What can you say? This state-owned coal miner is facing some very serious problems. They haven’t run a profit in years, have required two Government bailouts, laid-off more than 700 staff and look like they need a third injection of taxpayer funding or they may go belly-up.
Solid Energy appeared in the Finance and Expenditure Select Committee today and while they face a clear financial mess, I wanted to find out about their environmental and social messes too.
I asked them how much their environmental remediation promises amount to for areas like the Stockton and Cypress mines, or the cost for the thousands of endemic endangered snails they have stored in refrigerators after their habitat was mined. They stated it’s $103m, which is a substantial liability in its own right, but worryingly they also confirmed the banks have first right to any assets if they go into liquidation. Back when the coal price was higher and they made frankly crazy decisions and statements around dirty lignite coal they also made some grand and unprecedented promises for land remediation to receive their mining consents. So facing massive liabilities and with the banks taking the first cut, will we once again see the taxpayer having to pay to clean up a corporate ecological mess?
They also confirmed in the hearing that further job loses are ‘inevitable.’ I acknowledge what a hard time it must be for hundreds of their workers to face such uncertainty. I also asked them if they had started working, either internally or with the Government, on ways they could support workers if they face large-scale job losses, since they had already thinking about selling assets in the event of bankruptcy. I was incredibly disappointed with their answer that they were just talking to them, because having already seen hundreds of jobs go it would be prudent for them and the Government to think about how they could actually support their workers.
Overall, it shows a ‘head in the (coal) hole’ mentality. The low international coal price is their main current problem but coal is their only solution. I asked them why, when Chinese coal consumption fell in 2014 for the first time this century and even New Zealand demand dropped by 670,000 tonnes, mining more coal was their ‘main strategy at turning the company around’. To paraphrase the saying, if you find yourself in a coal hole, it’s probably time to stop digging and think of a plan to get out. I received a snarky reply ‘you can’t mine milk!’
Coal is a high risk industry. Redundancies are sudden and brutal. These job losses haven’t been for environmental reasons, they’ve been in response to market signals and not many people think it’s going to get better in the short term. In Australia, BHP Billiton, Rio Tinto, and Anglo American are closing coal mines. The International Energy Agency say “Diversification efforts, the so-called anything but coal policy, will lead to big developments of hydropower, wind, photovoltaic (PV) and nuclear capacity and gas use.” Coal is the problem and it isn’t the solution. I’m urging the Government to step up and show some leadership for a fair transition for those workers, and commit to protecting the environment.