Don Elder pulls down $1.4 million per year as CEO of Solid Energy – about 51 times the median Kiwi income – well paid for his role in the destruction of our planetary civilisation.
And if this week’s announcements are anything to go by, this is precisely what he is doing.
It must be galling for him to have to explain why his company is under-performing so badly. Caught between a high New Zealand dollar and a world price of high-grade coking coal that has fallen 40% in the past year, Solid Energy’s financial result will be well under expectations.
Bill English responded by saying that Solid Energy was in “no shape” for sale
Elder has now announced how Solid will deal with the situation and the news isn’t great – not for the climate, nor for the workers.
Open cast mining of lignite in Southland to go ahead
Along with a review of Spring Creek mine on the West Coast and projected layoffs at Huntly East power station, Elder has confirmed that he will go ahead with the dirty, open cast lignite developments in Southland.
Elder says his company will “unlock the value of Southland lignites, including full commissioning of the Mataura domestic briquette plant by October this year.”
But even such a seemingly simple task as completing a pilot briquetting plant keeps being delayed. The completion of the briquetting plant is proving unexpectedly troublesome. It was supposed to be open by now.
Solid Energy recently told a meeting of the plant’s neighbours that the project was running over budget, that Health and Safety had forced them to install additional lighting in the plant, and that the (brand new) plant had required rewiring because the electrics were not dust-proof. Considering that the plant is using experimental technology, it sounds far from an ideal place to work.
Fears about the plant’s safety and its effect on the local community are borne out by the track record of the plant on which it is modelled – the GTL Energy plant in South Heart, North Dakota. Solid Energy is in partnership with GTL Energy. Both plants were built without the communities getting a say. Solid Energy shipped Southland lignite half way across the world to South Heart’s plant for testing.
The farming community of South Heart, North Dakota, has been badly affected by coal industries. We stand in solidarity with these people. We do not want this for Mataura.
Southland has good prospects without lignite
Meanwhile a BERL report, commissioned by WWF, shows that hundreds of new jobs and tens of millions of dollars could be generated for the people of Southland - without developing the polluting coal industry.
And Ravensdown backs off lignite-to-urea plans
Don’s friends are deserting him.
Potential business partners are having second thoughts and investors are spooked. The coal-to-urea plans aren’t going well. Solid’s partner in its feasibility work on this process, Ravensdown, has now pulled out of the feasibility project, leaving Solid high and dry and having to find the capital for further tests from elsewhere.
The lignite-to-urea project is a double-whammy for the climate. Creating an open cast mine on prime Southland farmland to convert the world’s dirtiest coal into urea is a 20th century idea and even Ravensdown seems to agree.
Meanwhile mines are doing badly
We also hear that Solid Energy is having problems selling coal. Exports are down, and we hear that instead of five trains of coal leaving the mine each day, they’re down to two, and this is being taken from stockpiles. Has Solid cut its Stockton production too?
On another West Coast front, Solid Energy has just received the go-ahead for the Mt William mine. See our blog on that issue here.
But the question has to be asked: can they afford to go ahead with Mt William? If they’re thinking of closing mines and laying off workers, and international coal exports are down, will Mt William really be a good financial option for Solid energy?
Mt William is adjacent to Solid’s Cypress Mine in Happy Valley where Solid is continuing to progress the haul road and dam reinforcement to make mining there a step closer. This will need to happen before they mine Mt William. It’ll be interesting to watch the progress of these climate killers if international coal prices remain low.
None of this is putting the company into a good state to go into an Asset sales process with – no wonder Bill English is worried.
But let’s not think about the climate
Lastly, but most importantly, the worst thing about this week’s announcements is that Solid Energy is going to get out of the only good thing it had going for the climate: the biodiesel and wood pellet businesses, which Elder says he will break up and sell.
Again, climate change is the “elephant in the room” that no media seems to be taking the slightest bit of notice of – and this in a week that has seen the lowest ever recording of Arctic sea ice, with one key expert predicting that Arctic summer sea ice will be gone altogether by 2015.
The media keep talking about the economics of needing to mine, drill and frack Aotearoa, but refuse to factor in the economic impacts of climate. Joining the dots seems to be beyond the ken of our fourth estate.
Ripping up the land, ruining ecosystems and increasing the risk of runaway climate change just doesn’t seem to be all that popular any more. Poor old Don. At least he has his pile of cash to keep him company. Unlike the miners he’s laying off.
And on that note, Coal Action Network Aotearoa would like to stress that our thoughts are with the workers that are losing their jobs with Solid Energy.
We have never advocated closing an operating mine. We are trying to stop new mines opening because we know that would simply create new jobs that will be lost as coal is phased out.
We need to phase out coal at the rate that the miners retire, the existing coal fields deplete, and leave the rest in the ground.
Solid Energy’s annual report is expected imminently – we’ll be updating this on the blog.