Energy SOE's Southland land holdings under review

BUSINESSDESK: Solid Energy will review its massive land holdings in Southland as part of decisions due by the end of the year on its plans to develop new industries from lignite, a low grade coal the state-owned coal miner says could be used to make fertiliser and diesel.

Outgoing chairman John Palmer told a media briefing in Wellington the company will look to sell land it doesn't need once it settles on the size and scope of its controversial plans.

"We have for some time been looking to see what options we have in relation to land holdings to cash out some of those," he said.

He was announcing writedowns of $151.7 million on underground coal mines and experiments in renewable energy that produced a $40.2 million loss in the year to June 30 and prompted restructuring that could cost 370 jobs above and below ground.

The company spent about $70 million in the mid-2000s buying up mainly farmland in eastern Southland, where it now owns more than 3000ha sitting atop lignite reserves of around 1.35 billion tonnes.

Solid Energy believes the deposits could be worth billions of dollars in exports and import replacement, but the Commissioner for the Environment Dr Jan Wright has slammed the proposed processes for their high output of greenhouse gases.

However, Solid Energy reaffirmed its lignite intentions this week as part of what chief executive Don Elder describes as a "refined" strategy that will concentrate on opencast mining and developing underground coal seam gas extraction and lignite conversion industries.

The company has yet to commit capital to either initiative, but is expecting to consider plans for lignite development by the end of the year.

The decisions come as the company faces pressure to prepare itself for partial privatisation.

Also associated with the land, much of it currently dairy farms, is a substantial shareholding in Fonterra.

Shares in the dairy co-operative are valued in Solid Energy's books at $4.25 million, representing another asset the company could realise to shore up its balance sheet.

Investment analysts have been critical in the past of Solid Energy's "land banking" for access to the lignite resource.

Mr Palmer says the farmland review was "something to be actioned this financial year".

Asked whether it could make a material contribution to Solid Energy's balance sheet woes, he said: "It could be significant, but a lot of it depends on the operating footprint that we think we would make. We can't make those decisions just yet."

 

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One Councillor in the Gore DC won't like reading this as he stated some years ago that when Solid Energy plans went ahead the residents of Gore wouldn't have to pay much in rates.

The CE reckoned that GDC would be the weathiest district in NZ and has spent unnecessary rate payer money hiring Russell McVeigh lawyers to counteract those against the mining of low grade lignite.

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Gore districts population has declined from 14600 1988 to 12100 last census'' Debt has skyrocketed due to extravegent spending on non essentials ; while essentials like rural roads have deteriated ; This district is fast becoming a cot case; The current mayor and CEO of this district are hoping solid energys mining plans start soon so the district can avoid imminent amalgamation'' resulting in the lose of their jobs'

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Nothing wrong with the CEO wanting more jobs locally. Mining would be a good replacement to Rio Tintos threat of closing their aluminium plant.

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I think you are taking anon up the wrong way. The CE of GDC has pushed his own barrow for the likes of arts & heritage, excessive parks & reserves, etc at the expense of maintaining rural roads adequately.

Anon alludes to the fact that GDC is desperate for SE mining to fund his and the mayor’s wish lists.

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A real smart move. Destroying some of the most productive farmland in the country all for short term "profit". Some useless Gore District Councillor thought that there would be several new suburbs of workers soon in Gore.( How do these people get elected? ). Part of the problem has been the fact that Solid Energy has been funding diiferent activities across the Gore District, hence the Mayor, Councillors and CEO have been singing from the S.E. songbook.
I predict an imminent sale of Eastern Southland farms to Chinese interests in the offing. It will be nice having the Red Chinese government as the largest ratepayer in the Gore District.

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Let's not forget that this mining of low grade lignite would be at the expense of highly productive farmland.

The CE of Solid Energy's spend of $70M on purchasing farm land was a blatant misuse of tax payer funds. This SOE is no different to the profligate spending of the Gore District Council Chief Executive.

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