Mine, Baby, Mine

A Tick for Solid Energy

Regular readers of this blog will be well aware that we have scant regard for the state using its coercive power to engage in commerce. However, the state owned enterprise ("SOE") model, where commercial operations are run on commercial terms at a reasonable arms length basis, has worked reasonably well--at least in the short term. (Having said that, we doubt that it would have survived another left-wing Labour government. Labour had already stacked SOE boards with its "friends" who had less commercial experience than an ante-diluvian Neanderthal. The writing was on the wall.)

We were cheered recently when the Government's mining company, Solid Energy announced that it intends to bid for what remains of the Pike River Coal company. The Chief Executive, in true mercantilist spirit, declared his company's interest in bidding, slammed other bids (by entities as yet unnamed) as not worth the paper they were written on, and talked up his company's considerable experience in West Coast mining. He also added a deft political touch by promising to pay out Pike River's creditors and work to recover the bodies of the slain miners.

More cheering still was his intimation that Solid Energy would employ open cast mining to extract the highly valuable coal from Pike River, pointing out that Solid Energy currently operates open cast mines successfully, in compliance with environmental codes.

If any company would be successful in extracting this valuable asset, it would likely be Solid Energy. The fact that it will likely be partially privatised in the next year or so makes the proposition even more attractive.