Solid Energy in talks with Downer EDI Mining

13 May 2009

Solid Energy in talks with Downer EDI Mining to negotiate joint operation of Stockton Mine

Solid Energy has selected Downer EDI Mining to negotiate an alliance arrangement to jointly manage and operate Stockton Opencast Mine in Buller from the beginning of October this year.

Barry Bragg, Solid Energy’s Chief Operating Officer, says Downer EDI Mining has experience with a range of successful mining alliances. “They have very strong skills and experience in the industry and, if we are able to reach an agreement, the alliance would allow us to continue the improvements we have begun at Stockton and ensure it can continue contributing to the local and national economy for many years.”

Solid Energy believes that a single management approach would deliver improved performance in a number of areas at Stockton, including health and safety, coal quality management, reducing costs, improving productivity and in continuing the mine’s progress in environmental performance. In early December 2008, Solid Energy requested proposals to form an alliance from a number of experienced mining companies. Since then it has been in discussions to identify a preferred partner with whom to investigate forming an alliance.

Mr Bragg says. “If the negotiations proceed successfully and internal approvals obtained, plant will be mobilised and people recruited in September with the aim of operating the mine under the new arrangement from October.”

Downer EDI Mining has been in opencast and underground mining for close to 90 years, in both coal and metals, and in the 2008 financial year generated revenue of A$1.31 billion. This would be its first mining role in New Zealand.

Downer EDI Mining is one of five divisions of the Downer EDI Group, an Australian top-100 company that is listed on both the Australian and New Zealand Stock Exchanges. Downer EDI already has a significant presence in New Zealand through its Works and Engineering divisions, which have some 4,000 and 1,800 New Zealand-based employees respectively.

Stockton Mine is Solid Energy’s most valuable mining asset. It is an important contributor to the Buller community and to New Zealand’s economy. In recent times Stockton, through Solid Energy and its main contractors, has directly employed approximately 500 people and is regularly the workplace of up to another 200 consultants and short-term contractors. Many other local and national businesses derive substantial income from work relating to the mine. In the last full year (2007-08), Stockton produced more than 1.8 million tonnes (mt) of high-value coal for export to the world’s steel makers, with production forecast to be about 1.35 mt in 2009/10 as a result of the world-wide economic downturn.

At Stockton, Solid Energy is progressing a number of major long-term capital projects, infrastructure improvements, and health and safety upgrades over the next year to 18 months designed to ensure the mine can return to full production when market demand increases, with operations that are safer, more efficient and more productive. These include upgrades to roadways and other infrastructure, a new $100 million coal processing plant, developing the area of the former Millerton Underground Mine and the Cypress extension immediately to the east of the current operational area.

ENDS

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