Bathurst Resources and Talleys buys three Solid Energy mines - Stuff.co.nz

HAMISH RUTHERFORD

Last updated 12:43, October 31 2016

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Bathurst Resources has bought two mines from state-owned Solid Energy

One of New Zealand's leading food companies has joined forces with a mining company to buy three mines from collapsed state mining company Solid Energy.

More than a year after the state-owned mining company was placed into voluntary administration to protect it from collapse, the sale of its assets was released on Monday.

The most notable purchase sees Talley's - a major Motueka-headquartered food producer, partner with Wellington-based Bathurst Resources in buying the Stockton mine on the West Coast, as well as the Rotowaro and Maramarua mines in the Waikato.

The purchase is in a joint venture, Phoenix Coal, with Talley's Group, which will own 35 per cent of the project.

READ MORE:
* Solid Energy announces voluntary administration ahead of sale
* Blame for Solid Energy's collapse should be spread far and wide
* Timeline: Solid Energy brought down by debt and ambition
* Bathurst Resources: Hauled over the coals of protest

Meanwhile Greenbriar, owned by the Palmer MH Group, a private South Island resources company, has bought the New Vale and Ohai coal mines in Southland.

Birchfield Coal Mines, a West Coast mining company, has bought the Strongman and Liverpool mines on the West Coast.

'A perfect storm'

Solid Energy embarked on a rapid expansion including into new forms of energy, but the company hit troubles in 2012, with a combination of hundreds of millions of dollars in debt and a collapsing coal prices.

Management and the Government blamed a "perfect storm" of a surging kiwi dollar and weak international coal prices.

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However it later emerged that the Government encouraged the company to take on debt to allow it to continue to pay dividends as it expanded, leaving it prone to a downturn.

In the years since the problems emerged the Christchurch-headquartered company laid of hundreds of workers and restructured its debt, but this was not enough to turn around its performance.

Once touted for sale in the mixed ownership model process, the company was placed in voluntary administration in August 2015, to enable an orderly sale. The government warned the banks which were owed hundreds of millions by Solid that the alternative was liquidation.

'Primarily an investor'

The move into coal marks a change of course for Talley's, which has interests in seafood, frozen vegetables, dairy and meat.

Director Andrew Talley said the company would leave Bathurst to operate the mines.

"The opportunity just presented; the right partner in what's a solid and proven resources. It just gives us a bit more business diversity , which we've always sought. We're not there to operate the mines. We're there primarily as an investor."

While Bathurst is headquartered in Wellington, the deal will require the approach of the Overseas Investment Office because most of its shareholders are based offshore. The company's shares are traded on the Australian ASX.

"Combining the Solid Energy assets with our existing mines will create the country's largest specialist coal mining company, sharing knowledge and resources, and providing economies of scale to create a strong foundation for a long-term business," Bathurst chief executive Richard Tron said.

"Our focus remains on being a responsible resource development company and we're confident that we can build a great business adding value to communities on the West Coast and the Waikato. We believe our strategy for the business will also contribute to the country through employment and maximising resource value."

More to come...

 - Stuff