Solid Energy, the state-owned coal miner in voluntary administration, plans to shut down its unprofitable Huntly East mine.
It plans to lay off 65 staff after deciding the site stands “no chance whatsoever” of finding a buyer according to BusinessDesk.
The Waikato mine has been losing money since undergoing a major restructure in late 2013.
“It was costing about $500,000 a month to operate and was “deeply unprofitable,” says chief executive Dan Clifford in a statement.
The company plans to end production, three of the site’s 68 staff will be kept on, with a small group re-employed to help close the mine, flooding the underground and sealing its entries.
“Because the company does not need the mine’s production to meet current demand, and because there is no prospect it will run profitably, we determined it has no chance of attracting a buyer,” says Clifford.
“We, therefore, must act to stem these losses.”
The majority of Huntly’s 100,000 tonnes of coal produced goes to New Zealand Steel’s Glenbrook mill.
Today’s announcement comes the same week the steelmaker said it was still renegotiating its supply contracts with Solid Energy.
NZ Steel wants to cut as many as 100 jobs in both its blue and white collar work forces, which operate the Glenbrook steel mill, the Pacific Steel operation, and iron sands exports.
Solid Energy told the staff of its plans for Huntly today, and will give them days to provide feedback, before making a final decision on Oct. 22.
Last month, the state-owned enterprise’s creditors backed a plan to sell the company’s assets in an orderly fashion over the next two-and-a-half years to try and extract maximum value.
The company was placed in voluntary administration in August after concluding it had no realistic prospect of refinancing $239 million of debt facilities due to mature in September next year.
