Solid Energy

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Solid Energy
Type State owned enterprise
Industry mining, coal
Founded 1987, Wellington
Headquarters Christchurch, New Zealand
Key people Former CEO: Don Elder (May 2000 to Feb 2013)[1]
Products Coal, renewable energy fuels
Revenue $689.8 million NZD (2010)[2]
Employees 772[2]
Website www.solidenergy.co.nz/

Solid Energy is the largest coal mining company in New Zealand and is a state owned enterprise of the New Zealand Government.

The company was formed from the former government department State Coal Mines. It was then established as a state owned enterprise called Coal Corporation in 1987 (known as Coalcorp),[3] and renamed Solid Energy New Zealand Limited in 1997. In 2010, it had a turnover of NZ$689.8 million and produced 3.8 million tonnes of coal.[2]

The company mines extensively in New Zealand's Waikato and the West Coast regions. Approximately half the coal mined is exported, as it is high value with little moisture, sulphur, or other impurities. Much of this is to China, India and Japan where it is used in the power generation and coke industries and for the manufacture of steel and other metals. Major domestic users include the Huntly Power Station and New Zealand Steel at Glenbrook.

Coal operations[edit]

Solid Energy produces approximately 85% of New Zealand's coal annually.[4] Each year it produces around 4 million tonnes, more than half of it for export.[5]

Solid Energy Mines
Mine Location Type Reserves, kt Production, kt pa
Huntly East Waikato Underground 2000 400
Rotowaro Waikato Opencast 14,000 1200
Stockton West Coast Opencast 16,000
Spring Creek West Coast Underground 18,000 mothballed
Terrace West Coast Underground 700 nil
Strongman West Coast Underground closed
Reddale Mine West Coast Opencast 140
New Vale Southland Opencast 250
Ohai Southland Opencast 2,000

Solid Energy has proposed opening two further mines: the Cypress Mine and the Mt William North Mining Project.

In 2006 Solid Energy bought Newvale Coal Co Limited and acquired the Newvale opencast mine, located in the Waimumu coal field in Southland.[6] The Newvale mine supplies lignite to the domestic market, including to Fonterra's Edendale dairy plant.[7] In December 2010 the Terrace mine near Reefton, which had closed in 2009, was sold to Crusader Coal.[8] In October 2011 Solid Energy opened the small opencast Reddale Mine near Reefton on the West Coast.[9]

Retrenchment 2011 to 2013[edit]

In mid-August 2012 Don Elder announced a likely decline in Solid Energy's revenue of $200 million and a review of its operations.[10] On 25 October 2012, Solid Energy confirmed it was moth-balling the Spring Creek Mine and that 220 miners would be made redundant.[11]

Also in 2012, Solid Energy purchased Pike River Coal, which had gone into receivership after the Pike River Mine disaster of 2010. [12] The sale was completed in May.[13]

In November 2012, Solid Energy released its annual report for the financial year ended June 2012. Solid Energy made a loss of $40 million this year, a decline of 146% from the 2011 year's profit. [14]

Workers at mines owned by Solid Energy have repeatedly rejected offers to take pay cuts and reduced hours.[15] The company made 235 employees redundant at the Spring Creek mine, and reduced the workforce at the Christchurch head office by 163 jobs.[16] mine, as well as cutting 60 jobs at the Huntly East mine.[17]

In January 2013, workers at the Stockton Mine agreed to reduced hours and pay after months of negotiations with owners Solid Energy, who had dis-established several hundred jobs in the previous year.[18]

On 4 February 2013, board Chairman Mark Ford announced that Don Elder had resigned as Chief Executive and that Garry Diack would be the interim CEO until a permanent CEO was appointed.[1][19] On 22 February 2013, Solid Energy stated that its half-year result would include a further "significant loss" and that its debt had increased to $389 million.[20]

The Government has, on a number of times, not ruled out using taxpayer money to bail out the company.[21][22]

Finance Minister Bill English distanced the Government from the state-owned company's woes, saying it would no longer be paying out large bonuses to executives.[23]

In 2011, Solid Energy had valued itself at $3.5 billion, but a later review said that was at least $2 billion too high. [24][25]

Lignite conversion proposals[edit]

In 2010, Solid Energy was promoting a number of 'lignite conversion' projects. Solid Energy considers lignite conversion “could unlock the vast potential of Southland’s multi-billion tonne lignite deposits by making them into high value products”.[26] In January 2011, Southland Chamber of Commerce chief executive Richard Hay predicted that the full lignite to briquette plant and the lignite to fertiliser plant may employ up to 2300 people which would transform Mataura's fortunes.[27]


Briquettes

One project is to make fuel briquettes from lignite. A pilot briquetting plant was planned for either the former Mataura Mine site, or the former Mataura Paper Mill. In July 2010, Solid Energy reported it had run a successful trial of briquettes with US partner GTL Energy.[28] In June 2011, Gore District Council approved resource consents for the Mataura briquetting plant. As of June 2012, construction was under way on a site by State Highway 1, south of Mataura. The briquetting plant is expected to process 148,000 tonnes of low-grade lignite from the New Vale mine into 90,000 tonnes of higher-quality briquettes for fuel. The plant will have a boiler likely to burn 15,000 tonnes of lignite a year.[29]

