project, also in Southland. .<ref>Solid Energy [http://www.solidenergy.co.nz/publications-and-resources/annual-reports/solid-energy-annual-report-2011.pdf "Annual Report 2011"], pages 28-29, accessed March 2013</ref> In addition, Solid Energy invested in renewable energy companies, although these made up only a small part of the value of the company. <ref>Forsyth Barr, 9 November 2011,[http://www.comu.govt.nz/resources/pdfs/valuation-reports/senz-vr-fb-11.pdf "Solid Energy Forecast and valuation update"], accessed March 2013</ref>
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| − | | |
| − | In 2011 Solid Energy welcomed the National-led Government’s plans to partially privatise state-owned energy companies, stating that the company needed to “raise significant capital to advance our business plans.”<ref>Business Day, 2 January 2011,[http://www.stuff.co.nz/business/industries/4584569/Energy-companies-open-to-privitisation-plan "Energy companies open to privatisation plan"], accessed March 2013</ref> However, the company’s optimistic valuation of its assets was greatly at odds with those of independent assessors. <ref>Crown Ownership Monitoring Unit,[http://www.comu.govt.nz/publications/information-releases/valuation-reports/2010/ "2010 Valuation Reports"], accessed March 2013</ref> Nevertheless, a net profit of $87.2 million was declared in 2011, up from $67.8 million in 2010.<ref>Solid Energy [http://www.solidenergy.co.nz/publications-and-resources/annual-reports/solid-energy-annual-report-2011.pdf "Annual Report 2011"], pages 28-29, accessed March 2013</ref>
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| − | | |
| − | At the beginning of 2012 Solid Energy was planning a major expansion of existing mines and the development of new projects for both domestic and export markets. By mid year, however, it was evident that the company was in serious difficulties and, following a loss of $40.2 M, needed to face up to a major restructuring of its activities. <ref>Solid Energy, [http://www.coalnz.com/publications-and-resources/annual-reports/solid-energy-annual-report-2012.pdf "Annual Report 2012"], accessed March 2013</ref>
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| − | | |
| − | By early 2013 Solid Energy had shed about a quarter of its work force, mothballed Spring Creek mine and cut back production at Huntly East, and divested itself of its renewable fuels operations. In addition, most board members had been replaced by the end of 2012, followed by the resignation of CEO Don Elder in early February 2013. The company’s debt had increased to $389 million; it was in crisis talks with Treasury and the banks; and further cuts would be necessary. In October 2013 the government persuaded the banks to agree to a rescue package which averted the immediate threat of the company going into receivership. However, Solid Energy’s economic situation only got worse. Coal sales and revenue continued to decline, there were further rounds of job cuts, the value of the company’s assets were cut by hundreds of millions of dollars, and plummeting coal prices showed no signs of short term recovery.
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| − | | |
| − | ===Employee numbers===
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| − | It is impossible to be sure about the total number of job losses as a result of Solid Energy’s decline because the figures cited in the company’s annual reports only include staff – not contractors.
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| − | June 2010 = 1223<br>
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| − | June 2011 = 1426<br>
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| − | June 2012 = 1658<br>
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| − | June 2013 = 1036<br>
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| − | Dec 2013 = 858<br>
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| − | June 2014 = 862<br>
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| − | Oct 2014 = 721 (estimated following Stockton job losses announced July 2014) <br>
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| − | June 2015 = 589<ref>Solid Energy, [http://www.solidenergy.co.nz/wp-content/uploads/2015/10/solid-energy-annual-report-2015.pdf “Solid Energy Annual Report 2015], page 11, accessed July 2016</ref><br>
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| − |
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| − | A further 66 jobs were lost at Huntly in October 2015.<ref>Solid Energy, 8 October 2015, [http://www.solidenergy.co.nz/solid-energy-proposes-to-cease-production-at-uneconomic-huntly-east-mine/ “Solid Energy proposes to cease production at uneconomic Huntly East Mine”], accessed July 2016</ref>
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| − | | |
| − | During the 2015 financial year 211 employees earned more than $100,000 a year, not including those whose earnings exceeded this figure because of redundancy-related payments. <ref>Solid Energy, [http://www.solidenergy.co.nz/wp-content/uploads/2015/10/solid-energy-annual-report-2015.pdf “Solid Energy Annual Report 2015], page 48, accessed July 2016</ref>
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| − | | |
| − | ==Solid Energy Companies==
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| − | | |
| − | '''Companies'''<ref>NZ Companies Office, [http://www.business.govt.nz/companies/learn-about/searching “Search the Register”], accessed July 2013</ref><br>
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| − | Solid Energy New Zealand Limited<br>
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| − | Previous name: Coal Corporation of New Zealand Limited (13 Mar 1997) <br>
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| − | Company number: 329045<br>
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| − | Incorporation date: 24 Feb 1987<br>
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| − | Solid Energy is a limited liability company incorporated in New Zealand and owned by the Government of New Zealand. The company has a number of wholly-owned subsidiaries (see below).
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| − | | |
| − | '''Contact details:''' <br>
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| − | Brendon James GIBSON (KORDAMENTHA) was appointed as the Voluntary Administrator on 13 Aug 2015.<br>
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| − | Level 16, 45 Queen Street, Auckland Central, Auckland, 1010<br>
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| − | Ph: +64 9 3077865<br>
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| − | | |
| − | Solid Energy New Zealand Ltd<br>
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| − | PO Box 1303, Christchurch 8140<br>
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| − | 25 Sir William Pickering Drive, Burnside,
Christchurch, 8053,
New Zealand
<br>
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| − | Tel: (03) 345 6000
Fax: (03) 345 6016<br>
info@solidenergy.co.nz<br>
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| − | http://www.coalnz.com/<br>
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| − | | |
| − | {| class="wikitable" align="center" style="text-align:left"
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| − | |-
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| − | ! width="200pt"|Directors
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| − | ! width="100pt"|Appointment Date
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| − | ! width="200pt"|Background<ref>Solid Energy NZ Ltd, [http://www.solidenergy.co.nz/about/board-of-directors/ "Board of Directors"], accessed October 2014</ref>
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| − | |-
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| − | | Richard Andrew COUPE (Acting Chair) ||21 Oct 2013||Professional company director||
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| − | |-
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| − | | Keiran Anne HORNE||01 Jan 2014||Chartered accountant||
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| − | |-
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| − | | Rabin Sockalingam RABINDRAN||01 Jan 2014|| Barrister and legal consultant||
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| − | |-
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| − | | David Harold REECE||09 Jun 2014||Australian mining engineer||
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| − | |-
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| − | | Neville William SNEDDON||08 Nov 2012||Australian mining engineer||
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| − | |-
| |
| − | |}<br>
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| − | Philippa Jane Dunphy was appointed as chair in March 2014.<br>
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| − | Her term was due to expire in Oct 2015, but her resignation was announced on 24 Feb 2015.<ref>NBR, 24 February 2015, [http://www.nbr.co.nz/article/soild-energy-chair-dunphy-steps-down-andy-coupe-act-chair-bd-169160 “Solid Energy chair Dunphy steps down, Andy Coupe to act as chair”], accessed March 2015</ref>
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| − | | |
| − | {| class="wikitable" align="center" style="text-align:left"
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| − | |+ '''Shareholdings'''<ref>NZ Companies Office, [http://www.business.govt.nz/companies], accessed October 2014</ref>
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| − | |-
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| − | ! width="300pt"|Name
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| − | ! width="100pt"|% shares
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| − | |-
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| − | | Todd Michael MCCLAY, Minister for State Owned Enterprises|| 26.69||
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| − | |-
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| − | | Anthony Boyd RYALL, Minister for State Owned Enterprises||26.69||
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| − | |-
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| − | | BNZ Equity Investments No2 Limited||10.13||
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| − | |-
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| − | | TSB Bank Limited||8.55||
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| − | |-
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| − | | Westpac New Zealand Limited||7.03||
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| − | |-
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| − | | Commonwealth Bank of Australia||5.70||
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| − | |-
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| − | | ANZ Bank New Zealand Limited||5.07||
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| − | |-
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| − | | Deutsche Bank AG, London Branch||5.07||
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| − | |-
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| − | | Merrill Lynch International||5.07||
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| − | |-
| |
| − | |}<br>
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| − | The shares held by Deutsche Bank and Merrill Lynch were originally allocated to The Bank of Tokyo – Mitsubishi UFJ Ltd.
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| − | | |
| − | ===Subsidiaries<ref>Solid Energy, [http://www.solidenergy.co.nz/solid-energys-annual-report-for-the-financial-year-to-30-june-2014/ “Annual Report for financial year to 30 June 2014”], page 56, accessed March 2015</ref><ref>NZ Companies Office, [http://www.business.govt.nz/companies/ “Search the Register”], accessed March 2015</ref><br>===
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| − | | |
| − | These New Zealand incorporated companies are wholly owned by Solid Energy. Daniel David Clifford, the CE of Solid Energy, is the sole director of each of these subsidiaries. On 13 Aug 2015 they were placed in Voluntary Administration.
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| − | | |
| − | '''Pike River (2012) Limited'''<br>
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| − | Company number: 1605686<br>
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| − | Incorporation date: 28 Feb 2005<br>
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| − | | |
| − | '''Solid Energy Briquettes Limited'''<br>
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| − | Company number: 4135725<br>
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| − | Incorporation date: 28 Nov 2012
<br>
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| − | | |
| − | '''Solid Energy Land Holdings Limited'''<br>
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| − | Company number: 1915887<br>
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| − | Incorporation date: 08 Mar 2007<br>
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| − | | |
| − | '''Solid Energy Land Lease Limited (formerly Biodiesel New Zealand Limited)'''<br>
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| − | Company number:1927762<br>
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| − | Incorporation date: 26 Apr 2007<br>
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| − | | |
| − | '''Solid Energy Renewable Fuels Limited'''<br>
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| − | Company number: 1357087<br>
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| − | Incorporation date: 24 Jul 2003<br>
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| − | | |
| − | '''Spring Creek Mine Holdings Limited'''<br>
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| − | Company number: 1893621<br>
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| − | Incorporation date: 18 Dec 2006<br>
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| − | | |
| − | '''Stockton Alliance Limited'''<br>
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| − | Company number: 2287804<br>
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| − | Incorporation date: 27 Jul 2009<br>
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| − | | |
| − | Stockton Alliance was originally a joint venture between Solid Energy and Downer EDI Mining NZ Limited. Each company had 50% of the shareholding. On 13 April 2015, Downer ceased to be a shareholder, and on 31 July Daniel Clifford was appointed as the sole director.
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| − | | |
| − | ===Amalgamated Companies<ref>Companies Office, [https://www.business.govt.nz/companies/app/service/services/documents/978AB312EDBDCA0D6A42CC8F592A3737 “Certificate of Almagamation, 28 June 2016], accessed July 2016</ref>===
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| − | | |
| − | On 28 June 2016 the following companies (formerly Solid Energy subsidiaries) were amalgamated to become '''SOLID ENERGY NEW ZEALAND LIMITED (329045)''':
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| − | | |
| − | '''Coalbed Methane Limited'''<br>
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| − | Company number:1566830<br>
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| − | Incorporation date: 19 Oct 2004<br>
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| − | | |
| − | '''CoalCorp Services Limited'''<br>
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| − | Company number: 292841<br>
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| − | Incorporation date: 27 Feb 1986<br>
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| − | | |
| − | '''Coal New Zealand Limited'''<br>
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| − | Company number: 618061<br>
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| − | Incorporation date: 24 Nov 1995<br>
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| − | | |
| − | '''Coal New Zealand International Limited'''<br>
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| − | Company number: 662950<br>
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| − | Incorporation date: 24 Nov 1995<br>
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| − | | |
| − | '''Terrace Coal Mine Limited'''<br>
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| − | Company number: 153073<br>
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| − | Incorporation date: 25 Aug 1939<br>
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| − | | |
| − | '''Solid Energy New Zealand Limited'''<br>
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| − | Company number: 329045<br>
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| − | Incorporation date: 24 Feb 1987<br>
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| − | | |
| − | ===Permits and licences held by Solid Energy===
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| − | A map of all current mineral and coal prospecting, exploration and mining permits can be downloaded from: http://www.nzpam.govt.nz/cms/coal/permits/current-permits-map. To see the exact location and extent of individual permits: http://data.nzpam.govt.nz/permitwebmaps?commodity=minerals.
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| − | | |
| − | Permit types<br>
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| − | ML Mining Licence<br>
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| − | AML Ancillary Mining Licence<br>
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| − | MP Mining Permit<br>
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| − | EP Exploration Permit<br>
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| − | EPP Exploration Permit (Petroleum) <br>
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| − | | |
| − | <center>
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| − | {| class="wikitable sortable"
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| − | !'''Number'''
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| − | ! '''Permit type'''
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| − | ! '''Location'''
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| − | ! '''Area'''
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| − | ! '''Operation'''
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| − | ! '''Date granted'''
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| − | ! '''Date expires'''
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| − | |-
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| − | | ||||||(ha)||||||
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| − | |-
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| − | |37024||ML||Southland||296||Goodwin||10.01.1983||19.02.2062
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| − | |-
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| − | |37027||ML||Waikato||172||Bennydale||01.07.1983||30.06.2023
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| − | |-
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| − | |37042||ML||Southland||58||Waimumu||08.03.1985||07.03.2019
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| − | |-
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| − | | 3715501||AML||Waikato||16||Crooks Farm||01.04.1987||31.03.2027
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| − | |-
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| − | |37155||ML||Waikato||2424||Rotowaro||01.04.1987||31.03.2027
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| − | |-
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| − | | 3715301||AML||Waikato||3||Huntly West||01.04.1987||31.03.2027
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| − | |-
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| − | | 37153||ML||Waikato||2261||Huntly West||01.04.1987||31.03.2027
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| − | |-
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| − | | 3715201||AML||Waikato||10||Huntly East||01.04.1987||31.03.2027
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| − | |-
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| − | | 3715003||AML||West Coast||12||Stockton||01.04.1987||31.03.2027
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| − | |-
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| − | | 3715002||AML||West Coast||185||Stockton||01.04.1987||31.03.2027
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| − | |-
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| − | | 3715901||AML||West Coast||49||Strongman||01.04.1987||31.03.2027
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| − | |-
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| − | | 3715902||AML||West Coast||11||Strongman||01.04.1987||31.03.2027
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| − | |-
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| − | | 37160||ML||West Coast||654||Island Block||01.04.1987||31.03.2027
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| − | |-
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| − | | 37161||ML||West Coast||318||Sullivan||01.04.1987||31.03.2027
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| − | |-
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| − | | 3716101||AML||West Coast||5||Sullivan||01.04.1987||31.03.2027
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| − | |-
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| − | | 3716102||AML||West Coast||24||Sullivan||01.04.1987||31.03.2027
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| − | |-
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| − | | 3716103||AML||West Coast||19||Sullivan||01.04.1987||31.03.2027
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| − | |-
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| − | | 3716104||AML||West Coast||4||Sullivan||01.04.1987||31.03.2027
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| − | |-
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| − | | 37157||ML||Southland||965||Ohai Opencast||01.04.1987||31.03.2027
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| − | |-
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| − | | 37159||ML||West Coast||886||Strongman||01.04.1987||31.03.2027
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| − | |-
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| − | | 37150||ML||West Coast||2310||Stockton||01.04.1987||31.03.2027
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| − | |-
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| − | | 37152||ML||Waikato||884||Huntly East||01.04.1987||31.03.2027
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| − | |-
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| − | | 41126||MP||West Coast||117||Reddale Valley||01.04.1987||19.09.2033
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| − | |-
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| − | | 41225||MP||West Coast||2065||Mt Davy||01.04.1987||12.07.2014
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| − | |-
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| − | | 41515+||MP||West Coast||2933||Cypress ||12.03.1998||11.03.2038
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| − | |-
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| − | | 41545||MP||West Coast||47||Burkes Creek||22.02.1999||21.02.2019
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| − | |-
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| − | |40698||EP||Waikato||587||Ruawaro||09.11.2004||08.11.2014
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| − | |-
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| − | | 50797||EP||West Coast||104||Welcome Opencast Mine||03.11.2008||02.11.2017
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| − | |-
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| − | | 52937||EP||West Coast||94||–||05.11.2010||04.11.2030
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| − | |-
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| − | | 52746||EP||West Coast||356||Waitahu||17.11.2010||16.11.2015
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| − | |-
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| − | |53250**||EP||Waikato||160||Maramarua||15.06.2012||14.06.2017
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| − | |-
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| − | | 54568||MP||Waikato||6||Kimihia||21.11.2012||20.11.2017
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| − | |-
| |
| − | |}
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| − | </center>
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| − | | |
| − | '''Expired or surrendered permits'''<br>
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| − | Southland: 40715 (Croydon), 40383, 54004,53258(Mataura),40782 (South Mataura)<br>
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| − | Taranaki: 40752<br>
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| − | Tasman: 53457 (Glenroy)<br>
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| − | Waikato: 40558 (Huntly North), 51428 (Huntly West), 40632 (Ohinawai)<br>
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| − | West Coast: 41723 (Charleston),40599 (Terrace)<br>
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| − | | |
| − | ==Coal Mining==
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| − | ===Production levels and sales<ref>Solid Energy, [http://www.solidenergy.co.nz/about/publications-resources/publications/ “2014 Annual Report”], accessed October 2014</ref>===
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| − | | |
| − | '''Financial year & production'''<br>
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| − | 2009–2010 3.8 Mt<br>
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| − | 2010–2011 4.0 Mt<br>
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| − | 2011–2012 4.1 Mt<br>
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| − | 2012–2013 3.9 Mt<br>
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| − | 2013–2014 3.3 Mt<br>
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| − | 2014-2015 2.8 Mt<br>
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| − | | |
| − | '''Export price for coking coal per tonne (USD)'''<br>
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| − | July 2014 $120<ref>Solid Energy, [http://www.solidenergy.co.nz/wp-content/uploads/2015/10/solid-energy-annual-report-2015.pdf “Solid Energy Annual Report 2015], page 4, accessed July 2016</ref><br>'''
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| − | July 2015 $93<ref>Solid Energy, [http://www.solidenergy.co.nz/wp-content/uploads/2015/10/solid-energy-annual-report-2015.pdf “Solid Energy Annual Report 2015], page 4, accessed July 2016</ref><br>
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| − | | |
| − | '''Export sales by coal type (2014) <ref>Solid Energy, [http://www.solidenergy.co.nz/solid-energys-annual-report-for-the-financial-year-to-30-june-2014/ “Annual Report for financial year to 30 June 2014”], page 5, accessed March 2015</ref><br>'''
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| − | 63% coking<br>
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| − | 31% semi soft<br>
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| − | 3% thermal<br>
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| − | 3% specialist<br>
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| − | | |
| − | '''Export sales by market (2014)<br>'''
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| − | 58% India<br>
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| − | 24% Japan<br>
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| − | 12% China<br>
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| − | 6% South Africa<br>
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| − | | |
| − | '''Domestic sales by sector (2014)''' <br>
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| − | 35% Electricity<br>
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| − | 29% Steel<br>
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| − | 19% Dairy<br>
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| − | 8% Meat<br>
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| − | 6% Other<br>
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| − | 3% Industrial<br>
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| − | | |
| − | Sales by coal type, export market and sector for 2014–2015 are shown in infographics on p8 of the 2015 Annual Report.
