Solid slashes Stockton output but sets sight on new plant

SOLID Energy will cut output by 20% from July 1 this year at its Stockton open cut coal mine in New Zealand’s South Island, but says it will go ahead with extending the mine’s life through a $NZ100 million investment in a new coal processing plant.
Solid slashes Stockton output but sets sight on new plant Solid slashes Stockton output but sets sight on new plant Solid slashes Stockton output but sets sight on new plant Solid slashes Stockton output but sets sight on new plant Solid slashes Stockton output but sets sight on new plant

Solid Energy's Stockton mine.

Angie Tomlinson

The company also said that while it has secured and confirmed orders from international customers for 10 shipments of Stockton export coal for the first three months of the year, it would cut coal production at the mine by 20% from July 1 this year in response to the global reduction in demand for steelmaking coal.

Steelmakers worldwide have been estimated to cut production by 30%.

“Reduced export demand and prices will obviously have a significant negative revenue impact, and we are looking to minimise our operating costs wherever possible,” Solid chief executive Don Elder said.

“However, reduced production, and the freeing up of some resources that have been overstretched for several years, also creates an opportunity for us.

“We are accelerating a number of major long-term capital projects, infrastructure improvements, and health and safety upgrades over the next year to 18 months so that we can make a return to full production when market demand increases with operations that are safer, more efficient and more productive.”

In the 2008 financial year, Stockton produced 1.82 million tonnes and Solid now estimates production in the 2009 financial year will be 1.65Mt. It plans to produce 1.35Mt in the 2010 financial year.

Solid chief operating officer Barry Bragg said while its skilled company workforce would be maintained, some contractor jobs were likely to be axed.

The impact on contractors will not be known until around the end of March, Bragg said.

“From June it is likely there will be either job cuts or fewer hours available to contractors’ workers. A small number of jobs may also be lost from our own workforce in Buller,” Bragg said.

“What we’re doing now is firming up our schedules and working with our contractors to determine the impact.

“Between us, we’re reviewing rosters, the non-essential work program and investigating opportunities to second people to other contractors on the site who may need more workers due to our accelerate capital works strategy.”

While output and jobs will be cut at the mine, Solid will invest in a new plant at the operation as part of the company’s long-term investment program to extend the mine’s life by a further 20 years.

Brightwater Engineers, which has worked on other Solid washeries, has been awarded the contract to design and construct the plant.

The mining system at Stockton has generated large stockpiles of coal mixed with rock and other material such as propping timbers from historical underground mining.

Plans to opencast the former Millerton Mine in the north of the coal mining licence will generate even more of this material, Solid said.

It is estimated that over the 20-year remaining life of mining on the Stockton Plateau the processing plant will enable up to 10 million tonnes of valuable coal to be recovered.

The plant has been designed to produce between 600,000t and 1Mt of coal a year.

About 80 people will be involved in its construction with the facility to begin operation in early 2010.