Fertiliser

One other potential lignite-conversion project is to gasify lignite to produce urea-based fertiliser.[30] Solid Energy was considering the viability of a lignite-to-urea plant with the fertiliser company Ravensdown as partner.[31] Solid Energy and Ravensdown co-operated over a joint concept study and in August 2012 Ravensdown stated it would no longer be involved with any further work with Solid Energy.[32]

Liquid fuel

The other potential lignite-conversion project is to gasify lignite to produce liquid fuels.[30] Solid Energy had an agreement with Australian company, Ignite Energy Resources Pty Ltd, to develop a lignite-to-liquid plant. The technology involved had not been proved viable at a commercial scale.[31]

Implications

In December 2010, Dr Jan Wright, the Parliamentary Commissioner for the Environment, issued a report, “Lignite and climate change: The high cost of low grade coal”,[33] which criticised the lignite conversion proposals for their carbon intensity, their contribution to climate change and the likelihood that they would be eligible to receive a free allocation of carbon credits under the New Zealand Emissions Trading Scheme.[34] Dr Wright said "it makes no sense that the emissions trading system (ETS) rules would lead to taxpayers subsidising, even at a modest level, new investment in outdated dirty technology".[35]

On 22 February 2013, the New Zealand Herald reported that the plans for converting the Southland lignite into diesel, fertiliser and burnable briquettes has been abandoned due to debts and low coal prices.[36]

Renewable energy operations[edit]

Solid Energy had previously invested heavily in the development of renewable energy in New Zealand, but due to the retrenchment action begun in mid-2012, some significant restructuring has occurred. The Biodiesel business has been successfully divested and now exists as two separate business: Biodiesel New Zealand which manufactures biodiesel, and Pure Oil NZ which manages the agri-business operations.

Switch, the wholesale distributor of wood pellet fires and Apricus solar hot water systems has been absorbed by Nature's Flame,[37] a manufacturer of wood pellet fuel. Nature's Flame has been restructured to be a stand-alone business, although is still an asset of Solid Energy.

Nature's Flame produces wood pellets for home heating.[37] The company claims that the wood pellets are a sustainable, renewable fuel that burns so efficiently it is virtually smokeless, and that it meets stringent new clean air standards.[37] According to Solid Energy's 2008 Annual Report, Nature's Flame was the largest manufacturer of wood pellets in the Southern Hemisphere.[38] Nature's Flame began in 2003, when Solid Energy purchased a small wood pellet company based at Rolleston.[39]

Solid Energy has also applied for a resource consent for a hydro-electric power station at its Stockton Mine.[40]

Opposition groups[edit]

Concerns have been raised about the environmental performance of Solid Energy particularly at the Stockton Mine on the West Coast. In 2006, the Parliamentary Commissioner for the Environment proposed to undertake a review of the environmental performance of the company in 2008.[41]

Solid Energy has also been criticised by the Ngawakau Riverwatch group and environmental groups and organisations such as Greenpeace, Forest and Bird, The Buller Conservation Group and the Save Happy Valley Coalition. The criticisms include carbon emissions, environmental damage and greenwashing in respect of the impacts of mining.[citation needed]

Resource consents were granted to Solid Energy for the development and operation of the Cypress mine on land near Waimangaroa.[42] This was opposed by the environmental group Save Happy Valley Campaign (SHVC). They claim that the mine will contribute to acid mine drainage, climate change and the possible extinction of a species of Powelliphanta snail.

On 27 May 2007, Sunday Star Times reported that Thompson and Clark Investigations Ltd, a security firm employed by Solid Energy, used private individuals to spy on SHVC.[43] A second spying episode was alleged involving Thompson and Clark attempting to employ another spy to obtain information from SHVC.[44] Solid Energy claimed that they had no knowledge of that instance of an attempt by Thompson and Clark to employ a spy.[45]

See also[edit]

References[edit]

