Last week was a bad week for coal mines on the West Coast.
Work on the Denniston Plateau has now stopped.
Early in the week Solid Energy announced 24 workers would lose their jobs from the Stockton mine, and by the end of the week Bathurst announced that it is putting the Denniston mine on hold, laying off 12 workers.
Terrible news for those workers and their families.
At the heart of this is the same issue that sent Solid Energy under: plummeting coking coal prices – a price that has continued to fall, and was again cited as the reason for Solid’s new layoffs.
Over on the Denniston Plateau, Bathurst’s woes have stemmed, in the first instance, from the long-signalled closure of the Holcim plant in Westport, its biggest client. Bathurst has had to seek domestic buyers for its high grade coking coal, because of the low international price.
Bathurst has managed to keep Denniston’s head above water because of Holcim. It has kept the rest of its operations afloat due to other domestic customers like Fonterra. No doubt has it hopes pinned on Fonterra’s plans to continue to expand its coal-fired milk drying operations, such as the one at Studholme, near Waimate – plans that must now be in jeopardy, given its financial state. Fonterra is now the second largest user of coal in the country.
Buller District Mayor Garry Howard tried to explain the Stockton layoffs, saying that Solid had to show the company was in profit before the mine goes onto the international market in a couple of months.
Perhaps he needs to look around, firstly over the ditch to Australia, where Anglo American is getting out of both Australia and the coal industry altogether, racking up huge losses in a $5.6 billion write-down. Whether it can actually sell its coking coal mines remains to be seen – as many commentators are saying, it’s a buyer’s market.
The international coal industry is on its knees, especially in the US. Bankruptcies all over the place: the biggest being Arch Coal. Others, like Alpha Resources, have filed for bankruptcy protection. The world’s largest coal company, Peabody Energy, is teetering on the brink.
Yet here in NZ, the Government, mining lobby group Straterra, Mayor Garry Howard and even Labour Leader Andrew Little have all made reassuring words about how the price of coking coal will bounce back, how everyone will need steel, yada yada yada.
The real reason behind job losses on the West Coast: China
It’s actually the hard coking coal price that lies at the heart of the US coal industry’s collapse. And that is driven by a massive downturn in China’s economy, and its use of steel – a downturn that doesn’t look like turning round any time soon.
Early figures (Jan-Feb) released by the Chinese Government over the weekend show steel use has fallen another 6% year on year.
So why do we need more coal mines?
While all these coal layoffs were being announced last week, and the coking coal price continued to slide, I was writing CANA’s submission to the Department of Conservation to oppose an access agreement for a brand new coal mine on the West Coast.
This 109ha opencast mine would be slap bang in the middle of the Westport Water Conservation Area, and touches on the Mt Rochfort Conservation Area, home to the Great Spotted Kiwi, rare geckos – a landscape already designated by DOC as a “Naturally Uncommon Ecosystem.” It’s one of those rare landscapes that it’s the job of the Minister of Conservation to protect (Read the DOC significance report here).
You’ll be able to see this massive blot on the landscape from the lower Buller Gorge, and from downtown Westport (see photo from the DOC submission) – not so great for the Coast’s other main source of income: tourism.
And up on the North Taranaki Coast there’s another open cast coal mine application underway – Mokau South. My colleague Tim Jones has written about it here (submissions are now closed).
The Government has re-written the Crown Minerals Act to make sure the “net economic benefits” of any proposal have to be taken into account when considering any application for a new mine.
Will the various regional councils be able to see through their coal-dusted spectacles and realise that New Zealand doesn’t need any more coal mines? That the coal industry is on its knees, and that the mines we already have can’t find markets, either at home or internationally?
Will they look at the Crown Minerals Act in a different light and discover there will be no “net economic benefits” of new mines, just economic losses to accompany the disastrous environmental destruction and greenhouse gas emissions that result from coal mining?
Bathurst Resources have only mined 50,000 tonnes of coal from the Denniston Mine. That they’ve only destroyed 26ha of the planned 200ha of the mine footprint is a relief. The mine that the company pledged would employ hundreds has turned out to be another false hope, another white elephant.
For anyone to consider opening a new coal mine in Aotearoa in 2016 is just nuts.
We say: keep the coal in the hole. Save our precious environment, and stop that coal from ending up in the sky.
Great overview, Cindy. Thanks.