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| − | | |
| − | ===Operating mines===
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| − | | |
| − | '''West Coast'''<br>
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| − | '''[[Stockton mine]]''', a sprawling opencast bituminous coal mine located on a plateau approximately 25 km north east of Westport on the West Coast of the South Island. Coal is sourced from a number of pits on the high altitude plateau and at present production capacity is approx 2 Mt per year. The coal is exported to steel mills in India, China, Japan, South Africa and Brazil and is also used for making activated carbon.<ref>Solid Energy, [http://www.coalnz.com/publications-and-resources/annual-reports/solid-energy-annual-report-2012.pdf "Annual Report 2012"], accessed March 2013</ref> Production decreased between 2006–2010 but by 2012 the mine was once more performing strongly. In Dec 2011 total production had reached 50 Mt and mine extensions were being planned especially at Cypress and Mount William North. During 2012, a disastrous year for Solid Energy, the company’s strategic and structural change proposals included, “Optimising production and minimizing costs at Stockton Mine to generate additional cash.” <ref> Crown Ownership Monitoring Unit, [http://www.comu.govt.nz/publications/information-releases/valuation-reports/2010/ “2010 Valuation Reports"], accessed March 2013</ref>
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| − | | |
| − | Production in 2012 was 1.87 Mt, and in 2013 it was 1.86 Mt. For the financial year ending 30 June 2014 production was 1.82 Mt.<ref>Solid Energy, [http://www.solidenergy.co.nz/solid-energys-annual-report-for-the-financial-year-to-30-june-2014/ “Annual Report for financial year to 30 June 2014”], page 8, accessed March 2015</ref> During this period, hundreds of jobs were lost, together with a reduction in pay and conditions for the remaining workers (see “Solid Energy’s road to disaster” below). Production (including Cypress) was 1,112,569 tonnes in 2015.<ref>NZ Petroleum & Minerals, [http://www.nzpam.govt.nz/cms/investors/our-resource-potential/minerals/coal/operating-coal-mines “Operating coal mine production figures”], accessed July 2016</ref>
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| − | | |
| − | '''[[Cypress mine]]''' (also known as Cypress extension) on the Stockton plateau. Solid Energy holds an opencast permit for almost 3000 ha in Happy Valley and has faced persistent opposition to its plans to extend the Stockton mine into this area. The company was granted resource consents in 2005 but failed to achieve its target of substantially completing development work by 2012<ref>Solid Energy, [http://www.coalnz.com/publications-and-resources/annual-reports/solid-energy-annual-report-2012.pdf "Annual Report 2012"], accessed March 2013</ref> In June 2013 the Biodiversity Defence Society filed declaration proceedings with the Environment Court, arguing that resource consents for the mine had expired because mining hadn’t yet begun.<ref> Scoop Independent News, [http://www.scoop.co.nz/stories/AK1306/S00204/mining-consent-expired-for-happy-valley.htm “Mining consent expired for Happy Valley”], 12 June 2013</ref> This case was rejected by the Environment Court whose decision was then upheld by the High Court which decided that the consent had been “given effect to” even though mining had not yet commenced.<ref>Resource Management Journal, April 2014, [http://www.rmla.org.nz/upload/files/journals/rmj_april_2014.pdf ], accessed October 2014</ref>
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| − | Since then, mining has commenced at the Cypress Pit (Happy Valley), which produced its first coal in October 2013. Solid Energy expected the pit to produce about 150,000 tonnes in the current financial year, ramping up to 450,000 tonnes from the 2015 financial year. <ref>Solid Energy, [http://www.solidenergy.co.nz/about/publications-resources/publications/ “2014 Annual Report”], accessed October 2014</ref> Solid Energy’s 2014 Annual Report doesn’t provide separate production figures for Cypress, which presumably are included in those for Stockton.
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| − | '''[[Reddale mine]]''', located northeast of Reefton on the West Coast. It opened in 2012 and was scheduled to produce approximately 140,000 tonnes of thermal coal over two to three years for Solid Energy’s industrial customers on the West Coast and upper South Island.<ref>Solid Energy, [http://www.solidenergy.co.nz/about/media-releases/2012/Solid-Energys-Reddale-mine-delivers-first-coal.html "Solid Energy's Reddale mine delivers first coal"], Media Release, March 12, 2012</ref> and then in 2015 it was down to 26,628 tonnes.<ref>NZ Petroleum & Minerals, [http://www.nzpam.govt.nz/cms/investors/our-resource-potential/minerals/coal/operating-coal-mines “Operating coal mine production figures”], accessed July 2016</ref> In 2016 Solid Energy was forced to withdraw mining operations from the bottom of the Reddale pit because of slumping. In order to maintain employment and coal supplies, the company applied to establish a 1 ha pit to mine 10,000–15,000 tonnes of coal in the Peerless Valley just east of the Reddale min, 2 km northeast of Reefton.<ref>NZ Herald,3 June 2016, http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11649628 "Reefton mine may save West Coast jobs"], accessed July 2016</ref>
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| − | Production for 2014 was 46,000 tonnes<ref>Solid Energy, [http://www.solidenergy.co.nz/solid-energys-annual-report-for-the-financial-year-to-30-june-2014/ “Annual Report for financial year to 30 June 2014”], pages 4 & 8, accessed March 2015</ref>
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| − | '''[[Strongman Opencast Mine]]''' is inland from Rapahoe on the West Coast. It was originally an underground mine (operating since the late 1930s) but since the early 2000s has gradually transitioned to opencast mining. Geotech Ltd were contracted to provide mining services between 2010–2015. During this time they produced more than 250,000 tonne of hard coking coal, but the main focus was on post-mining remediation, especially the containment and stopping of historic underground fires. <ref>NZ Petroleum & Minerals, [http://www.nzpam.govt.nz/cms/investors/our-resource-potential/minerals/coal/operating-coal-mines “Operating coal mine production figures”], accessed July 2016</ref> In 2012 Solid Energy described mining as being almost complete, by 2015 production was down to 58,710 tonnes and is now (2016) described as being ‘suspended’. <ref>NZ Petroleum & Minerals, [http://www.nzpam.govt.nz/cms/investors/our-resource-potential/minerals/coal/operating-coal-mines “Operating coal mine production figures”], accessed July 2016</ref>
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| − | '''Southland'''<br>
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| − | '''[[New Vale mine]]''', an opencast lignite mine located near Waimumu in Eastern Southland. The mine produces lignite, mainly for Fonterrra’s Edendale milk processing plant, but also for meat processing.<ref>Royal Commission,[http://pikeriver.royalcommission.govt.nz/vwluResources/Chronology-1-NZ-Mining-and-Coal-Production-Profile/$file/Chronology-1-NZ-Mining-and-Coal-Production-Profile.pdf "Chronology One - New Zealand Mining and Coal Production Profile"], accessed March 2013</ref> Solid Energy bought up large amounts of farmland in the area, intending to massively extend lignite mining in order to provide feedstock for a planned briquetting plant, a lignite to urea project, and a lignite to diesel project.<ref>Solid Energy [http://www.solidenergy.co.nz/publications-and-resources/annual-reports/solid-energy-annual-report-2011.pdf "Annual Report 2011"], pages 24, accessed March 2013</ref> Apart from the construction of a failed pilot briquetting plant, later sold at a loss, none of these projects bore fruit. The farmland has been either sold or leased.
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| − | Production was 318,000 tonnes in 2012, 304,000 tonnes in 2013 and 291,000 tonnes in 2014.<ref>Solid Energy, [http://www.solidenergy.co.nz/solid-energys-annual-report-for-the-financial-year-to-30-june-2014/ “Annual Report for financial year to 30 June 2014”], page 8, accessed March 2015</ref>
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| − | In 2015, 323,561 tonnes of coal were mined. <ref>NZ Petroleum & Minerals, [http://www.nzpam.govt.nz/cms/investors/our-resource-potential/minerals/coal/operating-coal-mines “Operating coal mine production figures”], accessed July 2016</ref>
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| − | '''[[Ohai (Wairaki) mine]]''', an opencast sub-bituminous mine located near Ohai. The coal is used in local homes and industries. The mine was closed in June 2009 and a three year rehabilitation project commenced. However, an additional 50,000 tonnes of coal of saleable coal was discovered and mining resumed.<ref>Solid Energy, [http://www.solidenergy.co.nz/publications-and-resources/annual-reports/solid-energy-annual-report-2012.pdf “Annual Report 2012”], accessed March 2013</ref> Since then, a new opencast block has been opened up.<ref>Solid Energy, [http://www.solidenergy.co.nz/about/publications-resources/publications/ “2014 Annual Report”], accessed October 2014</ref> Solid Energy’s annual reports do not provide information for production in 2013 and 2014.
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| − | In 2015, 27,804 tonnes of coal were mined. <ref>NZ Petroleum & Minerals, [http://www.nzpam.govt.nz/cms/investors/our-resource-potential/minerals/coal/operating-coal-mines “Operating coal mine production figures”], accessed July 2016</ref>
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| − | '''North Island domestic operations'''<br>
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| − | '''[[Rotowaro Opencast Mine]]''', an opencast sub-bituminous coal mine located approximately 10 km west of the township of Huntly and 100 km south of Auckland. The mine has a production capacity of 1.5–1.9 million tonnes per annum of which approximately three-quarters is supplied to the Huntly Power Station with the remainder to New Zealand Steel's nearby Glenbrook steel mill. In 2011 Solid Energy stated that it expected to continue mining at Rotowaro until 2017.<ref>Scoop, 31 May 2011, [http://www.scoop.co.nz/stories/BU1105/S01066/preferred-contractor-selected-for-rotowaro-opencast-mine.htm “Preferred contractor selected for Rotowaro opencast mine”], accessed July 2013</ref>
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| − | Production has decreased steadily since 2010. 0.95 Mt were mined in 2014 compared to 1.14 Mt in 2013. <ref>Solid Energy, [http://www.solidenergy.co.nz/solid-energys-annual-report-for-the-financial-year-to-30-june-2014/ “Annual Report for financial year to 30 June 2014”], page 8, accessed March 2015</ref>
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| − | In 2015, production decreased further to 861,085 tonnes. <ref>NZ Petroleum & Minerals, [http://www.nzpam.govt.nz/cms/investors/our-resource-potential/minerals/coal/operating-coal-mines “Operating coal mine production figures”], accessed July 2016</ref>
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| − | '''Kopuku (aka Kopako) mine''' at Maramarua in the North Island. Solid Energy stated in 2011 that it had completed a feasibility study on an opencast mine and begun a small mining operation to qualify this coal for New Zealand Steel.<ref>Solid Energy [http://www.solidenergy.co.nz/publications-and-resources/annual-reports/solid-energy-annual-report-2011.pdf "Annual Report 2011"], page 28, accessed March 2013</ref> (Kopako 1 is an abandoned opencast mine about 40 km north of Huntly.) In Feb 2015 it was claimed that Solid Energy had just reopened Kopako 1, an old mine that was part of the same Maramarua coal field as the proposed site for Glencoal's mine, which had met strong local opposition. An SE spokesman said that work was being done on whether the Maramarua field should be re-opened but that no decision had been made.<ref>NBR, 27 February 2015, [http://www.nbr.co.nz/article/fonterras-glencoal-says-waikato-coal-mine-not-hold-just-delayed-bd-169408 “Fonterra’s Glencoal says Waikato coal mine not on hold, just delayed”], accessed March 2015</ref>
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| − | By September 2015, however, it was acknowledged that stripping had begun in June, and that current plans for resumption of mining were for it to contribute about 15,000 tonnes of coal a month over about five years to the company’s North Island production. Much of the equipment had been sourced from other Solid Energy sites around the country.<ref>Solid Energy, [http://www.solidenergy.co.nz/wp-content/uploads/2015/10/solid-energy-annual-report-2015.pdf "Annual Report 2015"], pages 8-9, accessed July 2016</ref> The mine reopened in 2016. <ref>NZ Petroleum & Minerals, [http://www.nzpam.govt.nz/cms/investors/our-resource-potential/minerals/coal/operating-coal-mines “Operating coal mine production figures”], accessed July 2016</ref>
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| − | ===Non-operational mines===
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| − | '''Huntly East mine''' is located just north of Huntly township. Production of sub-bituminous coal from the underground mine began in 1978. Most of the coal was supplied to the Glenbrook steel mill and to Huntly Power Station. In 2011 Solid Energy began the construction of a $30 million, 270 m deep ventilation shaft to allow the northern expansion of the mine to the west of the Waikato River, which was intended to extend the mine’s life by 15 years.[37] In 2012, annual production was 450,000 tonnes, but then Genesis began importing cheaper coal from Indonesia.<ref>Solid Energy, [http://coalnzcom.digiwebhosting.com/wp-content/uploads/2014/05/huntly-east-underground-mine.pdf “Huntly East underground Mine, May 2012”], accessed October 2015</ref>
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| − | In Aug 2012 Solid Energy announced that it would stop further capital investment and cut back production. About 60 contractors and 63 miners lost their jobs.[38] Production was scaled back to 327,000 tonnes in 2013 and then 100,000 tonnes in 2014.<ref>Solid Energy, [http://www.solidenergy.co.nz/wp-content/uploads/2014/10/solid-energy-annual-report-2014.pdf “Solid Energy Annual Report 2014”], accessed October 2015</ref>
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| − | In August 2015 Genesis cancelled its remaining contract with Solid Energy and announced that Huntly, the last coal-fired power station in New Zealand would be closed in 2016.<ref>World Socialist Website, 3 October 2015, [https://www.wsws.org/en/articles/2015/10/03/coal-o03.html “New Zealand: Solid Energy privatisation threatens hundreds of jobs”], accessed October 2015</ref> Also in August, New Zealand Steel stated that it might need to close its entire factory in Glenbrook if costs couldn’t be drastically reduced, resulting in a renegotiation of the contract and a further reduction in income. <ref>World Socialist Website, 3 October 2015, [https://www.wsws.org/en/articles/2015/10/03/coal-o03.html “New Zealand: Solid Energy privatisation threatens hundreds of jobs”], accessed October 2015</ref>
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| − | In October 2015 it was announced that the mine was continuing to incur heavy losses and was unsalable. (Only 65,943 tonnes of coal were mined during 2015. <ref>NZ Petroleum & Minerals, [http://www.nzpam.govt.nz/cms/investors/our-resource-potential/minerals/coal/operating-coal-mines “Operating coal mine production figures”], accessed July 2016</ref> Production would be halted, almost all employees would lose their jobs, the mine workings flooded and the entries permanently sealed. This would bring to an end almost 140 years of underground mining in the Huntly district.<ref>Solid Energy, 8 October 2015, [http://www.solidenergy.co.nz/solid-energy-proposes-to-cease-production-at-uneconomic-huntly-east-mine/ “Solid Energy proposes to cease production at uneconomic Huntly East mine”], accessed October 2015</ref>
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| − | '''Island Block''', an opencast bituminous mine near Reefton on the West Coast. The mine was mothballed in 2002.<ref>West Coast Regional Council, [http://www.wcrc.govt.nz/mtwilliam/hearing/applicant/Mark%20Pizey%20-%20Solid%20Energy%20and%20Overview%20of%20Stockton%20Operations.pdf “Mt William hearing, Mark Pizey Statement of Evidence”], accessed July 2012</ref>
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| − | '''[[Pike River Mine]]''' is an underground coal mine, originally operated by Pike River Coal, situated northeast of Greymouth on the West Coast. Setbacks delayed the start of coal production and it was only just reaching significant levels when a series of explosions killed 29 miners and left the mine unworkable. Solid Energy bought the Pike River Coal assets from the receivers in July 2012 at a cost of $7.5 M. It applied to change the mining permit in order to investigate ways of making money from Pike River, including the possibility of opencast mining. (The mine is on Conservation land and partly within Paparoa National Park.) The company informed families of the 29 men killed at Pike River that recovery of the bodies would only proceed as part of developing a commercially viable coal mine at the site, but that it would be some years before the company would be able to say if mining would go ahead.<ref>Stuff Business Day, 28 Feb 2013, [http://www.stuff.co.nz/business/industries/8365640/Pike-River-opencast-mining-considered “Pike River opencast mining considered”], accessed July 2013</ref>
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| − | A seven-stage re-entry plan got underway in October 2013. The ventilation shaft was blocked off, new boreholes drilled and the area explored with a camera. During 2014 Solid Energy faced increasing criticism about delays. Grey District Mayor Tony Kokshoom called on Solid Energy to proceed with entering the mine’s drift (entrance tunnel). He claimed that the risk of entering the 2.3 km stretch leading up to the major rockfall was minimal and that the 400 m stretch which had not been searched by cameras should be checked even though it was highly likely that all the bodies would be beyond the drift.<ref>Stuff Business Day, 22 August 2014, [http://www.stuff.co.nz/business/industries/10412473/Pike-River-mine-re-entry-risk-minimal “Pike River mine re-entry risk minimal”], accessed October 2014</ref>
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| − | Solid Energy CE Dan Clifford stated that safety concerns, such as the lack of a second escapeway, had resulted in delays in entering the mine. Other factors included the presence of dangerously stressed rock (there was evidence of recent rockfall in the main drift) and the production of methane by the gassy mine. Many things could go wrong, just as they had done in the past, and it was important to look at all the potential complications.<ref>Solid Energy, 25 September 2014, [http://www.solidenergy.co.nz/pike-river-drift-re-entry-project-reviewing-the-potentially-fatal-risks/ “Pike River drift re-entry project – reviewing the potentially fatal risks”], accessed October 2014</ref>
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| − | Speaking in Westport on workplace safety (29 Sep 2014), Pike River Mine Royal Commissioner Stewart Bell said that the Paparoa Ranges were a difficult mining environment and that, "Pike [then owned by Pike River Coal] needed the best of everything. It needed the best management, the best equipment, the best knowledge, the best data. It had none of that. Arguably it had the worst of everything."<ref>NZ Herald, 30 September 2014, [http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11334252 “Pike River had ‘worst of everything’”], accessed October 2014</ref>
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| − | In Nov 2014 Solid Energy made a definitive announcement that it would not be re-entering the Pike River mine drift because the risks were considered to be too high, and that it would be surrendering the Pike River mining permit.<ref>Solid Energy, 6 November 2014, [http://www.solidenergy.co.nz/risks-to-life-too-high-for-solid-energy-to-re-enter-pike-river-drift/ “Risks to life too high for Solid Energy to re-enter Pike River drift”], accessed March 2015</ref> During a visit to the Atarau memorial site in Jan 2015 Environment Minister Nick Smith expressed support for the plan to add the mine site and surrounding area to the Paparoa National Park. The Government had ordered a feasibility study into developing a new ‘great walk’ from the mining site and over the Paparoa Range.<ref>NZ Herald, 29 January 2015, [http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11393602 “Calls for Pike River mine to become national park”], accessed March 2015</ref>
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| − | Infrastructure at the mine site, which had cost $290 million to develop, was dismantled by the end of 2015.<ref>Otago Daily Times, 9 November 2015, [http://www.odt.co.nz/news/national/362500/pike-river-mine-site-dismantled “Pike River mine site dismantled”], accessed July 2016</ref>
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| − | '''[[Spring Creek Underground Mine]]''' is an underground bituminous coal mine near Dunollie, north of Greymouth on the West Coast of the South Island.<ref> Solid Energy, [http://www.solidenergy.co.nz/coal/operations/spring-creek-underground-mine.html "Spring Creek mine"], accessed March 2012</ref> The mine was operated through a joint venture with Cargill between 2007–2011 but then Solid Energy resumed full ownership.<ref>Solid Energy, [http://www.solidenergy.co.nz/about/media-releases/2012/Solid-Energy-resumes-full-ownership-of-Spring-Creek-Underground-Mine.html “Solid Energy resumes full ownership of Spring Creek underground mine”], Media Release, 2 Feb 2012</ref> In 2011 $19M of capital expenditure was put into mine development and the company’s annual report stated that it was planning for a future extension west into the Rapahoe East mining area.<ref>Solid Energy [http://www.solidenergy.co.nz/publications-and-resources/annual-reports/solid-energy-annual-report-2011.pdf “Annual Report 2011”], page 25, accessed March 2013</ref> The mine became operational for a few months but in Oct 2012 it was announced that Spring Creek was uneconomic and would be placed into a care and maintenance state, resulting in about 220 staff redundancies.<ref>Solid Energy, Media Release 25 Oct 2012, [http://www.coalnz.com/about/continuous-disclosure/2012/Solid-Energy-confirms-it-will-put-Spring-Creek-Mine-into-care-and-maintenance.html "Solid Energy confirms it will put Spring Creek Mine into care and maintenance"], accessed February 2013</ref> During the 2013 and 2014 financial years Spring Creek Mining Company had impairments of $105.4 M<ref>Solid Energy, [http://www.solidenergy.co.nz/solid-energys-annual-report-for-the-financial-year-to-30-june-2014/ “Annual Report for financial year to 30 June 2014”], page 32, accessed March 2015</ref>
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| − | A Solid Energy briefing note (08 Oct 2012) commented on the future prospects of the mine, stating that bringing it out of care and maintenance would require a credible mine plan (noting that the mine never hit its past plans) and a significant uplift in international coal prices. Other West Coast “resource opportunities” would be prioritised but would need to meet the same criteria. The resources in question were Island block near Reefton, Buller resources at and near Stockton, Liverpool/Rajah resource near Greymouth, and Pike River.<ref>The Treasury, [http://www.treasury.govt.nz/publications/informationreleases/solidenergy/pdfs/se-2462735.pdf “Solid Energy Information Release, May 2013”], accessed July 2013</ref>
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| − | ===Proposed mines===
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| − | Despite its financial woes, Solid Energy has continued to pursue new coal mining developments. These include:
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| − | '''[[Burkes Creek mine]]''', a thermal coal prospect with inferred coal resources of 18 Mt adjacent to the recently opened Reddale opencast mine, which is northeast of Reefton on the West Coast.<ref>Solid Energy, [http://www.solidenergy.co.nz/publications-and-resources/annual-reports/solid-energy-annual-report-2012.pdf “Annual Report 2012”], accessed March 2013</ref>
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| − | '''Kopako/Kopuku coal project(Maramarua)''' The Kopuku mine was re-opened in 2016. (See entry in Operating mines above.)
