State-owned coal company Solid Energy has announced proposals to mothball its Spring Creek mine on the West Coast, with the loss of 230 jobs in a desperate bid to survive a global downturn in coal prices.
The company announced sweeping restructure plans today for 448 job losses as it looks to cut its involvement in underground mining.
Huntly East Mine in Waikato is also heavily affected, with 63 jobs confirmed for the chop.
Consultation has already started for corporate, support services and development staff at its Christchurch's headquarters which would see its 300-strong workforce slashed in half.
At the announcement, made in Christchurch just 30 minutes after staff were told at Dunollie near Greymouth, Solid Energy chairman Mark Ford said it was a ``sombre day'' for the firm.
He said competitors in New Zealand, Australia and Asia were taking ``drastic action'' to cope with the drop in international coal prices, and they had to keep up with global trends.
At Spring Creek, which was a high cost, low quality mine, for example, coal was worth $120 per tonne, and they needed $200 per tonne to break even, Mr Ford said.
It has a history of underperforming, having lost $100m since 2007, and if the company hadn't made changes across the board, it stood to lose $29m this year.
"We appreciate that this ongoing uncertainty is very difficult for people but the management team has to give staff the opportunity to comment on the further changes that we are now proposing,'' Mr Ford said.
Mr Ford said chief executive officer Don Elder told Spring Creek staff that it had completed its review of the mine's viability and concluded that it could not afford the "ongoing costs of the operation''.
He said the decision took "several hours'' and they discussed alternative plans to save the mines put forward by miners themselves "at great length''.
The company will now begin a period of consultation with Spring Creek Mine staff who will remain on full pay.
All underground work at the mine, except essential safety and maintenance work, will remain suspended.
The decision would also affect the jobs of up to another 130 people, employed by contractors, many of whom had been on the site as part of the development project.
If all the proposals are confirmed, total jobs will be cut by 25 per cent to about 1360 - down from 1800 at the start of the year.
"We absolutely understand the potential impact of this proposal on the local community and the wider district,'' Mr Ford said.
"We all do all we can to identify future employment opportunities for affected staff and we have already had some very promising discussions which we hope to confirm in the near future.''
The Engineering, Printing and Manufacturing Union (EPMU) said the job cuts at Spring Creek and Huntly East would be ``felt terribly'' by local communities.
But the union said the fight was not over, with the final decision about the future of the mines and their communities still resting with the Government.
Miners from Spring Creek and Huntly East will march on Parliament tomorrow to meet State Owned Enterprises Minister Tony Ryall to plead for support.
Prime Minister John Key was asked this afternoon about Kiwi Rail's and Solid Energy's announcements.
"You wouldn't want to read in to the fact that those two companies going through tough times means the rest of the economy is failing,'' he said.
He said Solid Energy did not require a capital injection.
"The issue isn't that we're not on their side - the issue is that international coal prices aren't on their side.''
He said a float of Solid Energy was unlikely in the near future because the company was in the process of restructuring.
"There have always been industries going through rough periods or technological change.
- APNZBy Kurt Bayer @KurtBayerAPNZ Email Kurt