  1. ^ a b "Dr Don Elder resigns as Solid Energy CEO" (Press release). Solid Energy. 4 February 2013. Retrieved 5 February 2013. 
  2. ^ a b c "Annual Report 2010". Solid Energy. 27 August 2010. 
  3. ^ "Industry History". Solid Energy. Retrieved 12 December 2011. 
  4. ^ "Coal Industry Overview". Crown Minerals. 17 December 2008. 
  5. ^ "Solid Energy's coal business". Solid Energy. 2007. 
  6. ^ "Solid Energy bid to acquire Newvale Coal" (Press release). Commerce Commission. 22 September 2006. Retrieved 13 December 2010. 
  7. ^ Crown Minerals (18 April 2007). "Eastern and Fonterra sign contract for Clandeboye coal supply". Ministry of Economic Development. Retrieved 13 December 20103. 
  8. ^ Gibson, Neville (21 December 2010). "Solid Energy sells mothballed coal mine to new company". The National Business Review. Retrieved 16 January 2011. 
  9. ^ "New Reefton opencast mine helps ensure supply for Solid Energy South Island customers" (Press release). Solid Energy. 28 October 2011. Retrieved 30 October 2011. 
  10. ^ Hartley, Simon (24 November 2012). "Solid Energy plunges". Otago Daily Times. Retrieved 21 January 2013. "State-owned enterprise Solid Energy has finished a forgettable financial year, with its after-tax profit plunging 146% to a loss of $40 million" 
  11. ^ Lee Scanlon (25 October 2012). "Axe falls on Spring Creek". Westport News. The Herald. Retrieved 14 November 2012. 
  12. ^ "Pike River mine sold to Solid Energy". Stuff.co.nz. March 3, 2012. 
  13. ^ "Conditional sale of Pike River confirmed". 3 News NZ. May 10, 2012. 
  14. ^ Steeman, Marta (24 November 2012). "Solid Energy's High Pay Rates Stay Despite Firm's Loss". Fairfax NZ News. Retrieved 21 January 2013. 
  15. ^ "Miners reject pay cut deal". 3 News NZ. 20 December 2012. 
  16. ^ "Mine job cuts `will affect thousands'". 3 News NZ. 26 October 2012. 
  17. ^ "Mothballed mine not viable – Solid Energy". 3 News NZ. September 25, 2012. 
  18. ^ "Miners agree to pay cut, reduced hours". 3 News NZ. 18 January 2013. 
  19. ^ Bradley, Grant (5 February 2013). "Solid Energy chief calls it a day". The New Zealand Herald. Retrieved 5 February 2013. 
  20. ^ Trevett, Claire (22 February 2013). "Crisis at state coal firm but Govt vows to save it". The New Zealand Herald. Retrieved 22 February 2013. 
  21. ^ "Key puts blame on Solid Energy board". 3 News. March 19, 2013. 
  22. ^ "Ex-Solid Energy bail-out cost likely to rise". Otage Daily Times. March 2, 2013. 
  23. ^ "No more bonuses - English". 3 News NZ. February 22, 2013. 
  24. ^ "New Zealand government will keep Solid Energy afloat". CoalGuru.com. February 23, 2013. 
  25. ^ "Solid Energy on shaky ground". 3 News. February 22, 2013. 
  26. ^ "Lignite Conversion". Solid Energy New Zealand Ltd. Archived from the original on 15 December 2010. Retrieved 15 December 2010. 
  27. ^ Goodwin, Eileen (25 January 2011). "Briquette plant proposal a step in the right direction". Otago Daily Times. Retrieved 21 January 2013. 
  28. ^ NZPA (13 July 2010). "Progress in lignite upgrade". The New Zealand Herald. Retrieved 25 January 2011. 
  29. ^ de Reus, Helena (5 June 2012). "Briquetting plant changes approved". Otago Daily Times. Retrieved 12 June 2012. 
  30. ^ a b "Solid Energy to continue lignite exploration in Southland" (Press release). Solid Energy New Zealand Ltd. 12 October 2010. Retrieved 15 December 2010. 
  31. ^ a b "Solid Energy secures access to upgrading technology" (Press release). Solid Energy New Zealand Ltd. 21 May 2010. Retrieved 15 December 2010. 
  32. ^ de Reus, Helena (11 August 2012). "Conflict of interest no longer". Otago Daily Times. Retrieved 31 August 2012. "Ravensdown would no longer be involved with further feasibility work" 
  33. ^ Lignite and climate change: The high cost of low grade coal. Parliamentary Commissioner for the Environment. 9 December 2010. Retrieved 5 January 2011. 
  34. ^ "Lignite a bad choice for NZ". Parliamentary Commissioner for the Environment. 9 December 2010. Retrieved 5 January 2011. 
  35. ^ NZPA (9 December 2010). "Don't subsidise 'dirty' coal with taxpayer cash - PCE". 3 News. Retrieved 9 August 2012. "But it makes no sense that the emissions trading system (ETS) rules would lead to taxpayers subsidising, even at a modest level, new investment in outdated dirty technology" 
  36. ^ BusinessDesk (22 February 2013). "Solid Energy's lignite plans dead". The New Zealand Herald. Retrieved 22 February 2013. 
  37. ^ a b c http://www.nature'sflame.co.nz
  38. ^ "Annual Report 2008". Solid Energy. 18 September 2008. 
  39. ^ "Nature's Flame wood pellet ash organic certified". Solid Energy. 5 April 2007. Retrieved 2008-02-27. 
  40. ^ "Stockton Hydro Scheme A Solid Energy Project". Solid Energy. 15 February 2010. Retrieved 19 April 2010. 
  41. ^ "Solid Energy's environmental management systems and performance". Parliamentary Commissioner for the Environment. November 2006. Retrieved 16 November 2008. 
  42. ^ "Solid Energy welcomes consent green light for Cypress coal mine". Crown Minerals. 3 June 2005. 
  43. ^ Nicky Hager; Deidre Mussen (27 May 2007). "I was paid to betray protesters". Sunday Star Times. 
  44. ^ "Private investigators still digging on West Coast". Sunday Star Times. 20 April 2008. 
  45. ^ "Statement by Solid Energy re article in today’s Sunday Times". Solid Energy. 20 April 2008. Retrieved 21 April 2008. 

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