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| − | '''[[Liverpool mine]]''' inland from the township of Runanga, near Greymouth, in the South Island. <ref>Solid Energy [http://www.solidenergy.co.nz/publications-and-resources/annual-reports/solid-energy-annual-report-2011.pdf “Annual Report 2011”], page 25, accessed March 2013</ref> <ref>Business Day, 8 Nov 2011, [http://www.stuff.co.nz/business/industries/5923403/Solid-Energy-seeks-Liverpool-consents “Solid Energy seeks Liverpool consents”],accessed March 2013</ref> In its 2011 annual report Solid Energy stated that it was aiming to complete a feasibility study for the project, both opencast and underground, planned to produce up to 500,000 tonnes a year of export-grade hard coking coal.<ref>Solid Energy [http://www.solidenergy.co.nz/publications-and-resources/annual-reports/solid-energy-annual-report-2011.pdf “Annual Report 2011”], page 25, accessed March 2013</ref> Resource consents for preliminary exploration were granted, and resource drilling completed in July 2012. <ref>Solid Energy, [http://www.coalnz.com/publications-and-resources/quarterly-reports/solid-energy-quarterly-report-to-30-september-2012.pdf “Quarterly Report to 30 September 2012”], accessed July 2013</ref>
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| − | '''Mt Davy''' An underground mine was developed by Solid Energy at Mt Davy on the West Coast in 1997 but was closed in 1998 as it proved too hazardous to mine.<ref>Solid Energy, [http://www.solidenergy.co.nz/about/our-industry/coal-regions/greymouth/ “Industry History: Greymouth”], accessed July 2016</ref>
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| − | Solid Energy’s 2015 Annual Report stated that the company was looking at the development of coal mining in the Mt Davy hard coking coal mining permit (which it still holds) in cooperation with a third party.<ref>Solid Energy, [http://www.solidenergy.co.nz/wp-content/uploads/2015/10/solid-energy-annual-report-2015.pdf “Solid Energy Annual Report 2015], page 9, accessed July 2016</ref>
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| − | '''[[Mount William North mining Project]]''' on the Stockton Plateau. Solid Energy applied for 12 resource consents in order to mine approximately 5 million tones of export coal in a new 243 ha opencast mine, following the development of the Cypress block. The project has been opposed by environmental groups such as the West Coast Environment Network.<ref> West Coast Regional Council, [http://www.wcrc.govt.nz/mtwilliam/moreinfo/Climate%20Change%20Declaration.pdf “Climate Change Declaration’], accessed July 2013</ref>
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| − | Following the May 2012 hearing in Westport, however, environmentalists announced that Mount William now stood, “in line as the next mountaintop removal on the Stockton plateau.”<ref> Coal Action Network Aotearoa, 11 March 2013, [http://coalactionnetworkaotearoa.wordpress.com/category/west-coast-environment-network/ “Getting used to the ‘new normal’”], accessed July 2013</ref><ref>West Coast Regional Council, [http://www.wcrc.govt.nz/mtwilliam/hearing.html “Mt William North Mining Project – Hearing information”], accessed July 2013</ref>
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| − | '''[[Sullivan Mine]]''', an underground mine prospect on the Denniston Plateau of about 400 ha for which Solid Energy holds mining licences. A 40-hole drilling programme was planned for 2012.<ref>Solid Energy [http://www.solidenergy.co.nz/publications-and-resources/annual-reports/solid-energy-annual-report-2011.pdf “Annual Report 2011”], pages 28-29, accessed March 2013</ref> The Denniston resource is estimated by Solid Energy to contain 6.5 Mt of indicated hard coking coal resource suitable for opencast mining.<ref>Solid Energy, [http://www.coalnz.com/publications-and-resources/quarterly-reports/solid-energy-quarterly-report-to-30-september-2012.pdf “Quarterly Report to 30 September 2012”], accessed July 2013</ref>
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| − | '''Upper Waimangaroa''' In 2015, studies were being carried out into options for these resource blocks in Buller. <ref>Solid Energy, [http://www.solidenergy.co.nz/wp-content/uploads/2015/10/solid-energy-annual-report-2015.pdf “Solid Energy Annual Report 2015], page 9, accessed July 2016</ref>
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| − | ==Failed Development Projects==
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| − | ==Lignite conversion==
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| − | ===Mataura Lignite Briquetting Plant===
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| − | In 2007 Solid energy began research into lignite upgrading (briquetting). More than $30 M was spent on the pilot Mataura Lignite Briquetting Plant in Southland. The plant, designed by Australian company GTL Energy, removes water from lignite obtained from the nearby New Vale opencast mine and turns the product into small pellets, which are easier to transport and to burn.<ref>Solid Energy [http://www.solidenergy.co.nz/publications-and-resources/annual-reports/solid-energy-annual-report-2011.pdf “Annual Report 2011”], page 29, accessed March 2013</ref> The project has been strongly opposed by environmental groups because of both the increased CO<nowiki>2</nowiki> emissions it would cause and the destruction of fertile farmland that would result from expanded mining.
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| − | After a string of delays, the plant was still not operating successfully by July 2013. Solid Energy aimed to produce 90,000 tonnes of briquettes per year from approximately 150,000 tonnes of lignite. Energy for the plant would be supplied by a lignite-fired boiler using 15,000 tonnes of lignite and generating up to 600 tonnes of coal ash per year. The initial briquette production would be aimed at supplying New Zealand domestic and industrial customers, but the company believed that potential existed for an export-scale plant.<ref>Solid Energy [http://www.solidenergy.co.nz/publications-and-resources/annual-reports/solid-energy-annual-report-2011.pdf “Annual Report 2011”], page 29, accessed March 2013</ref> By September 2012, however, it appeared increasingly unlikely that this much larger plant would ever get built.
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| − | Efforts continued to get the pilot plant up and running, in the face of continuing uncertainty about Solid Energy’s future, but then in April 2013 the company terminated the agreement with GTL Energy. In June, Solid Energy made a payment of $500,000 to GTL Energy, which at the end of the month posted a loss of $761,289.<ref>NBR, 12 March 2014,[http://www.nbr.co.nz/article/gtl-energy’s-nz-unit-option-solid-energy’s-idled-briquette-plant-posts-wider-loss-bd-153116 "GTL Energy’s NZ unit, with option on Solid Energy’s idled briquette plant, posts wider loss"], accessed Otober 2014</ref>
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| − | In the same month it was revealed that Solid Energy had spent a total of $35 M on the briquetting plant. This did not include expenditure on the lignite projects of $85.4 M for land acquisition, approx $12 M on exploration drilling and prospecting; and $21.1 M on project feasibility studies.
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| − | On 20 June acting CE Garry Diack announced that Solid Energy and GTL Energy would continue with the operations of the plant, but Solid Energy did not see itself as a long-term owner. The companies were assessing commercial arrangements and the plant [not yet in operation] would run for an extended period to showcase it to potential buyers.<ref>Business Day, 20 June 2013, [http://www.stuff.co.nz/business/industries/8820389/Mataura-briquette-plant-to-continue-operations “Mataura briquette plant to continue operations”], accessed July 2013</ref><ref>Southland Times, 21 June 2013, [http://www.stuff.co.nz/southland-times/business/8822601/Mataura-briquetting-plant-on-market “Mataura briquetting plant on market”], accessed July 2013</ref> A few months later, however, the plant was put into care and maintenance. Coal Action Network Aotearoa spokeswoman Rosemary pointed out that from ''promises'' of 85 jobs at the plant when construction began in September 2011, there was now one full-time staff member, employed to oversee its mothballing.<ref>Otago Daily Times, 17 October 2013, [http://www.odt.co.nz/your-town/mataura/277334/coal-saga-nears-end “Coal saga nears end”], accessed October 2014</ref>
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| − | Opponents of the plant were relieved to hear that a huge expansion of lignite mining was no longer under consideration, but were concerned that the farms acquired by Solid Energy would be offered for sale as a block and acquired by an overseas investor.<ref>Radio New Zealand, 17 June 2013, [http://www.radionz.co.nz/news/business/137823/solid-energy-looking-to-sell-southland-land “Solid Energy looking to sell Southland land”], accessed July 2013</ref> In June 2014 Solid Energy announced that it had sold approximately 2000 ha of surplus rural land in Eastern Southland and that all but one of the successful tenderers were New Zealand entities, including a number of local farming enterprises.<ref>Solid Energy, 8 May 2014, [http://www.solidenergy.co.nz/solid-energy-sells-surplus-southland-farmland/ “Solid Energy sells surplus Southland farmland”], accessed October 2014</ref>
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| − | In July 2014 it was announced that the briquette plant had been sold to GTL Energy. The sale price was not divulged but it was later revealed that it would realise an impairment reversal of just $0.4 M. (The plant had been impaired by $26.2 M the previous year.) <ref>Solid Energy, [http://www.solidenergy.co.nz/solid-energys-annual-report-for-the-financial-year-to-30-june-2014/ “Annual Report for financial year to 30 June 2014”], page 31, accessed March 2015</ref> GTL Energy planned to keep the plant in standby mode while future options were reviewed such as developing markets in the Asian region. Mataura Community Board chairman Alan Taylor and Clutha-Southland National Party candidate [now MP] Todd Barclay believed that the sale of the plant would be positive for Mataura.<ref>Otago Daily Times, 18 July 2014, [http://www.odt.co.nz/regions/southland/309725/solid-energy-sells-plant “Solid Energy sells plant”], accessed October 2014</ref>
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| − | ===Coal to urea plans for Southland===
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| − | In September 2009 Solid Energy and the agricultural fertiliser supplier, Ravensdown Fertiliser Cooperative, agreed to investigate the construction of a coal-to-fertiliser plant in Southland. In 2010 Solid Energy stated that initial investigations had been focused on a plant producing 1.2 million tonnes of urea – 500,000 tonnes for New Zealand markets and the remainder for export – and it was hoped that the plant would be in operation from 2016/7.<ref>Solid Energy, [http://www.coalnz.com/publications-and-resources/fact-sheets/southland-lignites.pdf "Southland Lignites"], November 2010</ref> In 2011 the company stated that the concept study had been completed. The June 2012 quarterly report stated that the company had “started the feasibility study to refine and confirm the economic and environmental viability and social acceptability of a Southland-based coal to urea development.”<ref>Solid Energy, [http://www.coalnz.com/publications-and-resources/quarterly-reports/solid-energy-quarterly-report-to-30-june-2012.pdf "Quarterly report to 30 June 2012"], accessed July 2013</ref> In August 2012, however, the Gore District Council was informed that Ravensdown did not have a formal relationship with Solid Energy and would not be involved in further feasibility work with the company. The future of the project looked increasingly shaky and by May 2013 it was clear that it would not go ahead.
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| − | ===Coal to liquid fuel plans===
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| − | In 2006 Solid Energy began investigating the development of a liquid fuels plant based on the Mataura and Croydon coalfields in eastern Southland, which it claimed contains sufficient "lignite resources to support a world-scale liquid fuels plant for more than 40 years". In March 2007 the company commenced a $4 M drilling programme designed to further define the quantity and quality of the lignite resources, and to gather baseline data for mine design and environmental effects assessment purposes.<ref>Solid Energy, [http://www.solidenergy.co.nz/publications-and-resources/annual-reports/solid-energy-annual-report-2007.pdf "Annual Report 2007"], page 14</ref>
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| − | In its 2011 annual report, Solid Energy was subdued in its reporting on plans to convert lignite to diesel for the New Zealand market. It noted that "in the year, we assessed a new transport fuels technology under development by Australian company Ignite Energy Resources Pty Ltd, but did not consider that the very early development status of this technology justified proceeding to a full licence agreement at this time."<ref>Solid Energy, [http://www.solidenergy.co.nz/publications-and-resources/annual-reports/solid-energy-annual-report-2011.pdf "Annual Report 2011"], page 29, accessed March 2013</ref> The “New Developments” sections in the March and April 2012 quarterly reports made no reference to plans for converting lignite to diesel.
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| − | ==Unconventional fuels==
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| − | | |
| − | ===Underground Coal Gasification (UCG)===
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| − | Underground Coal Gasification (UCG) involves setting fire to coal, often in deep, complex seams, and converting it to a mixture of gases known as synthetic gas (syngas), which can be used for electricity generation or for the production of chemical compounds such as urea, methanol or plastics. It is a controversial operation for a number of reasons, including the fact that the process may use fracking (hydraulic fracturing) in which a high pressure mixture of water, sand and chemical agents is pumped into the target formation.
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| − | Solid Energy began development of UCG in 2006, and in December 2010 it received resource consents to produce synthetic gas for electricity generation. In its 2011 annual report the company stated that, "The UCG pilot will convert up to 30,000 tonnes of coal into syngas and operate for up to two years … It will provide process, technical and geological information, and verify modelled environmental effects.”<ref>Solid Energy, [http://www.solidenergy.co.nz/publications-and-resources/annual-reports/solid-energy-annual-report-2011.pdf "Annual Report 2011"], page 28, accessed March 2013</ref> The Huntly Underground Coal Gasification Pilot Plant in the Waikato began operations in February 2012 and was commissioned in April of that year.<ref>Solid Energy, [http://www.coalnz.com/coal/projects/underground-coal-gasification.html “Underground coal gasification”], accessed July 2013</ref> Solid Energy CE, Don Elder, stated that the company "has access to around two billion tonnes of coal in the Huntly Coal Field. Most is too deep to be economic using conventional mining. UCG can potentially allow us to access most of this, which represents 10 times the energy of the Maui gas field."<ref>Solid Energy, Media release 16 April 2013, [http://www.solidenergy.co.nz/about/media-releases/2012/Solid-Energy-begins-Underground-Coal-Gasification-successfully.html “Solid Energy begins underground coal gasification successfully”]</ref> [At that time there were only three productive UCG plants in the world.]
