Jeanette Fitzsimons writes:
So we finally have the Government’s plan to restructure finances of the heavily indebted Solid Energy. There were only ever two main paths.
The first was liquidation, with the liquidator selling assets (mainly current mines and permits) to pay some of the debts. There are no obvious NZ buyers with the cash, so these mines would have gone to Australian, Chinese, Indian investors with the capital to buy them and expand further.
The second had to involve quite a lot of taxpayer money to enable Solid to keep trading as a State Owned Enterprise. After all, we the public own Solid Energy so we own its debts and their $389 million of debt is actually our debt, unfair as that is to those of us who have opposed their adventures all the way. When a country starts defaulting on its debts nasty things can follow.
Both paths were unpalatable, but for climate change reasons the first would have been much worse.
Reactions among the “keep the coal in the hole” fraternity have favoured outrage at the amount of taxpayers’ money involved, at the shares given to the banks (“privatisation”), and at the commitment by Solid to keep on mining. It feels good to be angry. But maybe we have missed something?
CANA is committed to phasing out coal by stopping new mines, and the expansion of existing mines, in order to protect a liveable climate.
Here we have the largest coal company in the country shrinking its operations, seriously strapped for cash. Coal prices have slumped and are unlikely to recover soon. Underground mining is uneconomic, even for high quality coking coal, hence the closure of Spring Creek and Huntly East. Annual production is down by nearly half a million tonnes: that’s over a million tonnes less carbon dioxide. The lignite stupidities are a distant memory except for one briquetting plant which doesn’t work and has been written off in the company’s books.
Solid has no cash to open any new mines for quite some time. It will continue its existing open cast operations at a lower production rate and try to recoup some of its losses. If we were to imagine the beginning of the end of coal – the start of the phase out – wouldn’t it look like this?
The bit I get angry about is that it has all been done off the backs of the miners who have been brutally dumped without warning when the price dropped. It didn’t need to be that way and we need to support those communities.
Apart from this, it appears we can pay less attention to Solid Energy for a while and focus our attention on Bathurst Resources, on divestment, and on persuading major users of coal within New Zealand to switch to renewable sources.