State-owned energy company Solid Energy has confirmed it will spend $100 million on a new coal processing plant at its Stockton mine but says it will also cut coal production at the mine by 20 per cent from July this year.
Workers at the mine, north of Westport,may lose their jobs as a result.
Uncertainty about the extent and duration of the international economic downturn has resulted in steelmakers worldwide cutting production by up to 30 per cent, said chief executive Don Elder.
Stockton produces hard coking coal to steelmakers in Asia and elsewhere.
It produced 1.825 million metric tonnes in the 2008 financial year.
Solid Energy was forecasting a 10 per cent production drop to 1.65 million tonnes this year and based on international demand, 1.35 million tonnes in the 2010 year.
Reduced production, and the freeing up of some resources that have been overstretched for several years, also created an opportunity for the company, Elder said.
A number of major long-term capital projects, infrastructure improvements, and health and safety upgrades were planned over the next year to 18 months.
That would enable a return to full, and safer, production when market demand increased, he said.
Lower production would likely impact on contractors' workforces, said chief operating officer Barry Bragg.
"We'll know more around the end of March," he said. "However, from June it is likely there will be either job cuts or fewer hours available to contractors' workers. A small number of jobs may also be lost from our own workforce in Buller."
Nelson engineering firm Brightwater has won the contract to design and construct the $100 million coal handling and processing plant at the mine which will begin operation in 2010. It is designed to produce between 600,000 tonnes and a million tonnes of coal a year.
About 80 people will be involved in its construction.