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| − | Green Party Energy spokesman Gareth Hughes stated that the project was unacceptable as there was no independent monitoring of the technique; the coal seam fire was just 300 m from the Tauranga Group aquifer; and the Waikato Regional Council was entirely reliant on Solid Energy's water quality data. (Three similar plants have been trialled in Australia, one of which was shut down permanently after leaked carcinogens were detected in nearby groundwater.)<ref>3 News, 18 April 2013, [http://www.3news.co.nz/Greens-slam-new-Solid-Energy-coal-project/tabid/1160/articleID/250815/Default.aspx#ixzz2XGjOT2yg “Greens slam new Solid Energy coal project”], accessed July 2013</ref> <ref>3 News, 13 April 2012, [http://www.3news.co.nz/Controversial-fracking-method-trialled-in-Huntly/tabid/1160/articleID/250781/Default.aspx#ixzz2XGoMCG3W "Controversial fracking method trialled in Huntly"], accessed July 2013</ref>
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| − | In August 2012 it was announced that the demonstration plant would shut down early and Solid Energy would shift the focus to move more quickly to commercial UCG projects in Huntly and overseas.<ref>Solid Energy, Press Release 29 August 2012, [http://www.scoop.co.nz/stories/BU1208/S01106/solid-energy-responds-to-very-tough-market.htm “Solid Energy responds to very tough market”], accessed September 2012</ref> There was, however, no capital expenditure committed for UCG expansion, and given the massive debt that Solid Energy had taken on by 2013 it would appear unlikely that there will be major activity in this area.<ref>National Business Review, 1 September 2012, [http://www.nbr.co.nz/article/no-capex-solid-energys-next-big-adventures-just-yet-bd-127295 “No capex for Solid Energy’s next big adventures just yet”], accessed July 2013</ref> When questioned by the Commerce Committee in 2013 Solid Energy stated that it had spent $26.3 million on capital development and production of syngas from the Huntly Underground Coal gasification pilot plant, and $11.2 million relating to resource exploration, and research and development.[Ref needed]The shutdown of the plant during the 2013 financial year resulted in an impairment of $23.9 M. This was reversed by $0.5 M when the plant was partially sold the following year. <ref>Solid Energy, [http://www.solidenergy.co.nz/solid-energys-annual-report-for-the-financial-year-to-30-june-2014/ “Annual Report for financial year to 30 June 2014”], page 31, accessed March 2015</ref>
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| − | ===Coal Seam Gas (CSG)===
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| − | Coal which is too deep to mine or is otherwise inaccessible may be a source of methane (natural gas) which is adsorbed on to the surface of some coal seams. CSG is produced by drilling wells into the deposit and extracting water to depressurise the seam so that the trapped gas (mainly methane) can rise to the surface. The process may involve fracking. Solid Energy has been experimenting with coal seam gas extraction in the Huntly area since 2004.<ref>Solid Energy, [http://www.solidenergy.co.nz/coal/projects/comparing-csg-and-ucg.html “Comparing CSG and UCG”], accessed August 2012</ref> Its 2011 Annual Report stated that the company had received a new Exploration Permit for the Counties region south of Auckland and that it had submitted a further permit application for an area in the King Country.<ref>Solid Energy, [http://www.coalnz.com/publications-and-resources/quarterly-reports/solid-energy-quarterly-report-to-30-june-2012.pdf “Quarterly Report to 30 June 2012”], accessed August 2012</ref>
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| − | Solid Energy’s June 2012 quarterly report announced the completion of the $18.5 M Huntly coal seam gas demonstration plant. The trial produced gas, which was burnt on-site to generate electricity sold in the spot market. As part of its restructuring and cost-saving plans in 2013, Solid Energy announced that it was halting the trial and moving the near-term focus of its coal seam gas activity to the significantly larger field at Taranaki because further commercial scale-up at Huntly wasn’t commercially viable.<ref>Solid Energy, Press Release 31 May 2012, [http://www.scoop.co.nz/stories/AK1205/S00708/solid-energy-to-refocus-taranaki-coal-seam-gas-development.htm “Solid Energy to refocus Taranaki coal seam gas development”], accessed September 2012</ref> When questioned by the Commerce Committee in March 2013, however, the company simply stated that CSG developments had been suspended. Solid Energy told the Commerce Committee that it had spent $14.8 million on capital development achieving gas production within the Huntly permit and $24.7 million on CSG exploration relating to permits in Huntly Taranaki and South Auckland.[Ref needed]
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| − | There is no reference to Coal Seam Gas in Solid Energy’s 2013 Statement of Corporate Intent or in its 2014 Annual Report.
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| − | | |
| − | ===Carbon Capture and Storage (CCS)===
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| − | In April 2005 New Zealand Energy & Environment Business Week announced that “A ground-breaking project to capture CO2 emissions from the Huntly Power Station and store them underground is on track to begin within the next 12 months. A consortium of Genesis Energy, Solid Energy, and Geological and Nuclear Sciences is set to begin the trial as soon as it can find the right type of ‘ceramic filter’, which will be attached to the power station’s chimney to extract CO2.” In April 2008, however, a Solid Energy fact sheet stated that, “it may be a low commercial priority to retrofit carbon capture technology to the Huntly power station.” The Huntly project was part of a much larger trans-Tasman initiative called Coal-21 aimed at making carbon capture and geo-sequestration commercially viable.<ref>NZ Energy and Environment Business Week, [http://www.nzenergy-environment.co.nz/EEBW/050413EEBW.htm "Plan to capture Huntly’s CO2 emissions could pave the way for ‘clean coal’ "]</ref>
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| − | In Solid Energy’s 2007 Annual Report, Chairman John Palmer and CE Don Elder wrote that "together with our studies into the best uses of our huge lignite resources in Southland and Otago, we are looking at the opportunity for gasification of coal and for the underground storage of CO2.”<ref>John Palmer and Don Elder,
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| − | [http://www.solidenergy.co.nz/publications-and-resources/annual-reports/solid-energy-annual-report-2007.pdf, “Chairman and Chief Executive Officer’s Report”], Solid Energy Annual Report 2007, page 10</ref> The company also stated that in October 2006 it had begun an assessment of possible sites for permanent storage of CO2 in several locations in the south of the South Island. Similar work was planned in Taranaki and the Waikato. <ref>Solid Energy, [http://www.solidenergy.co.nz/publications-and-resources/annual-reports/solid-energy-annual-report-2007.pdf “Annual Report 2007”], page 30</ref> It was also pursuing a review of historical geological records to identify areas in New Zealand that could have suitable reservoirs for storing CO2.<ref>Solid Energy, [http://www.coalnz.com/coal/projects/carbon-management/carbon-capture-and-storage.html “Carbon capture and storage”], accessed July 2013</ref>
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| − | Solid Energy is a member of the Coal 21 consortium, investigating the Integrated Gasification Combined Cycle (IGCC) power generation system and the prospects of carbon capture and storage. It is also a member of the board of the Australian-based Cooperative Research Centre for Greenhouse Gas Technologies (CO2CRC).<ref> CO2CRC, [http://www.co2crc.com.au/]</ref> Despite at least eight years of investigation, however, there is no CCS plant operating or planned in New Zealand and many overseas attempts have been cancelled.
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| − | There is no reference to Carbon Capture and Storage in Solid Energy’s 2013 Statement of Corporate Intent or in its 2014 Annual Report.
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| − | ==Investment in renewable energy sources==
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| − | ===Wood pelleting===
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| − | In 2003 Solid Energy began a move into the field of renewable energy when it purchased Nature's Flame, a company selling wood pellets for heating.<ref>Solid Energy, Media Release 5 April 2007, [http://www.solidenergy.co.nz/about/media-releases/2007/Natures-Flame-wood-pellet-ash-organic-certified.html “Natures Flame wood pellet ash organic certified”], accessed July 2013</ref> The $34 M Taupo plant, with the capacity to produce up to 40,000 tonnes a year, was opened in 2010. The company also had pellet plants in Rotorua and at Rolleston, near Christchurch. Bulk export shipments were made as part of an initial three-year, $15 million supply agreement with the European utility sector.<ref> Solid Energy Media Release, 4 November 2010, [http://www.solidenergy.co.nz/about/media-releases/2010/Natures-Flame-completes-second-large-wood-pellet-shipment-for-European-market.html “Natures Flame completes second large wood pellet shipment for European market”], accessed July 2013</ref>
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| − | In its March 2012 Quarterly Report, however, Solid Energy announced that wood pellet production had decreased by 31% and that Nature’s Flame had ceased production at its Rolleston plant, although production at the Taupo and Rotorua plants would continue.<ref>Solid Energy, [http://www.solidenergy.co.nz/publications-and-resources/quarterly-reports/solid-energy-quarterly-report-to-31-march-2012.pdf “Quarterly report to 31 March 2012”], accessed July 2013</ref> The book value of the company decreased from $37.5 M to $13 M,<ref>The National Business Review, 31 August 2012, [http://www.nbr.co.nz/article/writedowns-push-solid-energy-40-million-loss-bd-127275 “Writedowns push Solid Energy to $40 million loss”], accessed September 2012</ref> and as part of the restructuring process in August 2012, Solid Energy decided to convert it to a stand-alone business that could be put on the market.
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| − | The value of the business was impaired by $4.3 M in 2013 and a further $0.9 M in 2014. <ref>Solid Energy, [http://www.solidenergy.co.nz/solid-energys-annual-report-for-the-financial-year-to-30-june-2014/ “Annual Report for financial year to 30 June 2014”], page 31, accessed March 2015</ref>
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| − | ===Biodiesel===
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| − | In 2007 Solid Energy bought Christchurch-based Canterbury Biodiesel, which was then renamed New Zealand Biodiesel.<ref>Solid Energy, Media Release 9 May 2007, [http://www.coalnz.com/about/media-releases/2007/Solid-Energy-enters-biodiesel-market.html “Solid Energy enters biodiesel market”], accessed July 2013</ref> The company also bought the family-owned, Nelson based solar hot water heating company Sensible Heat, which would be used as a basis for a unit of Solid Energy called Switch.[Ref needed]
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| − | As part of its restructuring process in August 2012, Solid Energy planned to sell or close the biodiesel business whose book value had been written down from $17.7 M to $8.7 M.<ref>Solid Energy, Continuous Disclosure 29 August 2012, [http://www.coalnz.com/about/continuous-disclosure/2012/Solid-Energy-responds-to-very-tough-market.html “Solid Energy responds to very tough market”], accessed July 2013</ref><ref>The National Business Review, 31 August 2012, [http://www.nbr.co.nz/article/writedowns-push-solid-energy-40-million-loss-bd-127275 “Writedowns push Solid Energy to $40 million loss”], accessed September 2012</ref> In October the company announced that it had completed the sale of the agribusiness division of Biodiesel New Zealand Ltd to Pure Oil New Zealand Ltd, owned by a consortium led by Southern Packers, and was currently considering bids for Biodiesel New Zealand's fuel division.<ref>Solid Energy Media Release, 30 November 2012, [http://www.coalnz.com/about/media-releases/2012/Agri-business-sale-completed.html “Agri-business sale completed”], accessed February 2013</ref> Biodiesel’s refinery converted used cooking oil into biodiesel.
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| − | The Christchurch management team of Biodiesel New Zealand bought the business early in 2013, confident that they would be able to run it profitably even without the government’s biodiesel subsidy, which had ended on 30 June 2012, and without the storage tanks that had already been removed and sold off by Solid Energy.<ref>Business Day, 15 February 2013,[http://www.stuff.co.nz/business/industries/8307941/Solid-Energy-sells-its-biofuel-arm-to-management “Solid Energy sells its biofuel arm to management”], accessed July 2013</ref>
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| − | ==Solid Energy – Environmental Issues==
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| − | | |
| − | ===Reporting by Parliamentary Commissioners for the Environment===
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| − | In 1988 the first Parliamentary Commissioner for the Environment (PCE), Helen Hughes, became concerned about the environmental conditions in the coal mining licences being transferred to the Coal Corporation, a new state-owned enterprise, which was to become Solid Energy NZ Ltd. There were continuing complaints about the environmental impact of coal mining, especially that carried out by Solid Energy, but it was not until 2005 that the second Commissioner Dr Morgan Williams undertook a scoping study on the company’s environmental management systems and performance. In the resulting report he made a commitment to investigate the environmental management of Solid Energy’s mine at Stockton on the West Coast, which was then followed up in 2009 by the third commissioner Dr Jan Wright. In her report Dr Wright drew attention to the problems of the continuation of the old regulatory regime for mining. More than a hundred mining licences granted prior to the 1991 enactment of the Resource Management Act and the Crown Minerals Act continue to apply until they expire; in one case, this is not until 2062. Most of Solid Energy’s mines operate under a licence rather than a permit and there is limited power to vary these licences. (“Old” mining licences may be sold on to private companies.) Issues associated with these licences include the often outdated environmental conditions that are associated with them, and the difficulties and inconsistencies involved with enforcement of these conditions. In addition there is the problem of “orphan” sites, which have been abandoned, leaving remediation costs to be borne by taxpayers and ratepayers. (The new mining permits issued under the 1991 Crown Mineral Act only give the right to mine, ie access to the land. The necessary resource consents, which control the environmental impacts, must then be obtained under the Resource Management Act currently under review.)<ref>Parliamentary Commissioner for the Environment, [http://www.pce.parliament.nz/publications/all-publications/stockton-revisited-the-mine-and-regulatory-minefield “Stockton revisited: The mine and regulatory minefield”], page 39, accessed July 2013</ref>
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| − | In August 2009 the Minister of Energy and Resources stated his interest in having a more permissive approach to mining on conservation land and “unlocking New Zealand’s mineral potential”. This resulted in massive protests, and in July 2010 Energy Minister, Gerry Brownlee, and Conservation Minister, Kate Wilkinson announced that no land would be removed from Schedule 4 of the Crown Minerals Act (which has the highest level of protection) for mining.<ref>The Telegraph, 20 July 2010, [http://www.telegraph.co.uk/news/worldnews/australiaandthepacific/newzealand/7899631/New-Zealand-drops-plans-to-allow-mining-in-national-parks.html “New Zealand drops plans to allow mining in national parks”], accessed July 2013</ref> In her report the PCE had stated that at least 55 of the 111 mining licences granted under the old regime included Department of Conservation land. Although none of these licences were on Schedule 4 land, some of the land might be inadequately protected. <ref>Parliamentary Commissioner for the Environment, [http://www.pce.parliament.nz/publications/all-publications/stockton-revisited-the-mine-and-regulatory-minefield “Stockton revisited: The mine and regulatory minefield”], accessed July 2013</ref>]
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| − | ===Stockton Mine===
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| − | Stockton is a huge opencast bituminous coal mine. The seam from which the coal is extracted has a layer of low ash/low sulfur coal sandwiched between high ash/high sulfur layers. Topsoil and vegetation are removed and placed in specific rehabilitation areas, then the sandstone is blasted away and moved to previously mined areas ready for rehabilitation. While the changed landscape is the most obvious environmental impact, there has also been an extremely significant impact on water quality. The natural geology of the area results in the many streams on the plateau being naturally acidic (pH 3.5–4.5) but acid drainage from the mine and from historic workings reduce the pH still further. Sparse vegetation, shallow soil and heavy rainfall all make it difficult to buffer the pH against these changes. The acid mine drainage also increases the rate at which metals – including iron, aluminium, manganese, nickel and zinc – are leached out of the rocks and into the streams. Together with the problems of excess sediment, all of this results in the potential for severe effects on freshwater ecosystems and their biodiversity.
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| − | Solid Energy’s 2004 Annual Report acknowledged that, “In the past, some of our mining activities have fallen well short of environmental best practices.” This was followed by a public commitment to improve its environmental management and performance. As part of its Environmental Management System (EMS) centralised data bases were set up for all of Solid Energy’s mines, and internal reviews undertaken. The Commissioner’s 2009 report commended Solid Energy for its commitment to improving environmental management and its performance at Stockton, including such initiatives as the improvement of water quality and improved information systems. The process of capping exposed rock and treatment with limestone was being trialled in order to try and reduce acid drainage. Water diversion and settling dams were being used as part of the Stockton Water Management Plan (SWaMP). About 140 ha of land were at various stages of remediation; although the Commissioner pointed out that the process did depend on new sources of overburden, soil and vegetation, ie on the continuation of mining. There was also some evidence of an improved monitoring regime by the West Coast Regional Council and Buller District Council. (Apparently it was only in 2005 that the Buller District Council became aware that it had a responsibility for compliance monitoring and reporting.) The Council was criticised by the Commissioner for failing to become significantly involved in the operation of the Stockton Community Consultative Group. <ref>Parliamentary Commissioner for the Environment, [http://www.pce.parliament.nz/publications/all-publications/stockton-revisited-the-mine-and-regulatory-minefield “Stockton revisited: The mine and regulatory minefield”], accessed July 2013</ref>
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| − | ===Stockton extension plans===
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| − | Solid Energy has faced persistent opposition to its proposed extension of its Stockton mine through the development of the Cypress mine in Happy Valley, and its plans to mine Mt Augustus and Mt William.
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| − | '''Mt Augustus'''<br>
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| − | The western boundary of the Stockton Coal Mining Licence is next to Department of Conservation land including areas known as Mt Frederick and Mt Augustus. Solid Energy wished to mine the ridge line along the boundary and had come up with elaborate technical plans to control drainage and rock movement. One of the reasons that environmentalists were opposed to expanded mining was the presence of the endemic native land snail Powelliphanta augusta on the Mt Augustus ridgeline. However, the company gained approval for the collection and relocation of over 6,000 of the snails in order to allow mining to proceed. In its 2007 annual report, Solid Energy complained that "unfortunately, months of delays, due firstly to permitting and in collecting increasing numbers of snails, and lastly, to environmental protesters, forced the cancellation of five export shipments in the year and resulting loss in profit."<ref>Solid Energy, Annual Report 2007, [http://www.solidenergy.co.nz/publications-and-resources/annual-reports/solid-energy-annual-report-2007.pdf “Chairman’s and Chief Executive Officer’s Report”], page 10, accessed July 2013</ref> Almost 4000 snails were released into the wild between 2006–2007, apparently with limited success. In November 2011, 800 of the remaining snails died in captivity as the result of a malfunctioning fridge.<ref>BBC News Asia, 11 November 2011, [http://www.bbc.co.uk/news/world-asia-15691701 “Mishap freezes to death 800 rare New Zealand snails”], accessed July 2013</ref>
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| − | '''Mount William North'''<br>
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| − | The Mount William North project area lies east of the main Stockton mine and northeast of the proposed Cypress mine. Speaking at the May 2012 hearings held by the West Coast Regional council and the Buller District Council, Lynley Hargreaves of the West Coast Environment Network and the Biodiversity Defence Society pointed out that the overall impact of the cumulative project should be considered, particularly in the light of other mining interests in the area. She also said that coal plateaux ecosystems needed greater protection and Department of Conservation stewardship does not in itself protect land from mining. The proposed biodiversity offset of 50 years of pest control at the Two Rivers site did not meet the requirements for offsetting. The 1998 report on the Protected Natural Area Programme (PNAP) had stated that the Upper Waimangaroa – Mt William Recommended Area for Protection (RAP) had the greatest ecological diversity of any area in the Denniston and Stockton coal plateaux and was in the least modified condition. “It is an outstanding, and fragile natural area (and landscape), and its values should be recognized in all future management.”
