$32m slashed from Stockton mine budget

New Zealand’s largest opencast mine is set to cut $32 million from its budget as it looks for ways to stay viable.

Buller’s Stockton mine manager has announced the cuts in budget may not be enough to save the mine, stating further measures like shift changes may need to be implemented to save the coal mine.

In a sign that New Zealand’s coal industry is facing the same pressures as the sector here in Australia, Stockton Alliance manager Michael Harrison said Solid Energy’s opencast export operations were close to marginal on the back of low coal prices and the high New Zealand dollar.

"We've already cut back the use of contractors to concentrate on making the best use of our fleet," The New Zealand Herald reported Harrison said in a newsletter to workers.

"To date, our plans will result in savings of approximately $32 million. However, unless we can make the savings which come from the shift change and other adjustments to how we operate and manage the mine, Stockton will no longer be a viable operation."

Engineering, Printing and Manufacturing Union area organiser Garth Elliot said machinery operators faced a wage cut of up to 17 per cent if they agreed to move from 12 to 10-hour shifts.

Managers are reportedly not facing pay cuts.

"The guys are feeling they are the only ones taking this on board, that they are the only ones feeling the pain."

Operators are scheduled to vote in a secret ballot tomorrow on whether to accept the changes to shift hours.

Other measures set out in the newsletter to reduce costs included reviewing the structure of teams, reducing the amount of travel and training for managers, cutting back on light vehicles and cancelling upgrades to buildings and compute systems.

"I am convinced that these changes – including the need to reduce the shifts to 10 hours – are essential. If it is rejected, the future viability of the mine will be in question in the current market," Harrison said.

In August, Solid Energy announced it was undertaking a cost cutting review ‘in response to extremely challenging market conditions.’

The company said it was expecting a $200 million fall in revenue for the current financial year.

At the time, Solid CEO Don Elder said that operational and structural changes could be expected from the review.

“We are reviewing all areas of our business, including current and future operations, all fixed and variable costs, and the values of some of our assets, which will result in us taking significant impairments. Our aim is to preserve cash through reduced spending while, as far as possible, maintaining our longer-term value opportunities."

Image: Wikipedia

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