Government patronage of the coal industry for the past 117 years concludes next year, with Solid Energy to be formally placed in solvent liquidation in March.
It appears another robot is shortly to be sent into the ill-fated Pike River coal mine, but that may yet have to be determined by whoever makes up the next government in a fortnight’s time.
Solid Energy’s general manager Steve Esposito told delegates at the annual AusIMM NZ Mining Conference in Christchurch its demise “brought to a close’’ State coal company patronage, which goes back to 1901.
“By March 2018 all proceeds of the asset sales will go to the creditors,’’ he said.
In the face of declining revenue in 2012, with the price of coal beginning to tank, Solid Energy, which started in 1987, was restructured through 2013-14, but by mid-2015 the writing was on the wall as amassed debts took their toll in the face of dwindling cash flow. Solid Energy was placed in voluntary administration; owing hundreds of millions of dollars.
In September 2015, the Otago Daily Times reported 1,500 creditors owed $400 million by Solid Energy had voted for an asset sell-down, after the company collapsed amid plummeting global coal prices.
Esposito made no mention of former boss Don Elder’s grandiose research and development projects, which in themselves contributed tens of millions of dollars toward the overall debt.
Revealingly, Esposito did show Solid Energy had managed to largely trim its costs of production against income in much of 2012 through to the coal price recovery in June 2017, but payment of debt prevailed.
Esposito said the subsequent asset sales prompted 20 indicative bids, 20 gigabytes of data and almost 1,000 questions during due diligence.
Southland-based assets were sold to Greenbriar, a company with Dunedin connections, West Coast assets went to Birchfield, Reefton to Moore Mining and Stockton and North Island assets to BT Mining.
BT Mining is 30% owned by fishers Tally’s and 70% by Australian-listed Bathurst Resources, which has adjacent coal permits on the contested Denniston Plateau , above Westport.
The sales included a “massive’’, and surprising to many delegates, 12,784 hectares of land, ranging from numerous farms in Southland and even an entire North Island township.
“I think we were the biggest dairy farmer in Southland,’’ Esposito quipped.
If there was any humour in the process, it may have been Esposito recalling lawyers’ instructing him to not talk about shredding 2,692 file boxes of documents, which he assured the delegates was of no relevance.
In spite of original estimates of payments to creditors ranging from just 15cents-20¢ in the $1, Mr Esposito said the sales would likely realised 60¢ in the $1 for creditors.
On the question of the future of the Pike River mine, Esposito said plans were underway with the Department of Conservation to “send another robot through’’, but that was likely to be decided by the next government.
He was asked about what “legacy’’ Solid Energy left behind and highlighted its environmental rehabilitation, drawing together of a myriad of widespread permits, information and data amassed, plus the benefit the company bought to the economies in several areas.
During the asset sale 31 mining permits were transferred to new owners, as were 99 business agreements and a total 252 resource consents.
*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.