Solid Energy has delayed a decision on the future of its Spring Creek underground mine north of Greymouth as the company looks for a way to make the operation economically viable.
An option being investigated now would need an investment of up to $30 million. If the numbers fail to
stack up the mine could close in January, affecting 130 jobs.
Solid Energy said yesterday it would make a decision on the mine's future in July rather than this month, as had been intended.
In the meantime, the company was looking into the feasibility of producing a high-quality thermal coal from the mine.
Chief operating officer Barry Bragg said workers at the mine were updated on developments yesterday.
He said difficulties at the mine included complex geology and challenges ventilating the operation.
"It's a high-cost operation and, therefore, in order to be viable we need to secure premium prices."
The high-quality thermal coal being investigated was expected to be mainly used in Asia and South America, with the possibility of some markets in the United States. Bragg said it could be used in steel-making and power generation.
Solid Energy had to confirm it could get access to the best quality coal and what the quality would be after the coal was washed to remove contaminants.
A $1 million feasibility study was under way and development work costing up to $3 million would be carried out once the crews involved finished their present work at the end of May. Bragg said if it was decided to discontinue development beyond July that money would have to be written off.
Development of the new area would take a year before extraction could begin. An investment of up to $30 million would be needed and the area could be mined for between five and seven years.
Spring Creek was ahead of financial targets. It was profitable but only because a $30 million write-off was taken in the last financial year, making the present short-term mine plan viable while longer-term options were studied.
- NZPA