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| − | Climate change had been excluded from the Mt Williams hearings but Ms Hargreaves attempted unsuccessfully to have the issue of ocean acidification considered. It appeared that at least one of the commissioners had a shaky grasp of the scientific principles involved in climate change; Ms Sharon McGarry claiming that it was caused by a hole in the ozone layer. Notwithstanding the weight of evidence brought by Ms Hargreaves and other submitters, consents were granted and Mt William stood “in line as the next mountaintop removal on the Stockton plateau.”<ref>WCRC, 28 May 2012, [http://www.wcrc.govt.nz/mtwilliam/hearing/submitters/Evidence%20given%20by%20Lynley%20Hargreaves%20on%20behalf%20of%20West%20Coast%20ENT%20and%20Biodiversity%20Defence%20Society.pdf “Oral submission on Mt William North mining proposal”], accessed July 2013</ref>
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| − | '''Happy Valley'''<br>
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| − | The longest running protest has been against Solid Energy’s plans to mine Happy Valley, the local name for an area in the Upper Waimangaroa, 25 km northeast of Westport, described by Save Happy Valley literature as, “home to 30 great spotted kiwi/roa and the rare Powelliphanta patrickensis snail. Eleven other endangered birds and animals inhabit this enclave of diversity. Happy Valley is a colourful mosaic of magnificent red tussock wetlands, low forests of lush mountain beech and dense mats of intricate herbfield plants scattered over striking sandstone rocks and bluffs."
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| − | In 2005 an application by Solid Energy for $NZ379,342 in witness costs and legal expenses against two environmental groups was dismissed. Forest & Bird and the Buller Conservation Group had argued before the Environment Court against approval for a new opencast coal mine to be called Cypress. Although the Court approved the mining project, it dismissed the company's costs claim. Forest and Bird's Regional Conservation Officer, Eugenie Sage, said the company "was trying to punish Forest and Bird and BCG for daring to oppose the mine. This was clearly a strategic law suit against public participation,”<ref>Scoop Politics, 29 August 2005, [http://www.scoop.co.nz/stories/PO0508/S00340.htm “Dismissal of Solid Energy's costs application welcomed”], accessed July 2013</ref> In August of that year, a group of Save Happy Valley Coalition activists and allies blockaded train tracks leading from Solid Energy's coal mines to the port of Lyttelton. Four Solid Energy trains stood on the tracks for five hours, while police cleared the blockade, which the company later claimed in court had cost them $150,000.<ref>Otago Daily Times, 25 July 2012, [http://www.odt.co.nz/your-town/mataura/218519/production-next-month "Production next month"], accessed September 2012</ref><ref>The Press, 16 August 2012, [http://www.stuff.co.nz/the-press/business/7490714/Solid-Energy-predicts-200m-revenue-drop "Solid Energy predicts $200m revenue drop"], accessed September 2012</ref>
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| − | In March 2007 Solid Energy lost a bid to suppress the publication by a coalition of environmentalists of a spoof corporate social responsibility report. The company sought an injunction from the High Court to have a two-part report removed from the website of the Save Happy Valley Coalition.<ref>Scoop Politics, 1 March 2007, [http://www.scoop.co.nz/stories/PO0703/S00005.htm "Solid Energy files injunction against Coalition”], accessed September 2012</ref> Before the court hearing, Solid Energy's chief executive, Don Elder, told a parliamentary committee hearing that the document was defamatory and could lead the community and regulators to make "wrong decisions." A spokeswoman for the coalition, Frances Mountier, said the company's failed bid to suppress the report revealed how they wanted "to keep it quiet about what they are doing to waterways, species and climate."
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| − | Another indication of how seriously Solid Energy took these protests was the employment of infiltrators and spies by Thompson and Clark Investigations (TCIL) a private investigation committee hired by Solid Energy. A paid informer Ryan Patterson-Rouse infiltrated Save Happy Valley. In 2007 when these activities were revealed, Prime Minister Helen Clark and SOE Minister Trevor Mallard both made it clear to Solid Energy that these practices were to stop. Yet twelve months later TCIL was still trying to infiltrate environmental organisations.<ref>Stuff National, 20 April 2008, [http://www.stuff.co.nz/national/377237/Private-investigators-still-digging-on-West-Coast “Private investigators still digging on West Coast”], accessed September 2012</ref> In a bizarre twist, Rob Gilchrist, who claimed to have been approached by TCIL to act as an informant, was outed as a long term police spy on protest groups, and in 2013 was planning to sue police for the psychological damage caused by the period of time he spent working undercover.<ref>Stuff National, 11 February 2013, [http://www.stuff.co.nz/national/8285326/Police-spy-sues-for-mental-pain “Police spy sues for mental pain”], accessed July 2013</ref> And in 2013 it was revealed that Solid Energy had continued to retain the services of TCIL as its “security advisor” at a cost of $205,053 in 2012.[Ref needed]
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| − | | |
| − | Solid Energy’s 2012 Annual Report stated that the goal of substantially completing development work at the proposed Cypress mine had not been reached, and in June 2013 the Biodiversity Defence Society filed declaration proceedings with the Environment Court, arguing that resource consents for the mine had expired because mining hadn’t yet begun.<ref>Scoop Regional, 12 June 2013, [http://www.scoop.co.nz/stories/AK1306/S00204/mining-consent-expired-for-happy-valley.htm “Mining consent expired for Happy Valley”], accessed July 2013</ref>
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| − | | |
| − | '''Mataura lignite project'''<br>
| |
| − | Solid Energy’s plans to massively increase the amount of coal being mined at Mataura in Southland met with strong opposition from environmental groups. Unlike the situation on the Buller plateau, mining expansion would not put natural ecosystems at risk but it would result in the destruction of hundreds if not thousands of hectares of some of New Zealand’s most fertile farmland.
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| − | | |
| − | In 2010, largely in response to Solid Energy’s lignite mining proposals, Coal Action Network Aotearoa (CANA) became more active on a national level. CANA was formed in 2007 by people with experience in coal activism, such as in the Save Happy Valley Campaign, who were looking for a way to broaden the New Zealand coal and climate campaign. The group’s primary focus was the threat that fossil fuels pose to the climate system; and its principal objective was to phase out coal mining and usage by 2027, initially by opposing new and expanded coal mines. James Hansen’s 2011 speaking tour, sponsored by organisations such as 350.org and Oxfam, helped to galvanise support for the New Zealand anti-coal movement. In Jan 2012 the first CANA Summer Festival was held in Mataura and Coal Action Murihiku (CAM) took up the challenge of opposing expanded lignite mining in Southland.
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| − | | |
| − | By 2013 Solid Energy’s economic woes had halted its ambitious expansionary programme but the future of the farmland it had acquired remained uncertain. The company had indicated that the land would be sold in order to reduce some of its $400 M debt and in Feb 2013, 1000 ha of farmland was put on the market and a 170 ha farm was sold. Concerns were expressed that Solid Energy’s remaining Southland land (approx 4000 ha) would be offered for sale as a block, with a consequently high probability that the farms would then be acquired by an overseas investor and pass out of New Zealand control.<ref>Southland Times, 11 May 2013, [http://www.stuff.co.nz/southland-times/news/8660028/Farmland-could-be-sold-as-package “Farmland could be sold as package”], accessed July 2013</ref>
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| − | | |
| − | [[Image:Solid Energy protest.jpg|Source: Happy Valley Coalition|200px|right|thumb]]
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| − | | |
| − | ===Government guarantees remediation costs===
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| − | In 2012 the Government confirmed that it would extend support to Solid Energy to keep the company operating. This support, extended in September 2014, included $103 million in environmental remediation costs. .<ref> Business Day, 13 August 2015, [http://www.stuff.co.nz/business/industries/71101446/bill-english-admits-government-will-recover-nothing-from-solid-energy-sale “Bill English admits government will recover nothing from Solid Energy sale”], accessed September 2015</ref>
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| − | | |
| − | ==Solid Energy’s road to disaster==
| |
| − | ===1999–2005===
| |
| − | When Don Elder became Chief Executive (CE) of Solid Energy in May 2000 he put into motion events that would in the short term lead to greatly increased coal production and cash flow, but would, in the long term bring the company to its knees.<ref>Milford Asset Management, 2 February 2013, [http://www.milfordasset.com/buck-stops-with-the-solid-energy-board “Buck stops with the Solid Energy Board”], accessed July 2013</ref>
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| − |
| |
| − | Back in 1999 Solid Energy was facing significant issues resulting from the Asian crisis. Poor performing foreign currency deals had resulted in the Board being replaced, banking facilities being renegotiated and the Crown offering support. The new Board chair initiated a strategic review and restructuring, and in 2000 Don Elder was appointed as CE.<ref>The Treasury, [http://www.treasury.govt.nz/publications/informationreleases/solidenergy/index.htm#trancheA “Solid Energy information release”], accessed July 2013</ref> Confounding expectations, he turned the company around and coal sales steadily increased from 2.81 Mt in 2000 to 4.46 Mt in 2005.<ref>Parliamentary Commissioner for the Environment, [http://www.pce.parliament.nz/assets/Uploads/Reports/pdf/solid_energy.pdf “Solid Energy’s environmental management systems and performance”], November 2006, accessed July 2013</ref>
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| − | | |
| − | ===2005–2008===
| |
| − | Sales and profits continued to increase, but in this period dividends (of $20 M) were paid only in 2006.<ref>Business Day, 20 March 2013, [http://www.stuff.co.nz/business/opinion-analysis/8446593/Solid-Energy-Elder-thrown-overboard “Solid Energy Elder thrown overboard”], accessed July 2013</ref> From 2005 Solid Energy had a healthy cash flow every year but this was regularly exceeded by the amounts invested in mining assets, production, new developments and staff costs. The company envisaged that demand and prices would continue to increase, with coking coal perhaps reaching US$400 a tonne by 2020. At the same time, the company obtained petroleum exploration permits, believing that this would be profitable as oil markets became ever tighter. Debt levels started increasing dramatically, from $15 M in 2007 to $295 M in 2012 and then almost $400 M in 2013. Most of the growth in revenue was financed by retained earnings and borrowings as no new shares were issued to the Crown during a 12-year period.
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| − | | |
| − | In a 2008 briefing paper for the Minister for State-Owned Enterprises (SOEs), Solid Energy was described as one of the strongest performing SOEs and one of New Zealand’s largest exporters. In its current business plan, Solid Energy forecast profits of $170–$180 million over each of the next three years, with dividends of $100–$130 M per annum. The significant increase over past performance was due to strong international coal prices.<ref>The Treasury, March 2013, [http://www.treasury.govt.nz/publications/informationreleases/solidenergy/pdfs/se-1718953.pdf “Solid Energy information release”], accessed July 2013</ref> The Board made a huge increase in its estimate of Solid Energy’s commercial value; from $475 M in 2007 to $2.954 bn in 2008.<ref>The Treasury, March 2013, [http://www.treasury.govt.nz/publications/informationreleases/solidenergy/pdfs/se-2553214.pdf “Information release”], accessed July 2013</ref>
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| − | | |
| − | Treasury advised a movement towards a greater private sector involvement in SOEs, while observing that partial listing would not be consistent with, “the Government’s policy to retain 100% ownership of SOEs.” This report also recommended putting pressure on SOEs to increase their gearing (ie, the ratio of debt to equity or capital) by borrowing more from the private sector and paying special dividends to the Crown. These higher debt levels would, “put increased pressure on SOEs to perform, by committing a fixed part of their future cash flow to debt servicing, meaning they must focus more on core business profitability, and on selecting new investment projects carefully.” At the same time, disquiet was expressed about the limited public monitoring of SOEs and the lack of transparency about the process.<ref>The Treasury, [http://www.treasury.govt.nz/publications/informationreleases/solidenergy/pdfs/se-1207621.pdf “Information release”], accessed July 2013</ref>
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| − | | |
| − | ===2009===
| |
| − | Solid Energy had a disappointing result in 2008/09, largely due to a collapse in the
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| − | international market for coking coal in November 2008, with prices declining from around $US300/tonne to $US100/tonne. Steel mill customers in India and China were delaying or cancelling coal shipments as a result of the global recession. (Later, this fall partially reversed resulting in only a temporary fall in profitability, which was also assisted by the weaker NZ$.) There was concern that reduction in operations were likely to lead to job losses at the Rotowaro mine near Huntly and also at Stockton.<ref> The Treasury, [http://www.treasury.govt.nz/publications/informationreleases/solidenergy/pdfs/se-1718961.pdf/at_download/file “Information release”], accessed July 2013</ref>
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| − | | |
| − | The performance of Solid Energy’s non-coal business was also challenging in 2008/09, contributing to impairments totalling $26.7 million before tax. This included a $13.2 M impairment in the value of the biodiesel business and a $6.3 M write down in the coal seam gas investment.<ref>The Treasury, [http://www.treasury.govt.nz/publications/informationreleases/solidenergy/pdfs/se-1718969.pdf/at_download/file “Information release”], accessed July 2013</ref>
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| − | | |
| − | During 2009 Solid Energy started a borrowing programme to finance its growth objectives. This course of action was encouraged by the government. On 26 May Simon Power, Minister for State Owned Enterprises, told Solid Energy, “I have been advised by officials that Solid Energy may have the capacity to sustain a 40% gearing ratio. I urge the Solid Energy Board to give serious consideration to this proposal, and to release all surplus capital to the shareholder as special dividends. I note that Solid Energy currently has a gearing target of 35%, including the company’s rehabilitation liability as if it were debt. Given that the nature of the rehabilitation liability is significantly different from debt, I am sceptical that this is an appropriate treatment . . . I would also like to . . . ensure that a larger and more consistent share of profits is returned to the Crown as shareholder. In this regard, I propose that the Solid Energy Board give serious consideration to adopting a dividend policy equal to 65% of operating cash flows.” Solid Energy was also brought to task about its failure to provide comprehensive and timely information about planned capital expenditure, performance targets and a commercial valuation of the company.<ref>The Treasury, [http://www.treasury.govt.nz/publications/informationreleases/solidenergy/pdfs/se-1875419.pdf “Information release”], accessed July 2013</ref>
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| − | | |
| − | ===2010===
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| − | This year saw the most grandiose yet of Solid Energy’s plans to build a resources empire. Chairman John Palmer told Prime Minister John Key that New Zealand had to ''urgently'' exploit its natural resources or risk the world adapting to the end of non-renewable sources of energy and New Zealand’s resources becoming valueless. He urged the Government to approve Solid Energy’s plans to become a vast natural resources company that would hold permits transferred from other state-owned companies; or to risk missing out on “super profits” which might not last. Solid Energy’s May 2010 business plan projected an economic gain of $20–100 billion if the “New Zealand National Resources Company” was set up as an umbrella company for new and existing mining ventures. Chief Executive Don Elder believed that a price surge for natural resources could lead to New Zealand having one of the world’s highest standards of living.<ref>Yahoo NZ News, [http://nz.news.yahoo.com/a/-/top-stories/17268098/solid-energys-100b-proposal-revealed/ “Solid Energy’s $100b proposal revealed”], accessed July 2013</ref> The plan was rejected by the government and Treasury analysts pointed out that, “Solid Energy's non-traditional plans relied on high and rising coal prices to fund its capital development and pay dividends, and a view of coal prices at odds with industry forecasts.”<ref>Business Day, 21 May 2013, [http://www.stuff.co.nz/business/industries/8699014/Plans-revealed-for-resources-giant “Plans revealed for ‘resources giant’”], accessed July 2013</ref>
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| − | | |
| − | An October Treasury briefing informed the shareholding Ministers that Solid Energy had made a net profit of $67.8 M for the 2009/10 year but the renewable companies were performing below revenue targets. The Ministers were asked to require Solid Energy to provide greater clarity and disclosure (the company didn’t, for example, provide financial details of the performance attribution of its differing areas of operation.) Ministers should expect to be consulted on significant developments, and receive robust business cases for consideration/approval.<ref>The Treasury, [http://www.treasury.govt.nz/publications/informationreleases/solidenergy/pdfs/se-1934268.pdf/at_download/file “Information release”], accessed July 2013</ref>
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| − | | |
| − | ===2011===
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| − | By July 2011 it appeared that previous issues still hadn’t been effectively addressed.
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| − | A Treasury briefing for a meeting with Solid Energy voiced concerns that Solid Energy had an unduly optimistic approach to forecasting future returns; had not yet provided a Draft Business Plan and Statement of Corporate Intent (SCI); and had not consulted with shareholding Ministers before lodging a bid for the Pike River assets.<ref> The Treasury, [http://www.treasury.govt.nz/publications/informationreleases/solidenergy/pdfs/se-2109328.pdf/at_download/file “Information release”], accessed July 2013</ref>
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| − | | |
| − | In May the Government had announced that, if re-elected, it would apply the mixed ownership model to Solid Energy. A scoping study of Solid Energy was carried out with the intention of readying it for partial privatisation. The results of this study appeared to be diametrically opposed to the company’s expansionary plans as it concluded that an Initial Public Offering (IPO) of the company would require a focus on the core coal-mining business with:<br>
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| − | • downsizing of the New Development activities particularly around the large scale<br>
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| − | projects associated with the Southland lignite resources<br>
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| − | • sale of the renewable businesses (biodiesel and wood pellets)<br>
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| − | • increased expenditure on drilling to prove up the level of coal reserves to meet equity market requirements, and<br>
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| − | • repayment of Solid Energy’s debt at time of listing to meet the debt free norm for listed coal companies.[Ref needed]
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| − | | |
| − | Merchant bank UBS, while assessing the company for partial privatisation, stated that it had been "unable to obtain evidence of internal or external documentation, analysis or review appropriate to support Solid Energy management and board views on commodity price paths." In December, however, Solid Energy was confirmed by Cabinet as being part of the mixed ownership model.<ref>National Business Review, 21 May 2013, [http://www.nbr.co.nz/article/solid-energy-based-failed-strategy-non-existent-analysis-bd-140430 “Solid Energy based failed strategy on non-existent analysis”], accessed July 2013</ref>
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| − | | |
| − | ===2012===
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| − | ''Warning signs reach the public domain''<br>
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| − | At the beginning of 2012 very little of this information was in the public domain when Coal Action Network Aotearoa (CANA) supporters gathered for a chilly Summer Festival on the Mataura property of Mike Dumbar, one of the few Southland farmers to withstand Solid Energy’s offers to buy up their land for lignite mining. Protest was focused on the briquetting plant, planned by Solid Energy as just the forerunner of its massive lignite projects. The situation appeared to be very much one of David versus Goliath – a small group of activists attempting to oppose a huge Crown-owned Enterprise.
