Solid Energy plans production and job reductions at Stockton

Solid Energy plans production and job reductions at West Coast export mine

Solid Energy has today told Stockton Alliance staff that it plans to reduce production at the West Coast export mine by a quarter, from 1.9 million tonnes per annum (Mtpa) to 1.4 Mtpa in the next financial year, and that it is proposing to reduce jobs at the mine, in response to continuing low international coal prices.

Solid Energy Chief Executive, Dan Clifford said that the changes proposed were a necessary response to the depressed export market which was expected to remain for quite some time. “On current pricing projections, we have to minimise our losses by reducing costs so that we can keep the mine operating.

“We feel for the staff and their families, and for the wider Westport community, who will be affected by this, but by reducing activity we believe we can keep the operation viable with the continued benefits for the community.”

If the proposal outlined to staff today is implemented, 137 people from the total Stockton workforce of 521 would be made redundant (35 management, technical, support and administration jobs and 102 mining jobs). The company would stop non-essential development work, mine from lower cost-to-produce pits to meet long-term export customer contracts and carry out most mining work during the day to reduce the impact of weather - snow, rain and fog - on the operation. A number of other productivity improvements are either proposed or underway, including changes to rosters and training to increase the proportion of employees who can do a range of jobs at the operation.

Dan Clifford says, “While Solid Energy’s domestic business has been stabilised, the export business has continued to see falling prices from the 2011 highs of US$330/tonne. Even more recently the price has continued to decline with the quarterly benchmark price for hard coking coal falling from US$143/tonne for the January to March quarter, to US$120/tonne for the current quarter while the spot price has been sitting at about US$113/tonne for the last two months.

“While we are planning to continue with reduced production and reduced staffing levels for the next two to three years, we will still be able to meet our long-term customer contracts while retaining our options to respond to changes in the market.”

About 120 contractors currently work at the mine in either specialist roles or carrying out part time work. In addition, Solid Energy plans to bring as much of that work in-house as possible, or reduce the scope of contracts which will reduce contractor jobs by about 50.

Solid Energy is proposing a two-week consultation period with Stockton employees, followed by confirmation of the structure and a selection process for contested and vacant roles with the aim of implementing the new rosters by the end of July.

ENDS

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