Solid Energy profit up as coal prices strong

Friday 26th August 2011

Solid Energy lifted full year net profit 29 percent to $87.2 million, with the result boosted by strong global coal prices and good production from the Stockton opencast mine at Buller.

Revenue rose 20 percent to $829m in the year to June, with coal sales volumes up 6 percent to 4.1 million tonnes, the state-owned company said today.

Despite increasing, volume was less than planned as ship loading issues due to Christchurch earthquakes in June pushed loading of three vessels into the 2012 financial year.

Coal exports of 2m tonnes were up 19 percent on last year.

Solid Energy is to pay a dividend of $30m next month on top of a $20m dividend paid in March, compared to $54m the year before.

Production at Stockton rose 27 percent to 1.6 million tonnes, despite a wet winter which constrained mining, and delays in opening a mining area.

Production at the Spring Creek underground mine declined 24 percent to 403,000 tonnes, after the company suspended mining for six months to upgrade infrastructure following two heatings in early November.

Biodiesel production rose 34 percent to 1.8 million litres, while wood pellet production was up 53 percent to 46,000 tonnes as the company's new Taupo pellet plant completed its first year of production.

Solid Energy chairman John Palmer said a pipeline of projects either completed or in development would allow the company to increase production in its coal and renewable energy businesses. While high international coal prices were expected to continue in the short term, they were expected to trend down in the coming year.

A record 136km was drilled in the latest year in support of current and future operations, with 15 rigs operating on the West Coast alone.

A $25m domestic-scale briquette plant in Mataura, which had been approved and should enter production in 2012, would test the viability of technology to upgrade lower rank Southland lignites, Mr Palmer said.

Earlier in the financial year work started on a $22m pilot underground coal gasification plant on the Huntly coalfield which would test the viability of technology to access deep unmineable coal seams in the Waikato.

The two projects would pave the way for other large scale and more complex projects in future, which would take some years to bring to fruition.

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