Kurt Bayer

Kurt Bayer is an NZME. News Service reporter

Solid Energy a 'very different company' - chairman

The ailing state owned coal company Solid Energy is poised to announce another 100 job cuts, mostly from its Christchurch head office. Photo / NZPA
The ailing state owned coal company Solid Energy is poised to announce another 100 job cuts, mostly from its Christchurch head office. Photo / NZPA

Solid Energy chairman Mark Ford says the struggling energy group is a "very different company'' to what it was a year ago.

Restructuring to save it from going to receivership, which he admitted it came from close to, meant that jobs had to go.

A move to cut 105 jobs will save the firm annually around $18 million in staff costs, with additional cost savings of around $3.5m, Mr Ford said. .

The number of staff was at 1620 at the end of the last financial year, and with the other job cuts announced last December, it's expected the firm will be down to around 1000 staff by the end of June.

Staff were told of the proposals this morning, and they will be consulted over the next couple of weeks.

"And after that, there is a period of realignment, which we think will finish around the end of June,'' Mr Ford said.

A business plan has been submitted to shareholders and its bank, and the board believes there's a "good future'' for the business.

But the shareholders and bank wants to review the plans, which will be done by the end of June, Mr Ford said.

The company's future will be focused on core coal mining.

"That's the best chance we have to move back into profit in the intermediate term,'' Mr Ford said.

"There's always a future for coalmining. We just need to be a hell of a lot more efficient.''

The business is now covering its operating costs, he said.

Forecast revenue to the year end in June, is expected to be $640m, on a sale of about four million tonnes of coal.

Last year, it sold 4.6 million tonnes but revenues were about a third higher, at just under a billion dollars.

Coal prices are still down, and Mr Ford said he was not expecting a significant rise in the future

"The business is still a challenge and we have to keep focused on generating cash and reducing operating costs,'' he said.

"I want to emphasise again, this optimisation does not affect mine operating staff - this is support staff and corporate staff.''

He said it will be a much smaller and more focused company, and wages will have to come down accordingly, he said.

They will have to downsize and move out of its Christchurch corporate headquarters.

Mr Ford would not rule out more job cuts.

"The business plan may be changed, the market could change... there's still some unknowns, and the consequences of that, there could be further cuts. But we're not there at this stage.''

Today's announcement would not affect the plan to reclaim the drift at Pike River mine.

He said that was an "absolute commitment'' from Prime Minister John Key to work with families on going back into the drift. Senior Solid Energy mining staff were working with the Government to "work on plans on going back in''.

"That doesn't change at all,'' Mr Ford said.

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on production bpcf02 at 22 Dec 2014 21:39:47 Processing Time: 464ms