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| − | | |
| − | The result for the first half of Solid Energy’s 2011/12 financial year was announced in February. A strong financial performance was reported but the company acknowledged a weakening market and falling prices. Solid Energy formally responded to the Oct 2011 recommendations of the scoping study but Treasury viewed this response as inadequate and commissioned Deutsche Bank to provide a further review. Undeterred, the following month Solid Energy announced its intention to buy the Pike River assets. In May Ministers met with the Chair and Deputy Chair of the Board, and in June the company was moved to intensive monitoring in response to deteriorating financial performance and early warning signs around the balance sheet. It belatedly supplied a draft 2012/13 Business Plan and SCI but these were rejected by the Ministers as an inadequate response to changing market conditions and the deadline for resubmission extended to 31 August.<ref>The Treasury, [http://www.treasury.govt.nz/publications/informationreleases/solidenergy/pdfs/se-2553214.pdf “Information release”], accessed July 2013</ref> [When the revised plan was submitted it was judged inadequate to address the changed market and the deadline extended to December.]
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| − | | |
| − | By mid year it was becoming publicly apparent that the monolith was beginning to crumble. Chairman John Palmer announced that he would step down later in the year although his current term did not conclude until October 2013.<ref>Scoop, 26 February 2012, [http://www.scoop.co.nz/stories/BU1206/S00765/solid-energy-chairman-john-palmer-to-step-down.htm “Solid Energy Chairman John Palmer to step down”], accessed July 2013</ref> [Mark Ford took over as Chair in Sep 2012]
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| − | | |
| − | ''Treasury advice to Ministers''<br>
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| − | Treasury advice (14 Aug) to Ministers English, Joyce and Ryall acknowledged that the problems faced by Solid Energy were industry-wide because of weakening Chinese and Indian demand, and the Eurozone crisis. The report, nevertheless, went on to state that, “In our view, Solid Energy has made poor use of the funds it generated when coal prices were high. We have had concerns for some time that Solid Energy's strategy was unlikely to pay off to the extent that Solid Energy believed it would (given that, amongst other things, they were effectively taking a very large bet against the market). However, the concern now is that the strategy has put Solid Energy in a position of significant vulnerability given that coal prices are low, and are forecast to remain low for an extended period.”<ref>The Treasury, [http://www.treasury.govt.nz/publications/informationreleases/solidenergy/pdfs/se-2421543.pdf/at_download/file “Information release”], accessed July 2013</ref>
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| − | | |
| − | ''Solid Energy announce $40.4 M loss''<br>
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| − | At the end of August Solid Energy released the official statement of its financial position, which showed a $40.4 M loss. There were $151.7 M of write downs, including Spring Creek Mine whose book value was written down from $137.3 M to $73 M; the South Island bio-diesel business (down from $17.7 M to $8.7 M); and the Nature’s Flame wood pellet business (down from $37.5 M to $13 M). <ref>The National Business Review, 31 August 2012, [http://www.nbr.co.nz/article/writedowns-push-solid-energy-40-million-loss-bd-127275 “Writedowns push Solid Energy to $40 million loss”], accessed September 2012</ref> Outgoing chairman, John Palmer, announced that Solid Energy would look to sell land it didn’t need, once it settled on the size and scope of its plans. The company had spent more than $70 M in the mid-2000s buying up farmland in eastern Southland, where it now owned more than 3,000 hectares sitting atop lignite reserves of around 1.35 billion tonnes.<ref>NZ City, 31 August 2012, [http://home.nzcity.co.nz/news/article.aspx?id=153472&fm=newsmain%2Cnrhl “Solid Energy reviews Southland holdings”], accessed September 2012</ref> CEO Don Elder, however, continued to reaffirm the intentions of Solid Energy to proceed with its plans to exploit these huge deposits.
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| − | | |
| − | Solid Energy stated that it was reviewing all operations in response to a market downturn, with revenues expected to fall by $200 M due to the steep fall in demand, especially from Asia, and prices for internationally traded coal. Prices for high-grade coking coal had fallen more than 40% to below $US200 a tonne from above $US300 in 2011. CE Don Elder pointed out that while the company had faced a similar plunge in coal prices during the 2008 global financial crisis, the difference this time was that the New Zealand dollar had stayed persistently strong. Solid Energy believed that it would need to withstand the market conditions for at least 12–24 months.<ref>The Press, 16 August 2012, [http://www.stuff.co.nz/the-press/business/7490714/Solid-Energy-predicts-200m-revenue-drop “Solid Energy predicts $200m revenue drop”], accessed September 2012</ref>
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| − | | |
| − | ''Restructuring moves begin''<br>
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| − | Finance Minister, Bill English, announced that Solid Energy wasn’t in good shape for investment and a partial sell-down, as the company had signalled substantial issues.<ref>Business Day, 21 August 2012, [http://www.stuff.co.nz/business/industries/7517502/Solid-Energy-not-sale-ready-English “Solid Energy not sale ready – English”], accessed September 2012</ref>
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| − | On 29 August Solid Energy announced that it would be taking drastic measures in order to, “narrow its business scope and development pipeline down to the best business opportunities by reducing its exposure to underground coal mining to concentrate on lower-cost opencast coal mining — both conventional and using conversion technologies — and underground coal gasification to harness the energy from deep coal seams.” Some of the company’s main proposals were: ceasing further major capital investment at Huntly East and cutting jobs; suspending operations at Spring Creek Mine pending a review; optimising production and minimising costs at Stockton Mine; selling or closing its biodiesel business; converting Nature’s Flame wood pellet business to a stand-alone operation; moving more rapidly to commercial underground coal gasification projects in Huntly while shifting coal seam gas development to Taranaki; reducing capital expenditure by approximately $100 M in the current financial year; and restructuring the organization with the loss of about 140 positions.<ref>Solid Energy, Continuous Disclosure, 29 August 2012, [http://www.coalnz.com/about/continuous-disclosure/2012/Solid-Energy-responds-to-very-tough-market.html “Solid Energy responds to very tough market”], accessed July 2013</ref>
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| − | | |
| − | Huntly East miners were told at a meeting with Solid Energy that there would be 63 redundancies. About 60 contractors had also lost work at the underground mine. A $30 M upgrade of the ventilation system had been taking place, but that work would now cease.<ref>Business Day, 31 August 2012, [http://www.stuff.co.nz/business/industries/7584080/Mining-town-braces-for-catastrophe “Mining town braces for catastrophe”], accessed September 2012</ref> The 200 staff and 50–60 contractors at the West Coast underground mine, Spring Creek, where some $22 M had been spent on mine development, were told that operations were being suspended while the future viability of the mine was being reviewed.<ref>The Press, 29 August 2012, [http://www.stuff.co.nz/the-press/news/7566957/Jobs-axe-expected-to-fall-in-mines “Jobs are expected to fall in mines”], accessed September 2012</ref> Prime Minister John Key expressed the hope that Solid Energy would be able to keep the Spring Creek mine open. He said that the suspension of mining at Spring Creek was an economic issue and was unrelated to the partial sale of Solid Energy. Key said that Solid Energy had always had an “optimistic” view of coal prices.<ref>Business Day, 21 August 2012, [http://www.stuff.co.nz/business/industries/7517502/Solid-Energy-not-sale-ready-English “Solid Energy not sale ready – English”], accessed September 2012</ref>
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| − | | |
| − | Solid Energy spokeswoman, Vicki Blyth, explained how a major process of restructuring would result in 65 of the 200 head office positions in Christchurch being lost, including that of senior manager, Barry Bragg.<ref>The Press, 30 August 2012, [http://www.stuff.co.nz/the-press/business/7581512/65-Solid-Energy-jobs-axed-in-Chch “65 Solid Energy jobs axed in Christchurch”], accessed September 2012</ref>
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| − | | |
| − | ''Salaries and debt levels''<br>
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| − | New Zealand media proffered reasons for Solid Energy’s problems. The Dominion Post pointed out that, in 2004, 64 Solid Energy staff earned more than $100,000 but by 2011 that number had increased to 368. Over the same period Don Elder’s salary had increased from between $570,000–$580,000 to $1.36 M. The editorial suggested that “the current board and Dr Elder have made the mistake of misinterpreting a temporary spike in the price of coking coal as a permanent phenomenon on which they could rely to bankroll expansion into risky new ventures.”<ref>The Dominion Post, 31 August 2012, [http://www.stuff.co.nz/dominion-post/comment/editorials/7583382/Editorial-All-that-glisters-is-not-coal “All that glisters is not coal”], accessed September 2012</ref>
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| − | | |
| − | In November, despite its massive existing debt level, Solid Energy borrowed another $25 M when it issued a medium term note to a wholesale investor whom it would later refuse to name. The following year it would also refuse to name the other two investors holding notes. The company has, however, named banks, which hold most of Solid Energy’s debt: ANZ, BNZ, Westpac and Bank of Tokyo-Mitsubishi.
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| − | | |
| − | By the end of the year John Fletcher, John McDonald, Simon Masters and Michelle Smith had resigned from the Board. The remaining members appointed PWC as an investigating accountant to assist in providing a clear picture of the company’s financial position. Yet another extension was granted for SCI and Business Plan submission to 28 February as questions around valuation and strategy
| |
| − | remained unresolved.<ref>The Treasury, [http://www.treasury.govt.nz/publications/informationreleases/solidenergy/pdfs/se-2553214.pdf “Solid Energy Information Release, March 2013”], accessed July 2013</ref>
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| − | | |
| − | ===2013===
| |
| − | ''Treasury report''<br>
| |
| − | At the beginning of 2013 the situation was looking increasingly dire. The Treasury’s Crown Ownership Monitoring Unit (COMU) released its 2012 Annual Portfolio Report. It did not have a valuation of Solid Energy because the company’s statement of corporate intent had not been finalized, but the previous year's value estimate of $2.8 bn by Solid Energy's board had been higher than an independent valuation of $1.7 bn commissioned by COMU. The report said, “The recent drop in coal prices will have placed further pressure on Solid Energy's 2011 estimate of commercial value … there is every reason to expect Solid Energy's value to have dropped considerably in the year to June 30, 2012.”<ref>3News, 19 January 2013, [http://www.3news.co.nz/Writedown-in-value-of-Solid-Energy-looms/tabid/421/articleID/283679/Default.aspx “Writedown in value of Solid Energy looms”], accessed February 2013</ref>
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| − | | |
| − | ''Don Elder’s resignation''<br>
| |
| − | On 04 Feb Don Elder, announced his resignation from Solid Energy, after discussions had been underway for some time. He decided to step down immediately as CE but to remain available to work for the company for a period (while still on full salary) to assist with a transition. Garry Diack, previously the company's Group Manager Organisational Development and Performance, would be the interim CE until a new appointment was made.<ref>Solid Energy, Continuous Disclosure 4 February 2013, [http://www.coalnz.com/about/continuous-disclosure/2013/Dr-Don-Elder-resigns-as-Solid-Energy-CEO.html “Dr Don Elder resigns as Solid Energy CEO”], accessed February 2013</ref>
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| − | | |
| − | ''Mataura lignite plans looking uncertain''<br>
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| − | Yet more writing appeared on the wall when Southland newspaper, The Ensign, revealed that Solid Energy had put several of its rural properties in Eastern Southland up for sale. Solid Energy’s communications manager, Bryn Somerville, was reported as saying that more than 1000 ha of land had been offered for sale, including 750 ha of dairy farmland to the west of Mataura. The company would place conditions on the land titles to ensure that interest in the lignite resource was retained, but did not believe that access would be required for 30–40 years. Mr Somerville stated that Solid Energy would still be able to build a plant or a mine in the district and was currently finalizing the preferred sites.<ref>Gore Ensign, 6 February 2013, [http://digital.theensign.co.nz/olive/ode/ens_daily/ “SOE shedding surplus land”], accessed February 2013</ref> A month previously he had announced that efforts would shortly resume to start commercial production at the lignite briquette plant in Mataura, originally expected to be commissioned in June 2012.<ref>Stuff Business Day, 16 January 2013, [http://www.stuff.co.nz/business/industries/8185031/Solid-Energy-keen-to-get-lignite-plant-operating “Solid Energy keen to get lignite plant operating”], accessed February 2013</ref> A Southland Times editorial, however, commented; “Much as the projects may be still on Solid Energy's agenda, it's an agenda that is right here, right now, looking increasingly like a historical document rather than a still-vibrant plan.”<ref>The Southland Times, 7 February 2013, [http://www.stuff.co.nz/southland-times/opinion/8270903/Editorial-Solid-Energy-on-shaky-ground “Solid Energy on shaky ground”], accessed February 2013</ref>
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| − | | |
| − | ''Financial position continues to deteriorate''<br>
| |
| − | During February Solid Energy’s trading position continued to deteriorate as Chairman Mark Ford announced that the company was in discussions with banks and Treasury about the debt and equity support required for future business operations. A restructuring and turnaround plan was being prepared by the newly appointed Board.<ref>Solid Energy, Continuous Disclosure 21 February 2013, [http://www.coalnz.com/about/continuous-disclosure/2013/Solid-Energys-financial-position.html “Solid Energy’s financial position”], accessed July 2013</ref> Prime Minister John Key criticised Solid Energy for taking on too much debt, making unsuccessful investments, and not having sufficient reserves to weather a slump in coal prices. He said that the debt had climbed to $389 million when "typically coal companies do not have a lot of debt on their balance sheets.” He indicated that the Government had been unhappy with investments for the last couple of years. When questioned about the $23 M of bonuses allotted at Solid Energy, Key said that it was a matter for the board.<ref>Timaru Herald, 23 February 2013, [http://www.stuff.co.nz/timaru-herald/business/8341851/State-miner-to-return-to-coalface “State miner to return to coalface”], accessed July 2013</ref>
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| − | | |
| − | Green Party co-leader Russel Norman pointed out that in 2011 John Key had actively encouraged Solid Energy’s expansion in areas such as lignite conversion. Trevor Mallard, a former Labour Minister for State Owned Enterprises, was referring to Mr Key’s statement that these initiatives could be traced back to previous Labour governments when he said, "Anyone who read the reports could see Solid Energy was having problems and for them to try and blame things that happened five, six, seven or eight years ago is just nonsense."<ref>The New Zealand Herald, 26 February 2013, [http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10867771 "Norman: Key encouraged expansion of Solid Energy’s lignite plans"], accessed July 2013</ref>
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| − | | |
| − | On 07 March Solid Energy presented its financial report to the Commerce Committee for the year ending 30 June 2012. The company acknowledged that its financial position had further deteriorated and was now a matter of wide public concern. Total revenue was forecast to decrease from $978 million in 2012 to $645 m in the current financial year. A major restructuring plan had seen Spring Creek Mine mothballed, work at Huntly East Mine scaled back, cost-cutting at Stockton, capital expenditure reduced by about $100 m, total job losses of 25% of the workforce, the resignation of CE Don Elder, and an almost total restructuring of the Board.<ref>Solid Energy, Continuous Disclosure 7 March 2013,[http://www.coalnz.com/about/continuous-disclosure/2013/Solid-Energy-Financial-Review-Opening-remarks-to-Commerce-Committee.html "Solid Energy Financial Review"], accessed July 2013</ref>
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| − | | |
| − | State owned enterprises minister Tony Ryall blamed the state of Solid Energy on a “perfect storm” of events; a wrong choice of investments along with a worldwide collapse in coal prices. He said that the government could not be blamed because it was the responsibility of the board to manage debts, dividends and investments.<ref>The National Business Review, 14 March 2013, [http://www.nbr.co.nz/article/ryall-blames-perfect-storm-solid-energys-crisis-bc-137251 “Ryall blames ‘perfect storm’ for Solid Energy’s crisis”], accessed July 2013</ref>
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| − | | |
| − | ''Release of Treasury documents and Select Committee hearings''<br>
| |
| − | Dozens of Treasury documents released in March and May 2013 under the Official Information Act revealed that Solid Energy had often been reluctant to supply information to the government, including an analysis that would justify its ambitious growth strategy. In March, the company’s responses to some of the Commerce Committee’s questions seemed to follow this same pattern, for example:
| |
| − | Q: For each new spending initiative introduced over the last three Budgets (i.e Budget 2009, Budget 2010, and Budget 2011), what evaluation has been undertaken of its effectiveness and what were the findings of that initiative?<br>
| |
| − | A: As a State Owned Enterprise, Solid Energy is not subject to annual Government budgets and therefore we have interpreted this question (and others which relate to “Budgets”) as not applicable to the company.
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| − | | |
| − | Some of the questions relating to funding did obtain more substantive answers. For example, Solid Energy spent $162 M on capital works in 2012, compared with $115 M in 2011, $172 M in 2010, $110 M in 2009 and $57 M in 2008.
