The future of up to 230 staff at Spring Creek, north of Greymouth, appears to be in limbo as Solid Energy works through a review over an unspecified timeframe on whether to reduce activity, mothball or close the underground mine.
Its $25 million lignite-to-briquette plant under construction near Mataura is unaffected and studies into lignite-to-fertiliser will continue - the development could include a new mine and processing plant.
Chief executive Don Elder said it was proposed 140 jobs would go, with about 75 in coal operations, including those at Huntly East mine in the Waikato and 65 in "other areas" of the business.
The Government had been informed since July of worsening trading conditions and said there had been no pressure to make cuts in preparation for Solid Energy to be partly sold off.
Solid Energy is restructuring its operations in the face of slumping global coal prices, which are down 40% at $US200 ($NZ248) per tonne, which it believes could continue for 12 to 24 months.
Underground operations at Spring Creek would cease immediately, saving $70 million in future investment funding, while in the North Island the Huntly East underground mine would work with a smaller team, Dr Elder said.
Huntly East's staff will reduce from 234 to 171, plus the loss of about 60 contracting roles associated with the mine's ventilation expansion and upgrade project, which would now not be required.
"I am very aware of the impact these decisions will have on affected staff members and our communities, but we've had to make these difficult decisions to cushion the impact of the market and protect as much as we can of the long-term value of the business," Dr Elder said.
Engineering, Printing and Manufacturing Union assistant national secretary Ged O'Connell plans to challenge the "drastic" cuts as not a "done deal", and because of the effect on miners, families and communities.
"Under this proposal, anyone who wants to stay in underground mining would have little option but to move to Australia," he said.
Staff could comment on the proposed changes and make suggestions before a final decision was announced in late September, Dr Elder said.
Solid Energy's open-cast mining operations at Rotowaro in the Waikato, Stockton (its largest export mine), Reddale in Buller on the West Coast and New Vale in Southland "will largely maintain their current operations, with an even stronger emphasis on cost-effective production", Dr Elder said.
"The current weak market conditions have also exposed the huge challenges of underground mining in New Zealand's geologically complex coal resources which, as a result, will always be near the top of the cost curve and therefore the first production to be susceptible to any market downturn," Dr Elder said.
This financial year, "discretional capital investments" and development programmes would be cancelled or postponed to save $100 million, he said.
Almost a fortnight ago, Solid Energy said it was expecting a $200 million revenue slump on the back of a 40% downturn in international hard-coking coal prices, signalling alarm bells for the future of several mines, specifically those on the West Coast.
Dr Elder said yesterday while Solid Energy's exposure to underground coal-mining was reduced, it would concentrate on lower-cost open-cast mining, in both conventional mining and using conversion technologies and underground coal gasification to harness energy from deep coal seams.
The company would sell its biodiesel business and the Nature's Flame wood-pellet business would become a stand-alone operation.
Solid Energy's full-year financial report is due out tomorrow.
