Solid Energy accused of opportunistic' Pike River lease grab

The entrance to the Pike River Coal mine where 29 workers died. Photo / Simon Baker
The entrance to the Pike River Coal mine where 29 workers died. Photo / Simon Baker

Pike River Coal (PRC) has accused state-owned coal miner Solid Energy of an "opportunistic" grab of the company's assets by taking over land leases, which it says are critical to the sale of the mine.

PRC has taken Solid Energy and two West Coast farming families to court, seeking to reinstate its leases on two properties at Ikamatua, where it spent $10.5 million building a facility to stockpile and load coal onto rail wagons for transport to the port of Lyttelton for export.

PRC had 25-year leases with the O'Malley family for the facility site and with the Brown family for access to the site.

The leases were worth $50,000 and $28,000 respectively each year.

However, when PRC went into receivership, following the explosion at the mine in November last year that killed 29 men, it triggered a clause that allowed the landowners to terminate their leases.

Solid Energy, which is also now vying to buy the mine, was able to sign a lease with the two families for the land for the same rent, plus a bonus of $80,000 each once the leases were sealed.

The lawyer for PRC's receiver, Mark O'Brien, in the High Court at Wellington today, described Solid Energy's move as "opportunistic", and meant it would make it more difficult to sell and get a good price for the mine.

He said the receivers would then be able to pay all the mine creditors, which included $75 million to secured creditors and $15m to trade creditors.

A number of bids were contingent on the "unique" Ikamatua facility being part of the sale, and if it was, the receivers were "reasonably confident" a buyer would be found

However, if PRC lost the lease it would mean hardship for the creditors, who had given the company a chance to salvage itself.

He asked for between 18 and 24 months' lease so the mine could be sold, or even a review of the lease after 12 months.

If PRC lost the lease, Mr O'Brien asked for two months so the equipment at Ikamatua could be removed.

Solid Energy says it would not object if all facilities were removed and it can use the land as part of its own operations, even if it does not own PRC.

The company's lawyer Craig Stevens today argued the Ikamatua facility was not nearly as valuable and as important to the sale as PRC claimed.

There were other options to stock and load coal, including on PRC's own land. When the company listed on the stock exchange it wanted to barge the coal from Greymouth to New Plymouth for export, and that could still happen, he said.

Mr Stevens said the railway line's capacity had been overtaken by Solid Energy's subsequent deal to transport coal from a mine near Westport and its own plans to double its own coal production of 1.7m tonnes a year.

The receiver's main goal was to stabilise the mine and make it safe and there was considerable uncertainty about whether it would open again. Even if it was able to achieve that it would take at least three years to reopen the mine, he said.

Mr Stevens argued PRC was "hopelessly insolvent" and could possibly walk away from the site without remediating it.

The O'Malleys' and Browns' lawyer Colin Carruthers, QC, said his clients used to have a 25-year lease arrangement but now were facing a year-by-year lease with the possibility the mine would never be sold and they would not get their money.

Justice Joseph Williams reserved his decision.

- NZPA


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