Snails row hits coal exports

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Lyttelton Port of Christchurch (LPC) is sticking to an $8 million annual net profit forecast, despite a potential significant fall in export coal crossing its wharves.

The port yesterday said a fall in coal volumes was likely to occur, given that mining by its client Solid Energy had been held up by a snail protection programme at Stockton, in Buller.

LPC's shares closed unchanged at 220c yesterday.

On Thursday, Solid Energy warned that its own profit would be slashed $25m pre-tax, caused by the dispute with environmentalists over the snails.

Chief executive Don Elder said the state-owned coal miner had lost $25m through being unable to meet five export coal shipments because of delays in getting to high quality coal on the Stockton ridgeline.

Solid Energy has been subject to "orchestrated and concerted protest action" by a group known as the Save Happy Valley Coalition, LPC chief financial officer Kathy Meads said.

Because of this action the state-owned miner had invoked provisions of its contract with LPC relating to coal from the Stockton mine exported from the port. "They're basically giving us formal advice that they need to invoke the force majeure provisions of our contract ... because of the issues that they have they cannot comply with their contract."

Force majeure means unforeseeable circumstances excusing a party from the fulfilment of a contract.

The action could also have an impact on Toll New Zealand, which has a contract to rail the coal from the West Coast to Lyttelton.

In June 2002, Solid Energy signed a 15-year agreement with LPC relating to coal handling services at the port. At the same time, it signed a 15-year contract with Tranz Rail to transport West Coast coal to Lyttelton. In late 2003 Australian company Toll Holdings took control of Tranz Rail.

Meads said the force majeure provisions were likely to mean a fall in coal volumes through Lyttelton. Solid Energy had recently advised it would cut back production at Stockton, which is near Westport, for about two months.

The port was still reviewing the impact of the cuts, and would advise the market further, she said.

"LPC will be working closely with Solid Energy to mitigate all potential impacts and delays on the business."

At this point, LPC was not projecting a drop in its forecasted annual net earnings, which remained at about $8m, Meads said.

Toll Holdings spokeswoman Sue Foley said the transport operator expected "minimal impact", with staff involved in Solid Energy work to be transferred to other projects or take leave.

In 2002, LPC agreed to upgrade its coal-handling facilities, and speed up ship-loading facilities, with both LPC and Solid Energy putting in funding lines for upgrades.

Solid Energy spokeswoman Vicki Blyth yesterday said she had nothing further to add to Thursday's financial disclosure.

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