State Coal assets valued at $69M

Press, 15 July 1987, Page 1

State Coal assets valued at $69M

By

PETER LUKE,

political reporter The Government has agreed with Coalcorp on a valuation of $69.4 million for the assets the new State corporation will take over from State Coal.

The agreement brings to an end four months of tough and at times heated negotiations. In early April two Coalcorp directors resigned, because of differences with the Treasury over the asset negotiations. However, the Government and Coalcorp announced last evening that the base value of the assets would be $69.4 million.

This figure takes account of a $7.9 million adjustment to the price for Coalcorp to take over personnel obligations from the Crown. It also takes account of a $5.8 million cost to Coalcorp of taking on the Wairaki and Morley mines at Ohai, in Southland. The transfer value before these two adjustments is therefore $83.1 million. The agreement is the third asset evaluation to be made between the Government and State corporations. The two earlier agreements were with New Zealand Post and Postbank. The sale of the new Coalcorp assets is subject to arrangements

to be agreed with the Maori Council to cover Maori land claims under the Treaty of Waitangi. The valuation could also be adjusted by contracts yet to be signed with Coalcorp’s two biggest customers, New Zealand Steel and Electricorp.

Coalcorp’s chairman, Mr John Perham, would not comment on these negotiations save to say they were “sensitive.” The personnel obligations taken over from the Crown are long-term contractual arrangements with former employees of State Coal.

The Ohai adjustment of $5.8 million covers the cost of making these mines profitable in the next two years. Mr Perham said Coalcorp was concerned about the economic viability of the Ohai mines, where there were about 250 jobs and a community of 3000 dependent on the mines. Once the final sale and purchase agreement is signed the corporation will gain mining licences at Rotowaro, Huntly, Maramarua, Stockton, Strongman, Island Block, Denniston, Wairaki, Morley, and Wangaloa. Coalcorp. will also have prospecting licences at Maramarua and Denniston.