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| − | | |
| − | Other expenditure appeared to be less directly related to the actual business of coal-mining. In 2012 Solid Energy spent $132,000 on Colmar Brunton surveys seeking New Zealanders’ opinions on coal mining and the minerals industry. Almost a million dollars were spent on salaries for communications and public relations staff, plus a total of $170,362 on public relations advice.[Ref needed] Solid Energy had continued to retain the services of Thompson & Clark Investigations Ltd (TCIL) as its security advisor at a cost of $205,053 in 2012. (TCIL was implicated in the use of paid undercover informants prepared to spy on environmental groups such as “Save Happy Valley” who were opposed to Solid Energy’s Cypress Mine plans.)<ref>Stuff National, 28 April 2008, [http://www.stuff.co.nz/national/377237/Private-investigators-still-digging-on-West-Coast “Private investigators still digging on West Coast”], accessed July 2013</ref>
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| − | | |
| − | In 2013 Saunders Unsworth were paid about $48,000 for the provision of expert advice and assistance with regard to handling Commerce Committee Parliamentary protocol and practice. The firm's advice on how to deal with "problematic" Labour MPs and the media was shared, not just with Solid Energy, but with the offices of Treasury and Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall. Saunders Unsworth advised that, “your statements to the committee should be as short as possible. The longer you talk, the more likely it will be that you trigger a range of questions that will not be pleasant.”<ref>The New Zealand Herald, 20 June 2013, [http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10891752 “PR spin costs Solid Energy $48K”], accessed July 2013</ref>
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| − | | |
| − | Newcomers Garry Diack (acting CE) and Mark Ford (Chairman) often found themselves unable to answer questions posed at the Select Committee hearing. When Don Elder finally appeared before the Committee on 14 March after a somewhat farcical series of events, he acknowledged that in hindsight some past decisions were wrong. He apologized to those who had lost their jobs or otherwise born the brunt of the company’s financial problems. Former chairman John Palmer accepted responsibility for what had happened but didn’t have any regrets about the path and strategy taken by the Board.<ref>Radio New Zealand, 14 March 2013, [http://www.radionz.co.nz/news/political/130439/solid-energy%27s-former-boss-says-sorry-at-hearing “Solid Energy’s former boss says sorry at hearing”], accessed Jul 2013</ref>
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| − | | |
| − | ''Further cutbacks''<br>
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| − | On 08 May Chairman Mark Ford announced that Christchurch based jobs would be cut by almost half as part of a strategy that would see the company focusing on its core coal mining capability. The Nature’s Flame wood pellet business would soon go on the market. He also appeared to give a definitive answer to the question of what would happen to Solid Energy’s multitude of projects: "While the underground coal gasification and lignite conversion still have potential, Solid Energy is no longer in a position to be the lead sponsor of major capital projects and we are looking to transition and divest these projects to entities which have the capital, experience and appetite to progress them. The company's financial situation also means that it is unlikely that we will be able to undertake any significant new coal development projects."<ref>Solid Energy, Continuous Disclosure 8 May 2013,[http://www.coalnz.com/about/continuous-disclosure/2013/Solid-Energy-proposes-further-job-cuts-in-refocused-business.html "Solid Energy proposes further job cuts in refocussed business"], accessed July 2013</ref>
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| − | | |
| − | ''Government response''<br>
| |
| − | Later in that month Prime Minister Key said that the Government needed more time to decide its next move on Solid Energy. On 19 March he had stated that the government would work directly with the bankers to try and find a way of realistically structuring the company. However, that didn’t mean the government would pick up the total bill for Solid Energy’s losses. [All bond and loan facilities were unsecured.] Corporate advisers KordaMentha had completed a report indicating that some parts of the business were in better shape than others. "So in totality it's probably got no equity left and significant debts but that doesn't mean there aren't some parts of it that are potentially genuine businesses,” said Key. “The question is how the Government can take the next step ...There are many options on the table, none of them are terribly palatable. But we're doing our best to try and resolve what is a quite broken company.”<ref>One News, 20 May 2013, [http://tvnz.co.nz/business-news/solid-energy-broken-company-key-5443041 “Solid Energy a ‘broken company’ – Key”], accessed July 2013</ref>
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| − | | |
| − | ''Deloitte report''<br>
| |
| − | On 12 March the government had engaged the firm of Deloitte to undertake an independent review of the monitoring of Solid Energy during its period of expansion. Treasury had not proposed to release the Deloitte report<ref>The Treasury, [http://media.nzherald.co.nz/webcontent/document/pdf/201324/solid.pdf “Solid Energy information release, June 2013”], accessed July 2013</ref> but on 11 June was obliged to do so under the provisions of the Official Information Act. The Deloitte report concluded that, although there wasn’t a material failure in Treasury’s monitoring processes, the failure of Solid Energy did “raise questions about how these processes are applied and whether Treasury's response was forceful enough or occurred soon enough given that the company provided cause for concern over an extended period." Solid Energy had been extremely reluctant to provide information requested by Treasury and the impression of the company over time was of "an entity that was not as respectful of Treasury's role/responsibility as ministers would expect from an SOE." The report concluded that the removal of Chairman John Palmer and CE Don Elder might have been warranted but that for Treasury to initiate such action "would have required it to effectively form the view that it lacked confidence in a board and executive with a sound track record in a technically complex industry". In response, Finance Minister Bill English said the Government hadn’t acted sooner because of the perception, right up until 2011, that Solid Energy had a highly capable Board. "In hindsight once the coal price had collapsed, you could look back and say we should've moved sooner. But to move sooner we would've had to sack more people sooner."<ref>NewstalkZB, 12 June 2013, [http://www.newstalkzb.co.nz/auckland/news/nbpol/1565727172-english-says-solid-energy-collapse-unavoidable “English says Solid Energy collapse unavoidable”], accessed July 2013</ref>
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| − | | |
| − | The Deloitte report also reached a number of conclusions about the underlying reasons for Solid Energy’s collapse. These included the view that:<br>
| |
| − | • its ultimate failure was primarily due to an unforeseen steep and sustained fall in coal prices in mid to late 2012<br>
| |
| − | • Solid Energy had reduced its capacity to manage through a period of distress by increasing its gearing and cost structure;<br>
| |
| − | • the increase in gearing primarily arose from a decision to fund investment activity from debt, despite its strong operating cash flows over most of the period;<br>
| |
| − | • the rationale for investment was underpinned by the Company’s long term view on energy prices which were generally well above consensus market expectations;<br>
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| − | • the Board supported the investment strategy, notwithstanding concerns raised by Treasury. Despite repeated requests for independent verification of management’s pricing forecasts, these were never undertaken or provided;<br>
| |
| − | • Treasury’s anxiety with respect to the Company’s strategy was elevated further by the general attitude of Solid Energy to Treasury and the related monitoring processes;<br>
| |
| − | • Concerns identified by Treasury were balanced against the reality that Solid Energy was considered to have a well-regarded CEO, strong Board, and for most of the period operated profitability and produced strong operating cash flows;<br>
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| − | | |
| − | On 07 July information came to light – apparently as a result of a clerical error as the information was redacted in all but one of the documents released by Treasury – indicating that $100 M of the funds raised from the partial sale of Mighty River Power was being put aside to help bail out Solid Energy. Finance Minister Bill English stated that this was a short term stand-by facility, which had not yet been activated, and if it were, the Government would get the money back.<ref>Otago Daily Times, 9 July 2013, [http://www.odt.co.nz/news/business/264093/asset-sales-funds-ailing-soe “Asset sales funds for ailing SOE”], accessed July 2013</ref>
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| − | | |
| − | Labour MP Clayton Cosgrove accused the government of attempting a cover up but Prime Minister Key appeared to be initially unaware of the budget allocation, saying, "If it's in the Budget documents, it's possible, but it's buried pretty deep in those."<ref>3News, 9 July 2013, [http://www.3news.co.nz/Solid-Energy-unlikely-to-get-asset-sale-funds/tabid/1607/articleID/304275/Default.aspx#ixzz2Yif8cpRQ "Solid Energy ‘unlikely’ to get asset sale funds"], accessed July 2013</ref>
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| − | | |
| − | ''Job cuts at Huntly''<br>
| |
| − | On 15 August Chairman Mark Ford announced that the last major round of job cuts would target about 93 redundancies, almost all at the Huntly East mine. These would cost the company around $5.6 million, and eventually deliver annual cost savings of $10 million. The workforce at Huntly East and the nearby Rotowaro mine would be reduced from 193 to 86. Revenues in the North Island were forecast to drop by 44% in the current financial year. New contracts had been signed at lower prices and for lower volumes with its two biggest domestic customers, New Zealand Steel and Genesis Energy, both of which had been importing cheaper coal from Indonesia. Acting chief executive Gary Diack warned that further cuts could occur if coal markets worsened further.<ref>National Business Review, 15 August 2013, [http://www.nbr.co.nz/article/solid-energy-targets-93-waikato-mine-job-cuts-plunging-coal-price-ck-144437 “Solid Energy targets 93 Waikato mine job cuts on plunging coal price”], accessed October 2014</ref>
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| − | | |
| − | ''Financial report for 2012/2013''<br>
| |
| − | There was no good news to be had when in October the company released its latest financial report which stated an operating loss of $205.6 million for the year ended Jun 2013. Once impairments and tax were taken into account this loss increased to $335.4 million. Underlying earnings had dropped 78 per cent to $22.2 million. The gearing ratio had increased from 42% to 81%. Coal sales of 4.1 Mt were down by 11 per cent in weak commodity markets, and the revenue of $631.1 million was down by 35 per cent as the average USD prices received fell by 34 per cent. Yet again, no dividend was declared.
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| − | | |
| − | The company’s total assets at 30 June 2013 were $859 million, down $308 million from their value a year previously. Impairments (loss in value) included $80.1 million for Stockton mine, $53.1 million for Spring Creek mine, $23.9 million for the Underground Coal Gasification pilot plant in Huntly, and $26.2 million for the Mataura briquette plant. Restructuring costs including redundancies totalled $46.7 million. Tens of millions of dollars were also spent in operating unprofitable or non-operating businesses, paying corporate staff who were made redundant, and in covering costs of projects that were closed down. Chairman Mark Ford claimed that Solid Energy had a good operating future now it was focused on cash generation and reduced and contained costs.<ref>NZ Treasury, [http://www.treasury.govt.nz/commercial/resources/pdfs/disclosures/soedisc-senz-4oct13.pdf “Results for announcement to the market, year ended 30 June 2013”], accessed October 2014</ref><ref>Otago Daily Times, 7 October 2012, [http://www.odt.co.nz/news/business/275937/solid-energy-plan-invest “Solid Energy plan to invest”], accessed October 2014</ref>
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| − | | |
| − | ''Government proposes a restructuring deal''<br>
| |
| − | In October Finance Minister Bill English proposed a deal in which the banks would effectively write off $75 million of the outstanding lending by agreeing to swap debt for non-voting, redeemable preference shares in Solid Energy. Banks receiving these shares included ANZ, BNZ, Westpac and TSB Bank [whose net profit was consequently reduced by 6 per cent the following year].<ref>NZ Herald, 30 May 2014, [http://www.nzherald.co.nz/solid-energy/news/article.cfm?o_id=362&objectid=11264212 “Solid Energy shares hit TSB”], accessed October 2014</ref> The government would buy $25 million of redeemable preference shares and offer Solid Energy secured credit up to $130 million made up of a $50 million secured working capital loan, a further secured mortgage-backed loan facility of $50 million and a secured standby facility of up to $30 million if required. The Auckland branch of Bank of Tokyo-Mitsubishi UFJ, the second-largest lender, opposed the deal and was warned by Deputy Prime Minister Bill English that if it did succeed in stopping the transaction, Solid Energy could become insolvent, and the bank would lose all its money. On 22 Oct it was announced that the deal would go ahead despite the bank’s opposition.<ref>Otago Daily Times, 7 October 2012, [http://www.odt.co.nz/news/business/275937/solid-energy-plan-invest “Solid Energy plan to invest”], accessed October 2014</ref><ref>NZ Herald, 17 October 2013, [http://www.nzherald.co.nz/solid-energy/news/article.cfm?o_id=362&objectid=11141623 "Solid Energy court challenge likely to fail – English"], accessed October 2014</ref><ref>
| |
| − | NZ Herald, 22 October 2013, [http://www.nzherald.co.nz/solid-energy/news/article.cfm?o_id=362&objectid=11144299 “Solid Energy secures restructuring deals with banks”], accessed October 2014</ref>
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| − | | |
| − | ''Losses continue''<br>
| |
| − | In the six months ended 31 Dec 2013 Solid Energy made a net loss of $40.9 million, smaller than the previous loss of $318.2 million, which had, however, included impairment charges of $222.7 million. Underlying earning (a measure which ignores impairments and large one-off expenditure) showed a loss of $28.7 million, compared to the previous profit of $3.5 million. No tax was paid. Revenues had fallen by 28 percent to $236.1 million. Export sales increased 10% in the half year to 1.1 MT, but NZ sales dropped by 47% to 0.6 Mt, mainly due to changing supply arrangements with New Zealand Steel and Genesis Energy.
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| − | | |
| − | Acting chair Pip Dunphy described the weak global coal market as ‘challenging’ (Feb 2014) and stated that the company’s financial recovery was likely to be prolonged. The company had cut costs by $74.2 million to $255.5 million, having reduced its workforce to 867 people as at Dec 31 from 1237 at the end of December 2012 and 1658 in July 2012. Jobs lost included 150 in the Christchurch corporate office, 220 when Spring Creek Underground Mine was put into care and maintenance and 200 as a result of reducing production at Huntly East Mine. Solid Energy had completed a major restructuring which had started in Aug 2012, including a two-thirds cutback in production at the Huntly East underground mine.<ref> NBR, 28 February 2014, [http://www.nbr.co.nz/article/solid-energy-posts-small-first-half-loss-409m-yet-draw-crown-funding-bd-152629 “Solid Energy posts small first-half loss of $40.9m, yet to draw on Crown funding”], accessed October 2014</ref><ref>Otago Daily Times, 1 March 2014, [http://www.odt.co.nz/news/business/293534/28-revenue-fall-solid-energy “28% revenue fall for Solid Energy”], accessed October 2014</ref>
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| − | | |
| − | ===2014===
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| − | ''Little cause for optimism''<br>
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| − | On 24 Feb Prime Minister John Key acknowledged that Solid Energy, was finding current conditions "very challenging." When asked about the potential for Solid Energy to be placed back on the list for partial privatisation, he said, "We think it can survive, but its asset value is very low."<ref>NBR, 25 February 2014, [http://www.nbr.co.nz/article/bathurst-hunkers-down-coking-coal-price-keeps-sinking-bd-152390 “Bathurst hunkers down as coking coal price keeps sinking”], accessed October 2014</ref>
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| − | | |
| − | The international situation was to provide few grounds for optimism. In May the Queensland Resources Council president Michael Roche was reported as saying 10 percent of mining companies in the state were in a "very precarious position" and predicting more mine closures, with a quarter of the coal being produced at a loss. In September, Anglo American CEO Mark Cutifani stated that, globally, coking coal mines would probably be closed or suspended at a rate of about one every two or three weeks until a reduced supply drove a price recovery. Mining jobs in Australia were being lost as mines such as Wongawilli, owned by Wollongong Coal, were shut down.<ref>Mining Australia, 28 November 2014, [http://www.miningaustralia.com.au/news/coking-coal-mines-will-see-global-shutdowns-cutifa “Coking coal mines will see global shutdowns”], accessed October 2014</ref>
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| − | | |
| − | In March 2014, Solid Energy’s acting CE Garry Diack stated that it would be 12–18 months before oversupply was removed from the system and Solid Energy could approach a breakeven result. Head of marketing and strategy Bill Luff told Parliament’s commerce select committee that the coking coal market had strong prospects with growing capacity in India (the committee was informed that Indian government official had expressed an interest in buying into Solid Energy), and the chance of a new steelmaking business in Vietnam coming on as a customer. He believed that the coking coal price would be about US$200 per tonne by 2021. It would have to rise back to about US$150/tonne if Solid Energy were to avoid drawing on the $100 million of working capital facilities made available by the government.<ref>NBR, 6 March 2014, [http://www.nbr.co.nz/article/solid-energy-faces-more-losses-global-coal-prices-stays-capped-bd-152892 “Solid Energy faces more losses as global coal prices stays capped”], accessed October 2014</ref><ref>TVNZ, 6 March 2014, [http://tvnz.co.nz/business-news/foreign-interest-in-solid-energy-govt-told-5859342 “Foreign interest in Solid Energy, government told”], accessed October 2014</ref>
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| − | | |
| − | Solid Energy chair, Pip Dunphy, told the committee that although typical gearing ranges (level of debt compared to assets) in the mining sector were between 20 and 50 percent, Solid Energy had forecast gearing of more than 70 percent from 2014/15 onwards. This was despite expecting a significant reduction in debt after renegotiating with the banks in 2013. Dunphy stated that Solid Energy, "believes its business can be sustainable with a hard coking-coal price of US$140 to US$150 a tonne, but the current price is only US$119." [By June the spot price for coking coal was only US$113/tonne.]<ref>NBR, 11 April 2014, [http://www.nbr.co.nz/article/solid-energy-gearing-stuck-about-70-percent-unless-coal-prices-recover-bd-154650 “Solid Energy gearing stuck about 70% unless coal prices recover”], accessed October 2014</ref>
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| − | | |
| − | ''More bad news for Stockton workers''<br>
| |
| − | On 7June further job losses at Stockton were announced. From the remaining workforce of 521, 102 mine staff and 35 management and administration jobs would go. In addition, a further 50 of the 120 jobs of contractors servicing the mine would be lost. It was planned for annual production to drop from 1.9 to 1.4 million tonnes. The company would stop non-essential development work, mine from lower cost-to-produce pits to meet long-term export customer contracts and carry out most mining work during the day.<ref>Otago Daily Times, 7 June 2014, [http://www.odt.co.nz/news/business/305049/187-jobs-gone-stockton-coal-mine “187 jobs gone at Stockton coal mine”], accessed October 2014</ref><ref>Solid Energy, 6 June 2014, [http://www.solidenergy.co.nz/solid-energy-plans-production-and-job-reductions-at-west-coast-export-mine/ “Solid Energy plans production and job reductions at West Coast export mine”], accessed October 2014</ref>
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| − |
| |
| − | Announcement of which jobs were to be cut was expected on 07 July, but this was delayed because almost 100 workers opted for voluntary redundancy. A worker, who declined to be named, stated that at a meeting with chief executive Dan Clifford and mine manager Michael Harrison there were “angry reactions from staff to the arrogant and combative way in which they addressed their audience". He claimed that hundreds of millions of dollars had been spent on new plant, vehicles and equipment, while the incomes of Stockton mineworkers had reduced significantly through reduced shifts and hourly rates.<ref>NZ Herald, 8 July 2014, [http://www.nzherald.co.nz/solid-energy/news/article.cfm?o_id=362&objectid=11289951 “’Fed up’ miners seek redundancy”], accessed October 2014</ref>
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| − | | |
| − | ''Further Government assistance''<br>
| |
| − | In September the Government announced that it would provide cover worth $103 million to Solid Energy for restoring mining land and to avoid its technical insolvency. The indemnity would enable the company to stay in positive equity, ie for its assets to outweigh its liabilities, and to sign off its accounts. Government officials were working with the company to extend its remediation indemnity, which would meet the future costs of restoring mined land to its previous state.<ref>Stuff Business Day, 18 September 2014, [http://www.stuff.co.nz/business/industries/10515618/Solid-Energy-gets-103-million-lifeline “Solid Energy gets $103 million lifeline”], accessed October 2014</ref>
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| − | | |
| − | ''No good news in the Annual Report <ref>Solid Energy, [http://www.solidenergy.co.nz/solid-energys-annual-report-for-the-financial-year-to-30-june-2014/ “Annual Report for financial year to 30 June 2014”], accessed March 2015</ref>''<br>
| |
| − | Solid Energy’s 2014 Annual Report wasn’t presented to Parliament until the end of October. The company reported a loss of $181.9 million in the 12 months ended 30 June. This was the third loss in a row ($335.4m in June 2013 year and 40m in 2012) and the Board didn’t anticipate that profitability would return until the 2017 financial year. Coal prices plummeted to US$107 (NZ$137) a tonne by March of the year, a 68 per cent fall on their peak of US$330 a tonne in 2011.
