Policy disputes may undermine coal agreement

Press, 8 April 1987, Page 1

Policy disputes may undermine coal agreement

By

BRENDON BURNS

in Wellington

The Government’s corporatisation of the State coal industry may collapse.

The chairman of Coalcorp, Mr John Perham, said he had considered resigning, a move already made by two directors, Messrs lan Small and Stephen Franks.

Sources close to the Coalcorp-Treasury negotiations on the value of State Coal said that the Treasury, in months of what the Deputy Prime Minister, Mr Palmer, termed “hard-headed negotiations,” had not even put forward a price for the assets. The sources described the negotiations as a delaying tactic, while major corporation boards such as Electricorp had reached agreement with the Treasury. Mr Palmer will today

chair a meeting of the Cabinet committee on State-owned enterprises to try to put the Treasury negotiations with Coalcorp “back on the rails again.”

The committee faces an enormous task. Messrs Small and Franks resigned saying that the Treasury seemed interested in shorter-term higher-profit returns which would have seen underground coalmining disappear before the end of the century. Mr Small, a businessman, of Wellington, said no agreement had been reached with the Treasury because it had a different view of the future of the coal business.

“It really relates back to whether there is a longterm future in underground mining in New Zealand. I believe there is.” Mr Franks, a lawyer, of Wellington, said the Treasury’s views were towards winding down underground mining in favour of the cheaper, more profitable practice of opencast mining. The Coalcorp view was to maintain underground operations well into the next century, hoping for an upturn in demand. Mr Perham said the Treasury plan would see withdrawal from underground mining “faster than the corporation’s

directors feel is commercially appropriate.” Speaking on Radio New Zealand’s “Checkpoint,” Mr Perham said the Treasury proposal could see Coalcorp mining staff numbers, already drastically reduced, cut further. Asked if he had considered resignation, Mr Perham said, “I have though about it and I have rejected the issue, certainly at this stage.” Mr Palmer said it was an exaggeration to say the Treasury’s proposals jeopardised the future of underground mining. But the Cabinet committee which he chairs will today review the Treasury position. Earlier report, page 2