Loss of Fonterra Supply Contract Puts Ohai Opencast Mine Future in Doubt

By MCCARTHY, Phil

THE future of Solid Energy’s Ohai coalmine and the 58 mine workers employed there is uncertain after it announced yesterday it had lost a supply contract with Fonterra that accounted for half the site’s annual production.

Solid Energy announced it would downsize operations at Ohai from August and review the long-term future of the opencast mine. It employs 23 staff at Ohai in technical, coal processing and administration roles.

The State-owned company’s contractor, Ohai Mining Ltd, employs 35 people stripping overburden and extracting coal.

Ohai Mine produces about 200,000 tonnes for the South Island industrial and bagged coal market, with half the annual production railed to Fonterra’s Clandeboye dairy plant under a five-year supply contract that expires in August next year.

The Southland Times understands the contract is about to be awarded to Brisbane-based Eastern Corporation, which last year bought Straith Industries’ Ohai and Nightcaps coal operations for $2 million.

Last year the company said it was planning to mine 100,000 tonnes of coal a year from the mine and that it was investigating whether the coal could be railed to places like Timaru, near the Clandeboye plant.

Several Ohai residents spoken to last night said they had heard Eastern Corporation had won the contract.Engineering Printing and Manufacturing Union national secretary Andrew Little said even though Eastern Corporation was moving to Ohai, the Fonterra move was likely to cost decent jobs and meant profits would head to Australia.

Solid Energy chief operating officer Barry Bragg said the company had instructed Ohai Mining that bulk stripping of the material above the coal would finish in August.

“Obviously, we’re disappointed.

The viability of Ohai is underwritten by that contract …” Solid Energy and Ohai Mining were discussing with staff the impact of this decision on jobs, Mr Bragg said.

“We’ve been talking to Ohai staff today and outlining what we’ll be doing over the next few months to assess how best to optimise the remaining coal reserves at Ohai to meet demand from new and existing customers.” This would determine how long the mine would continue to operate — at this stage, based on access to current reserves, this would be between late 2009 and the end of 2012 — and the numbers of jobs that will be affected, he said.

As part of the review process, Solid Energy would be assessing its ability to continue to supply Ohai bagged coal in Southland and Otago until the end of 2012. Reaction, page 3

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(c) 2007 Southland Times, The. Provided by ProQuest Information and Learning. All rights Reserved.