The comment comes as miners from Spring Creek and Huntly East prepare to visit Parliament today in a desperate bid to convince the Government to invest in the company.
Solid Energy yesterday announced it would close Spring Creek and cut about a quarter of its workforce in an attempt to keep the company viable during a global downturn in coal prices.
Some 448 jobs will go: 230 at Spring Creek, 63 at Huntly East, and half of the 300 jobs at the Christchurch headquarters.
Mr Key today denied suggestions the Government was tidying up Solid Energy's books ahead of the partial sale of the company, telling TV3's Firstline that was "not true".
He said the Government took "a deeper dive" into the company's books as it planned for the mixed-ownership model.
"What that brought up was that Solid Energy had what we believe was quite an unrealistic price built into their projections for coal," he said.
"This is actually a reflection of exactly what we're talking about - that governments often aren't the best owners of companies, certainly in totality."
Mr Key said most coal companies generated revenue and did not have debt on their balance sheets.
"Solid Energy has built up a reasonable pool of debt to fund other activities and other things that they've gone into. So now that the coal price is collapsing, essentially Spring Creek is not viable and the head office reductions are about some of the other activities they've undertaken," he said.
"No one can stop international coal prices falling, and as long as those coal prices stay down, the likelihood of us being able to take Solid Energy to the market are reduced."
Solid Energy chairman Mark Ford yesterday said it was a "sombre day" for the firm.
He said Spring Creek was a high cost, low quality mine which needed $200 a tonne to break even - well short of the current price of $120 per tonne.
The mine has lost $100 million since 2007, and the company stood to lose $29m this year if it had not made changes across the board.
A review of the mine's viability concluded it could not afford the "ongoing costs of the operation".
The Engineering, Printing and Manufacturing Union said the job cuts at Spring Creek and Huntly East would be "felt terribly" by local communities.
But the union said the fight was not over, with the final decision about the future of the mines and their communities still resting with the Government.
Spring Creek miner Trevor Bolderson and 12 colleagues travelled from the West Coast last night for a meeting with State Owned Enterprises Minister Tony Ryall at midday today.
He said they hoped to bring some "common sense" to the Government.
For the last three weeks he and the union had worked to put together a workable plan to keep the mine running.
"It's been a bit of a roller coaster ride to be honest. We've had lots of ups and downs, and we've been on the edge of the abyss a few times. Today [Mon] just seems to have been that we've fallen off."
Grey District Mayor Tony Kokshoorn said the "gutted" Greymouth community would get through it, but only because they had no choice.
"What really hurts me the most is it was no fault of the miners. Management and the board never really had any cash reserves in place."
Brian Lynch, who has been a maintenance fitter at Huntly East Mine for more than six years, said the entire Huntly community would feel the cuts.
"It spreads out; these families if they've got kids at school, the school's affected , the supermarket's affected, everyone."
