Stockton mine cuts $32m from budget

By Lee Scanlon of the Westport News

The pull-back from underground mining has been made in favour of lower-cost, open-cast operations. Photo / APN
The pull-back from underground mining has been made in favour of lower-cost, open-cast operations. Photo / APN

Buller's Stockton opencast mine is cutting $32 million from its budget, but needs to save more by making shift changes or its viability will be in doubt, says the mine manager.

However, workers are sceptical and want to know how much management proposes cutting from its own pay packets.

Stockton Alliance manager Michael Harrison said Solid Energy's export opencast operations, including Stockton, were close to marginal at current coal prices and with the New Zealand dollar so high.

"We've already cut back the use of contractors to concentrate on making the best use of our fleet," Mr Harrison said in a newsletter to workers.

"To date, our plans will result in savings of approximately $32 million. However, unless we can make the savings which come from the shift change and other adjustments to how we operate and manage the mine, Stockton will no longer be a viable operation."

Engineering, Printing and Manufacturing Union area organiser Garth Elliot said machinery operators faced a wage cut of up to 17 per cent if they agreed to move from 12-hour to 10-hour shifts.

They could lose between $9000 and $13,000 a year each.

As far as the operators knew, managers weren't facing any pay cuts.

"The guys are feeling they are the only ones taking this on board, that they are the only ones feeling the pain."

However, workers also had to consider what was happening to Solid Energy nationwide. "They're obviously not in a very good financial state and they've got to make the best out of Stockton.

"The company are saying to us that this (10-hour shifts) is their best option in regards to making the mine viable."

Mr Elliott said the workers doubted Stockton was as under threat as management had claimed.

"Stockton has been profitable in years gone by and what's actually changed that now? They find that very hard to accept."

Half the operators had voted in a secret ballot on the shift proposal last Thursday, he said. The rest would vote at 5.30pm tomorrow. None of the votes would be counted until after the second vote.

Workers on the mine's aerial ropeway and at its workshops were not affected by the proposed shift change.

If operators rejected the proposal, he hoped Solid Energy would be prepared to discuss alternatives.

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Maximum plant use

The newsletter said the Stockton Alliance must get the maximum use from its core mobile plant to meet the mine's cost targets. The Alliance also had to meet the mine plan and deliver the amount and quality of coal Solid Energy's customers needed.

To do that, the mine must have 87 pieces of equipment working every shift but fewer annual hours from each piece of gear.

Stockton's new mine plan required each piece of equipment to work 4200 hours in the year ahead, which required 348 operators.

"If we did that on 12-hour shifts we'd end up with just over 5200 hours a year worked, far more than we need or can afford. On a 10-hour roster, it works out at just over 4620 hours, which is close to our target (4200)," Mr Harrison said.

The alternative some people had suggested - fewer operators still working the old 12-hour shifts - would not work because it would mean the mine couldn't staff all the equipment.

He said other cost-cutting measures taken at Stockton included:

Reducing Downer EDI expat personnel on site;

reviewing the structure of teams to bring them in line with the tighter work plan. In many cases numbers were reducing and vacant posts were not being filled;

reducing the amount of travel and training for managers and supervisors;

cutting back on light vehicles;

cancelling upgrades to buildings and computer/IT systems.

"These current and proposed savings to date total over $32 million and have been incorporated already in our budget.

"These changes, across the site and top to bottom, are what's needed to get Stockton through this downturn and ensure it remains a viable operation," Mr Harrison said.

"I am convinced that these changes - including the need to reduce the shifts to 10 hours - are essential. If it is rejected, the future viability of the mine will be in question in the current market."

- APNZ

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