Solid Energy buyback 'sell-off' tactic

West Coast-Tasman MP Damien O'Connor says Solid Energy's decision to buy back Cargill's 49 per cent share of the Spring Creek underground mine is driven by the National Government's desire to "sell off New Zealand".

Cargill, an international conglomerate, joined Solid Energy as the minority joint-venture partner in March 2007 and supported a development programme at the Dunollie mine, which has provided four years of coal production. This week, state-owned Solid Energy, which is itself subject to a partial privatisation by the Government, announced that the partnership had ended.

Chief operating officer Barry Bragg said Cargill was essentially a trader, shipper and marketer, and wanted out of the mining business.

"Spring Creek was Cargill's first investment in physical coalmining and we have always appreciated that and taken it as a mark of confidence that they decided to investigate this side of the business with Solid Energy," Bragg said. "We understand that physical mining is not really part of their business and that they have now decided to exit this end of it."

However, O'Connor said the coincidence that Cargill wanted out at a time when the Government wanted to sell was too great to ignore.

"To me it smacks of Government wanting to tidy it [Solid Energy] up to get it ready for part-privatisation," he said. "It's glaringly obvious to anyone who reads Government statements about the asset sales programme that issues such as joint ventures undermine the value of the asset."

O'Connor said he welcomed the news that Solid Energy had regained total control of Spring Creek, but not if it was for the wrong reasons.

"It's just one move in what is a policy of selling off New Zealand which I am passionately opposed to."

Solid Energy has been involved in Spring Creek since its initial development in 2002 and continues as the mine operator, employing 230 workers.

Bragg said the mine was now moving to a strong development focus, with several months of limited coal output as new roadways were constructed and underground infrastructure installed to provide access to about 3 million tonnes of coal in the Rapahoe sector, north of the area already mined.

Most of Spring Creek's high-energy, low-sulphur coal is exported to Asia.


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