Solid Energy boss quits after shocker year
By Pattrick Smellie
Feb. 4 (BusinessDesk) - The chief executive of state-owned coal miner Solid Energy, Don Elder, is to follow most of the company's previous board of directors and hundreds of staff out the door, announcing his resignation after 12 years in the post.
Elder's departure had been likely ever since last August, when he announced a shock $40 million loss in the year to June 30, the mothballing of the Spring Creek underground coal mine near Greymouth and an end to plans to extend the Huntly East mine in the absence of new contracts with its main customer, the New Zealand Steel mill at Glenbrook.
Writedowns of $151.7 million were included in the result, with further post-balance date writedowns yet to be declared.
He blamed the result on an "extreme downturn" which hit international prices of coking coal as demand from China turned down in the first half of last year, but critics also saw a pattern of Solid Energy concentrating too heavily on a range of loss-making "new energy" initiatives that had been intended to take the company away from its traditional reliance on coal production.
However, many of the 440 positions lost in a restructuring announced in September were at head office, where a large team had been established to pursue a variety of non-core businesses that Elder hoped would one day transform Solid Energy from a pure coal play to a multi-fuel producer.
The Treasury's Crown Ownership Monitoring Unit had already been gunning for Solid Energy after a $1 billion gap emerged between the company's calculation of its value and an independent valuation. The company was taken off the list for partial privatisation as the extent of its problems became public, creating a further headache for the already unpopular government programme.
Elder's vision for Solid Energy was that the net impact of its activities would be a positive for the environment, despite its core business being coal extraction. The company had extensive environmental remediation projects, but came unstuck in a series of investments in areas such as wood-fire pellets and bio-diesel, as well as being hit by the coal price downturn.
It drew heavy criticism from environmentalists and the Parliamentary Commissioner for the Environment for its plans to turn huge deposits of low-grade, high carbon emitting lignite coal in Southland into diesel, urea and burnable briquettes.
The closest the company came to fruition on those plans was the commissioning of a $29 million demonstration briquette plant in Mataura.
The previous chairman, John Palmer - also chair of state-controlled Air New Zealand - had already announced his resignation at the time the loss was reported. He was replaced by Mark Ford, a government fix-it man who was brought in to help with the Auckland super-city merger.
Most of the rest of the board was quietly cleaned out by Christmas, with some replacements still to be announced.
Ford acknowledged Elder's contribution, saying the company had "grown and developed substantially and achieved many successes" since he took the reins in May 2000.
Elder was not giving interviews, but said in a statement his decision was "consistent with his belief that the company had a strong future once it worked its way out of the impacts of the market downturn."
Garry Diack, Solid's group manager for organisational development and performance will be interim chief executive until a new appointment is made.