The West Coast's second largest coal producer says the drop in international coal prices that Solid Energy blames for the possible closure of Spring Creek was "all very predictable".

Solid Energy has been shedding staff all over New Zealand to help balance the books as it grapples with a steep fall in international coal prices and an expected cut in annual revenues of about $200 million.

However, Francis Mining Company Ltd director Brent Francis said today it was business as usual for the 32 men operating the Roa underground mine, 30km north-east of Greymouth.

"The current market squeeze was all very predictable and we provisioned for this at Roa," he said.


"Coal sales, like everything else, are cyclical and we have had some pretty good times in the past few years so a drop off was always expected."

Mr Francis said management was taking advantage of the situation by developing new areas of the mine while the price was low, and would switch back to full production when the price rose again.

A small proportion of Roa coal is mined by the open-cast method but the bulk is from underground mining and Mr Francis said that would continue.

Solid Energy has hinted that it wants to move away from underground pits, including the big Spring Creek Mine at Dunollie.

"We are probably going against the grain there but Roa is a good mine, well managed and we are very happy with it. We still see our future as an underground mine," he said.

Roa Mine produces about 150,000 tonnes of coal a year for export mainly to Japan, China and India but also South America and Europe; most is used by foundry coke producers.

In 2006, Francis Mining signed a 10-year deal with Solid Energy to transport up to 150,000 tonnes of coal a year to Lyttelton for blending with Solid Energy coal for export.

He said the predicted mothballing of the Spring Creek Mine would not affect that contract because Roa coal was blended with Stockton coal.

- GRS ln