Solid Energy sells mothballed coal mine to new company

While the future of the Pike River coal mine remains in doubt, another underground mine at nearby Reefton is to be re-opened under private ownership.

State-owned Solid Energy has agreed to sell its closed Terrace mine to Crusader Coal, whose owners have coal industry experience in New Zealand and Australia.

Mining at Terrace ceased in June 2009, when increasing production costs made it uneconomic, Solid Energy says. The mine produced sub-bituminous coal that was supplied to industrial and household markets in the upper South Island.

The mine was first set up in the early 1900s and remained in private ownership until 1988 when Solid Energy (then Coalcorp) bought a controlling stake.

Terrace’s production peaked in 2002/03 at a little over 73,000 tonnes but from 1999 until operations ceased its average production was 45,000 tonne a year.

The sale agreement is subject to a number of outside approvals, including those for the transfer of mining licences, permits and resource consents. These are expected to be completed in the next few months.

Barry Bragg, Solid Energy’s chief operating officer, says the sale process has taken longer than expected because the company decided around mid-2010 to have one last look at options for retaining the mine.

A director of Crusader Coal, Bernie Lambley, says he and his fellow directors are excited by the prospect of reopening Terrace Mine.

“We are announcing the conditional sale now because there has been some discussion locally about the possibility of Terrace reopening,” he said in a statement.

“Although we are reasonably confident all the approvals needed will come through, these could still take several months and we did not want to unduly raise expectations about employment.”

Pike River Coal (in receivership) has laid off nearly a 100 of its permanent staff while efforts continue to stabilise the mine and attempt to recovery the remains of 29 dead miners.

These efforts had been hampered by continuing bad weather and the failure of a 20-tonne nitrogen generator shipped over from Australia to neutralise the underground environment.

The Gorniczy Agregat Gasniczy (GAG) machine was struggling to pump nitrogen up the 2.5km hillside shaft, which was full of cracks and housed an underground heat source, possibly a smouldering coal fire, police said.

After three weeks, authorities are considering whether they will have to close the mine instead.