There hasn’t been a great deal of good news lately for Solid Energy. It’s long-term chief executive Don Elder has just tendered his resignation, the company has announced it plans to cut 450 jobs and mothball mines and even the Government’s has passed its judgement on the State Owned Enterprise (SOE) saying they don’t think Solid Energy is fit for privatisation.
This run of bad news and results should be the catalyst to transform this struggling SOE.
The fact is, Solid Energy looked to the past for its economic inspiration and didn’t look to the future. Solid Energy focused on coal mining, ‘Think Big-esque’ and climate-harming lignite coal projects and experimental coal gasification for its future at a time when coal prices were plummeting and concern around the warming climate was increasing.
Its annual report bears this out: Spring Creek Mine resulted in an write-down of $64.3m, Huntly coal seam gas $18.5m, Huntly East Mine $33.5m, and they wasted $29m on a briquetting plant that may never work and may never have markets, though this is not impaired in the accounts at present. Ultimately, Solid Energy dug themselves a $116 million hole, digging for fossil fuels.
Admittedly, there were much small write-downs in Solid Energy’s biofuels and Nature’s Flame wood pellet businesses, but changing Government policy towards biofuels has much to do with this..
At a time when the world is crying out for clean energy solutions and international renewable investment is outstripping investment in fossil fuels, focusing on the old fossil fuel economy was clearly the wrong strategic decision for Solid Energy.
The challenges facing Solid Energy really are tremendous opportunities. The Government could direct the SOE to focus on and lead the country in terms of clean energy. A transformed Solid Energy, let’s call it Sustainable Energy, could be developing sustainable liquid fuels, helping replace wasteful and polluting coal burners in schools and factories and supply them with carbon-neutral wood pellets, and possibly exporting these products and the associated intellectual property. With a future-focused strategy, an appropriate carbon price signal, and Government support through a biofuels mandate or grant, (as scrapped by the National Government) we could see a refocused Solid Energy at the forefront of the smart green economy creating green jobs. All it takes is Government leadership.