Coal-rush creates bonanza for miner

State-owned coal mining company Solid Energy's annual net profit is up nearly 50 per cent to $56 million after record exports and currency gains.

Chairman Tim Saunders said Solid Energy sold a record 4.09 million tonnes in the year to June, up 22 per cent on the previous year.

Sales revenue was up 20 per cent at $317 million.

Increased demand from Genesis Power and New Zealand Steel's Glenbrook Mill lifted domestic sales 26 per cent to a record 1.96 million tonnes.

Exports reached a record 2.13 million tonnes, up 18 per cent, because of increased transport capacity at the Stockton opencast mine on the West Coast.

Solid Energy was unable to meet export demand because of limited rail capacity from the West Coast to the export port of Lyttelton, Saunders said.

The company's last carry-forward tax losses boosted the profit by $8.8 million. Currency hedging from last year, when the New Zealand dollar was trading in the low to mid-40c range against the US dollar, produced foreign exchange gains of $17.7 million.

But the dollar's current level of about 60USc was expected to significantly reduce Solid Energy's profitability next year.

"The one disappointment in the year has been the slower than expected pace of capital investment in new mines, to replace diminishing developed coal reserves, and in distribution infrastructure," Saunders said.

The company had deferred capital investment because of "poor rail performance and lack of future rail certainty".

Chief executive Don Elder said New Zealand's 10 billion tonnes of coal would last more than 1000 years at current production levels of 4.4 million tonnes a year.

Elder said that despite New Zealand's ratification of the Kyoto Protocol to reduce emissions of greenhouse gases such as carbon dioxide, he expected demand for coal to grow strongly in the short to medium term.

Solid Energy aimed to increase production to almost 7 million tonnes a year within five years.

"If major new low-cost gasfields are not discovered and developed, and New Zealand economic growth continues to be driven by the primary sector, the country's total annual coal production could grow to 10 million tonnes by 2010," he forecast.

But the growth of coal use was expected to eventually reverse, and Solid Energy was looking to develop other coal-related business areas, such as coal seam methane and hydrogen energy, and the use of biomass for home heating and industrial energy.

- NZPA