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| − | | |
| − | Operating costs in the 2014 financial year had been cut by $141 m to $500 m, but were still greater than revenue of $449.2m (which was almost 30 per cent lower than the previous year). Solid Energy took a $110.6 million impairment charge, largely due to the write down in the value of its export operations. Gearing had increased to 95% after further asset impairments, while the shareholders equity had decreased from $91.6m to $12.5m. Total assets at 30 June 2014 were $636m, down $223 million on the same time the
| |
| − | previous year. <ref>Solid Energy, [http://www.solidenergy.co.nz/solid-energys-annual-report-for-the-financial-year-to-30-june-2014/ “Annual Report for financial year to 30 June 2014”], page 5, accessed March 2015</ref>
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| − | | |
| − | The accounts were tagged by auditor KPMG, which said there is "material uncertainty relating to the level of future coal prices, exchange rates and operating costs that will determine the group's ability to generate sufficient cash flows to operate within the group financing arrangements or for any repayment or refinancing requirements at the maturity of the group financing arrangements."<ref>Stuff Business Day, 27 February 2015, [http://www.stuff.co.nz/business/industries/66753573/crown-protected-solid-energy-directors “Crown protected Solid Energy directors”], accessed March 2015</ref>
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| − | | |
| − | ===2015===
| |
| − | ''Further job losses at Stockton''<br>
| |
| − | At the beginning of the year rumours were circulating that further job losses at Stockton could be imminent, after 184 jobs had been cut only six months previously. Local mayor Garry Howard had previously stated that, "If the price of coal doesn't improve, I'm expecting further redundancies this year, unfortunately."<ref> Australian Mining, 8 January 2015, [http://www.miningaustralia.com.au/news/more-job-cuts-likely-at-nz-coal-mine “More job cuts likely at NZ coal mine”], accessed March 2015</ref>
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| − | | |
| − | On 07 May Solid Energy signaled that there would be yet another restructure and that jobs at Stockton would be cut from 397 to 246. Coal output would be further reduced from July, to about 1 Mt a year. After three weeks consultation, the job cuts were confirmed on 26 May. <ref>Business Day, 26 May 2015, [http://www.stuff.co.nz/business/industries/68871308/West-Coasts-Stockton-mine-job-losses-confirmed “West Coast’s Stockton mine job losses confirmed”], accessed September 2015</ref>
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| − | | |
| − | ''Chair resigns''<br>
| |
| − | On 24 Feb, Chair Pip Dunphy resigned, less than a year after being appointed. It was announced that independent director Andy Coupe would take over as acting chair until a permanent replacement was appointed.[181] It was later revealed that Ms Dunphy’s resignation followed disagreements with Minister English as to whether the issues with Solid Energy were resolvable. She did not believe that they were.<ref>Business Day, 1 April 2015, [http://www.stuff.co.nz/business/industries/67575205/Solid-Energy-chairwoman-quits-over-disagreement-with-Finance-Minister “Solid Energy chairwoman quits over disagreement with Finance Minister”], accessed September 2015</ref>
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| − | | |
| − | ''Precarious financial position''<br>
| |
| − | On 27 Feb Solid Energy announced that it would delay the release of its half-year results because of its precarious financial position. CE Dan Clifford said that the company was moving early on the face of a poor outlook for international coal prices. Production costs had been cut by 30 percent in the previous 18 months but more structural changes were needed. State Services Minister Todd McClay said as long as there was a reasonable chance Solid Energy could return to profitability, the Government would continue to do what it could to support it. <ref>Radio New Zealand, 28 February 2015, [http://www.radionz.co.nz/news/political/267378/solid-energy-delays-half-year-results “Solid Energy delays half year results”], accessed March 2015</ref>
| |
| − | He confirmed that the Crown had granted an indemnity to protect the directors of the company.<ref>Stuff Business Day, 27 February 2015, [http://www.stuff.co.nz/business/industries/66753573/crown-protected-solid-energy-directors “Crown protected Solid Energy directors”], accessed March 2015</ref>
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| − | | |
| − | ''Lenders write off debt''<br>
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| − | TSB Bank was one of a group of lenders to Solid Energy who wrote off $75 million of the $369.7 million they were owed in exchange for [non-voting] preference shares. By the end of Feb 2015 the bank had written off all of its $53.9 million loan. <ref>Radio New Zealand, 28 February 2015, [http://www.radionz.co.nz/news/political/267378/solid-energy-delays-half-year-results “Solid Energy delays half year results”], accessed March 2015</ref><ref>NBR, 27 February 2015, [http://www.nbr.co.nz/article/tsb-bank-writes-539-mln-solid-energy-debt-fitch-affirms-rating-bd-169412 “TSB bank writes off 539 million Solid Energy debt, Fitch affirms A- rating”], accessed March 2015</ref> On 2 March Kevin Murphy. TSB chief executive, confirmed that Solid Energy was negotiating a fresh restructure which could see lenders accept more losses on their loans. He said that State Owned Enterprises Minister Todd McClay had communicated to lenders that the Government was not willing to put more taxpayer funds at risk in order to help Solid Energy.<ref>Stuff Business Day, 2 March 2015, [http://www.stuff.co.nz/business/industries/66822234/tsb-bank-writes-off-solid-energy-loan "Solid Energy lenders could see more losses"], accessed March 205</ref> Prime Minister John Key indicated that Solid Energy’s private debt was the banks’ problem and denied that the company was continuing to trade on the basis of an implicit guarantee that it would be rescued by the Government. He would not comment on whether the company would be liquidated if the banks did not accept further losses.<ref>Stuff Business Day, 3 March 2015, [http://www.stuff.co.nz/business/industries/66867625/tsb-bank-confirms-ongoing-talks-with-shaky-solid-energy “TSB bank confirms ongoing talks with shaky Solid Energy”], accessed March 2015</ref>
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| − | ''Report to Parliament''<br>
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| − | In March 2015, Finance Minister Bill English was still not sure whether a core business could be salvaged.<ref>Business Day, 10 March 2015, [http://www.stuff.co.nz/business/industries/67169365/Solid-Energy-may-not-be-viable-English “Solid Energy ‘may not be viable’: English”], accessed September 2015</ref> On 11 March 2015 acting chairman, Andy Coupe, presented Solid Energy’s annual review to Parliament. He stated that the company was ‘marginally cash positive’ but was looking at another significant loss. Solid Energy did not expect further financial assistance from the Government. The company was in ‘critical’ discussions with the banks who were owed $300m; a debt which would not be sustainable beyond 2016. Further job losses would be inevitable and the company was looking at selling parts of its business. Not only had chairwoman Pip Dunphy resigned, but the chief financial officer and a senior accountant had also resigned.
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| − | Labour MP Clayton Cosgrove described Solid Energy as "the worst [state-owned enterprise] disaster in our history". He claimed that Finance Minister Bill English had undermined the negotiations with the banks by announcing that the Government would not contribute more money.<ref>Stuff Business Day, 11 March 2015, [http://www.stuff.co.nz/business/67222829/solid-energy-job-losses-inevitable “Solid Energy job losses ‘inevitable’”], accessed March 2015</ref>
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| − | ''The end of the road''<br>
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| − | On 13 August it was announced that Solid Energy and its subsidiaries would be placed into voluntary administration (VA) for a five week period. It was planned that if creditors agreed to freeze its debts, then the company would gradually sell off its assets over a two and a half year period. If creditors accepted the proposal, the companies would be handed back to the Directors to oversee the implementation of the sell down process at the end of the VA period.<ref>Solid Energy, Media Release 13 August 2015’ [http://www.solidenergy.co.nz/wp-content/uploads/2015/08/20150813_MR_SolidEnergy_VoluntaryAdministration_F3.pdf “Solid Energy Board places company into voluntary administration”], accessed September 2015</ref>
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| − | Finance Minister Bill English acknowledged that, while the banks might recover some of their losses, the Government would get no return from the company, and in fact taxpayers would face a loss of at least $128 milliom.<ref> Business Day, 13 August 2015, [http://www.stuff.co.nz/business/industries/71101446/bill-english-admits-government-will-recover-nothing-from-solid-energy-sale “Bill English admits government will recover nothing from Solid Energy sale”], accessed September 2015</ref> He didn’t believe that it was bad management on the National Government’s part that had pushed the company over the edge.<ref>NZ Herald, 15 August 2015, [http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11497614 “Government denies ‘bad management’ was to blame”], accessed September 2015</ref> Prime Minister John Key stated, “Over the course of the past few years we've invested over $200m to try and support the company. People will be aware that it's a victim largely of falling coal prices." Labour leader Andrew Little, on the other hand, considered that the company had failed because, "The Government encouraged Solid Energy's management to make reckless decisions and risky investments.”<ref>Business Day, 13 August 2015, [http://www.stuff.co.nz/business/industries/71077310/solid-energy-announces-voluntary-administration-ahead-of-sale “Solid Energy announces voluntary administration ahead of sale”], accessed September 2015</ref>
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| − | The next day, Radio NZ ran a story “Contractor eyes up Solid Energy”. Mark Franklin, CE of the Stevenson Group, which operates Solid Energy’s second biggest mine Rotowaro in Waikato, stated that the company might be interested in the North Island business. Solid Energy’s acting chair, Andy Coupe, said that there had been recent inquiries from international sources. It was speculated that one of these might be the Indian company, Adani, which was currently seeking to develop the giant Carmichael mine in Queensland, but their involvement appears unlikely.<ref>Radio NZ, 14 August 2015, [http://www.radionz.co.nz/news/national/281333/contractor-eyes-up-solid-energy “Contractor eyes up Solid Energy”], accessed September 2015</ref><ref>IWW Environmental Unionism Caucus, [http://ecology.iww.org/aggregator/sources/417] accessed September 2015</ref> Bathurst Resources Limited investor relations general manager Sam Aarons said the company was interested in looking at all of Solid Energy's assets, especially the Southland assets.<ref>Business Day, 14 August 2015, [http://www.stuff.co.nz/business/industries/71121243/solid-energys-southland-assets-could-have-buyers “Solid Energy’s Southland assets could have buyers”], accessed September 2015</ref> On 21 Sep, Chairman of the Tainui Executive, Te Arataura, Rahui Papa said the sell-down would trigger its 1995 Waitangi Treaty Settlement which gave it first right of refusal on surplus crown assets. Mr Papa said they had had initial discussions with Solid Energy about the assets, including the Huntly East Mine, which employed a number of Tainui people.<ref>Radio NZ, 21 September 2015, [http://www.radionz.co.nz/news/te-manu-korihi/284851/waikato-tainui-moots-solid-asset-buy “Waikato Tainui moots Solid asset buy”], accessed October 2015</ref>
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| − | Less than a week later, Genesis Energy announced that it would cancel its coal supply agreement with Solid Energy from October, using a clause triggered by the company going into voluntary administration. (Genesis had almost a million tonnes of coal stock-piled, and had announced previously that it planned to close down its remaining coal units at Huntly Power Station by 2018.) Solid Energy’s administrator, Brendon Gibson of KordaMentha, refused to say whether any other contracts included the get-out clause.<ref> Business Day, 20 August 2015, [http://www.stuff.co.nz/business/industries/71287779/genesis-energy-uses-solid-energy-administration-to-cancel-major-contract “Genesis Energy uses Solid Energy administration to cancel major contract”], accessed September 2015</ref><ref>Business Day, 21 August 2015, [http://www.stuff.co.nz/business/industries/71325506/genesis-pullout-of-solid-energy-contract-red-herring “Genesis pull-out of Solid Energy contract ‘red herring’”], accessed September 2015</ref>
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| − | There was also bad news from New Zealand Steel (with a capacity to use up to 800,000 tonnes of coal a year), which was told by its parent company Bluescope that its Glenbrook operation might need to be mothballed if NZ Steel couldn’t cut $50 million in costs. Using NZ coal wasn’t competitive.<ref>Business Day, 24 August 2015, [http://www.stuff.co.nz/business/industries/71385492/nz-steel-under-review-by-parent-bluescope-steel “NZ Steel under review by parent Bluescope Steel”], accessed September 2015</ref>
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| − | KiwiRail, just one of the companies suffering as a result of Solid Energy’s failing fortunes, said that, as the volume of coal being shipped from the West Coast had dropped from around 2 Mt of coal annually to about 1 Mt, the pricing structure didn’t fairly reflect the costs being born by the rail company.<ref>Radio NZ, 24 August 2015, [http://www.radionz.co.nz/news/national/282194/west-coast-coal-cartage-under-dispute “West Coast coal cartage under dispute”], accessed September 2015</ref>
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| − | The first meeting of creditors was held on 25 Aug in Christchurch. The creditors voted against forming a creditors’ committee and voted to retain the existing Administrators, Brendon Gibson and Grant Graham of KordaMentha.<ref>guide2.co.nz, 25 August 2015, [http://www.guide2.co.nz/money/news/business/solid-energy-creditors-meet/11/28717 “Solid Energy creditors meet”], accessed September 2015</ref> The second creditors’ meeting – known as the watershed meeting – was held on 17 September. In a last-minute twist, Mach Capital, registered with the Australian Securities and Investment Commission in October 2014, requested a delay in the proceedings to give them time to make an alternative offer. However, this was rejected by the meeting.<ref>NZ Herald, 17 September 2015, [http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11514520 “Alternative bidder emerges for Solid Energy”], accessed September 2015</ref> Eighty-five per cent of the 1500 creditors voted to accept a two-and-a-half year controlled asset sell-down. Control of Solid Energy would return to the board. Staff and trades people would be paid in full, but banks would only get an estimated $0.35–0.40 in the dollar return on their $400 million debt. The Government and some bond holders would also be big losers. After the sell-down, Solid Energy would cease to exist, and 70 years of state-run coal-mining in New Zealand would come to an end.<ref>Otago Daily Times, 18 September 2015, [http://www.odt.co.nz/news/business/356252/selling-solid-energy “Selling off Solid Energy”], accessed September 2015</ref><ref>Radio NZ, 17 September 2015, [http://www.radionz.co.nz/news/national/284432/solid-energy-creditors-accept-sell-off-plan “Solid Energy creditors accept sell-off plan”], accessed September 2015</ref>
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| − | The news continued to get worse for Solid Energy employees. On 08 Oct Solid Energy CE Dan Clifford announced that production at Huntly East would permanently cease as the mine had no prospect of returning to profitability and was unsalable. Monthly losses were in the order of $500,000. It was likely that all but three of the 68 staff jobs would be lost. <ref>Solid Energy, 8 October 2015, [http://www.solidenergy.co.nz/solid-energy-proposes-to-cease-production-at-uneconomic-huntly-east-mine/ “Solid Energy proposes to cease production at uneconomic Huntly East mine”], accessed October 2015</ref>
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| − | | |
| − | ==Other SourceWatch Resources==
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| − | *[[New Zealand and coal]]
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| − | *[[SLAPPs]]
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| − | *[[SLAPP's in Australia]]
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| − | *[[SLAPP's in New Zealand]]
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| − | *[[Thompson & Clark Investigations]]
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| − | | |
| − | ==References==
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| − | {{reflist|2}}
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| − | | |
| − | == External links ==
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| − | *"[http://www.stuff.co.nz/3978673a11.html Solid Energy fails to gag environmentalists]", New Zealand Press Association, March 2, 2007.
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| − | * Nicky Hager and Deidre Mussen, "[http://www.stuff.co.nz/sundaystartimes/4074270a6005.html 'I was paid to betray protesters']", ''Sunday Star Times'', May 27, 2007.
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| − | * [http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10505208 "Solid Energy denies cash for information claims"], ''New Zealand Herald'', April 20, 2008.
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| − | * [http://tvnz.co.nz/view/page/411365/1728157 "New spy claims against Solid Energy"], TVNZ One, April 20, 2008.
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| − | * Nicky Hager, "[http://www.stuff.co.nz/4074109a6442.html Finding the enemy within]", ''Sunday Star Times'', May 27, 2007.
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| − | * [http://www.radionz.co.nz/news/latest/200804201716/30bc90cb "Company denies using paid informants in mining row"], Radio New Zealand, April 20, 2008.
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| − | * Solid Energy, [http://www.coalnz.com/index.cfm/1,230,723,49,html/Statement-by-Solid-Energy-re-article-in-today-s-Sunday-Times 'Statement by Solid Energy re article in today’s Sunday Times"], Media Release, April 20, 2008.
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| − | * [http://tvnz.co.nz/view/page/536641/1729243 "Spying allegations"], TVNZ One, April 21, 2008. (Click on the "PI company discusses spying claims" link).
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| − | * [http://www.radionz.co.nz/news/latest/200804210733/1ebd2930 "Attempt to hire spy was due to threats, says investigator"], Radio New Zealand, April 21, 2008.
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| − | * [http://www.newstalkzb.co.nz/newsdetail1.asp?storyID=136041 "Greens want inquiry into spying claims"] ''NewsTalk ZB'', April 21, 2008.
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| − | * [http://www.stuff.co.nz/4490497a11.html "Hager challenged to release spy tapes"], New Zealand Press Association, April 21, 2008.
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| − | * [http://www.radionz.co.nz/news/latest/200804221635/30bc929e "Security firm applies to patrol public land near mine"], Radio New Zealand, April 22, 2008.
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| − | * [http://www.stuff.co.nz/4492455a6160.html "Solid Energy Chief gets presents from the Greens"], ''New Zealand Press Association, April 22, 2008.
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| − | * [http://www.stuff.co.nz/4492667a6160.html "Coals to Newcastle' giftwrapped in Green"], ''The Press'' (Christchurch), April 23, 2008.
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| − | * Nicky Hager, "Happy Valley: Spies have fingers in many government pies", ''Sunday Star Times'' (New Zealand), April 26, 2008.
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| − | {{stub}}
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| − | {{wikipedia}}
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| − | | |
| − | [[Category:New Zealand]]
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| − | [[Category:Environment]]
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| − | [[Category:Climate change]]
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| − | [[Category:Coal mining companies and agencies in New Zealand]]
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| − | [[Category:New Zealand and coal]]
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