The New ‘Gold Coast’

By STEEMAN, Marta

Coal may turn into gold for Solid Energy as the state coalminer forecasts nearly $1 billion in coal sales next year.

A huge appetite from emerging economies India and China has resulted in hard coking coal, used for steel-making, tripling in price.

Solid Energy’s exporting coal is produced by its West Coast mines, with the coal boom bringing more jobs to the region.

A new West Coast miner is planning to tap into the coal price surge. Pike River Coal Company wants 50 more staff to bring the new underground mine in the Paparoa Range, 46km north of Greymouth, to a full complement of 150 workers so it can kick into full production next year.

Yesterday, Solid Energy chief executive Don Elder said the company would approach $1b in coal sales in the year to June 2009, compared with $552 million in the year to June 2008.

The state-owned enterprise has secured hard coking coal contracts at $US300 a tonne ($NZ445), triple the price of the year before. Those prices kicked in from April this year.

This financial year, the state- owned enterprise produced 4.5m tonnes – exporting 1.9m of that and selling the rest in New Zealand.

Its biggest export customer is now India, followed by Japan.

The Government’s coffers will be enriched by a $34.37m dividend from Solid Energy this month. Yesterday, the company tabled its annual result for the year to June 2008 in Parliament. Profit was $34.4m, much lower than the $96.4m the year before.

Solid Energy chief operating officer Barry Bragg said the big question for coalminers was whether the appetite of India and China would be hurt by the international credit crisis.

So far, the global financial turmoil had not damaged the prices which on international markets had reached $US360 a tonne. Solid Energy did not make a profit forecast. However, Bragg said the profit for the June 2009 year would beat the $96.4m of the June 2007 year. Several factors – including the level of the kiwi dollar and the expected 20% escalation in costs from higher oil, steel and materials prices – would determine the eventual surplus.

Solid Energy expected the Spring Creek Mine to produce another 800,000 tonnes of coal in the June 2009 year. Half belonged to Solid Energy as it owned 51% of the mine.

Solid Energy also announced it would spend $120m in the next 18 months on a new coal- processing plant, offices, roads and other infrastructure at Stockton.

Risky incidents

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