19 February 2009 – Embargoed for 3pm

Solid Energy confirms Ohai Mine closure

Energy producer, Solid Energy has confirmed it will close Ohai Opencast Mine in Southland at the end of June 2009, when the last recoverable coal from the current pit will be extracted. The company first signalled the mine would wind down after it lost a major commercial supply contract in 2007.

Rapidly declining reserves at the mine have reduced the volume of coal that can be bagged for the household market before closure to 5,000 tonnes which, based on previous years, will not meet demand beyond the 2009 winter.

Solid Energy, which has spent recent years re-working old underground mines at Ohai, had thought the last pit would provide enough coal to supply the household market through the 2010 winter but Chief Operating Officer, Barry Bragg, says this outlook has been affected by the diminishing reserves.

“Estimating coal reserves in pits that have been previously worked by underground mining is difficult and on this occasion we have 20% less coal than predicted. The last remaining pit currently contains 45,000 tonnes of coal but most of that is needed to honour commercial supply contracts, leaving us with only 5,000 tonnes of household coal that we hope will last most of this winter.”

Household coal customers will still be able to purchase bulk coal at the gate from Solid Energy’s other Southland mine, New Vale, west of Mataura.

Mr Bragg says that while most of the 13 Ohai staff will be made redundant by the closure, the company is looking to see if it can offer alternative employment at other Solid Energy sites, such as New Vale.

Following Ohai Mine’s closure, many of the buildings and plant will be dismantled and either redistributed to other Solid Energy sites, with most going to New Vale, or offered for tender. Rehabilitation and environmental monitoring will continue at the site for several years.

There will be five pits to rehabilitate, which will be reshaped and partially filled with available overburden before being seeded with pasture for grazing. After this is done, three remaining hollows will be formed into lakes of 29 hectares, 12 hectare and 7 hectares, with wetland vegetation sown along the banks.

Mr Bragg says that the rehabilitation has been designed to allow for the resumption of mining if a substantial long-term supply contract could provide the economies of scale needed to open a new pit.

To facilitate rehabilitation, Solid Energy hopes to remove about 40,000 tonnes of fines from the site, which may be railed to Lyttelton for export if no local buyers can be found. About 20,000 tonnes of fine coal has been exported this year.

ENDS

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