Media Release

Joint contract to prove viability of new mine in Southland

Solid Energy New Zealand Ltd has moved a step closer towards proving the long-term commercial viability of an opencast mine at Ohai in Southland with the award of a joint contract to W. Stevenson & Sons Ltd and Coleman Mining Ltd.

The contractors will start work on the site of the planned Ohai Opencast Mine within the next week. The contract includes stripping of the overburden (material above the coal) as well as the initial coal winning. It is the next stage in an extensive feasibility study, which commenced at the end of 2001, designed to establish the commercial viability of a new mine at Ohai.

The opencast mine is within the company's current mining licence area and next to the Wairaki No. 6 Underground Mine which will close in September 2003 when current recoverable reserves will be exhausted. Solid Energy estimates that opencast mining at Ohai has the potential to produce between 1 million and 4 million tonnes of coal in the short to medium term, with the possibility of up to 12 million tonnes over 20 years. The coal would secure continuity of supply for Solid Energy's industrial and domestic customers in the lower South Island. It will also help to meet the projected increased demand for coal from South Island industrial customers, including the current and future needs of the dairy industry.

Solid Energy South General Manager, Steve Riddell, comments: "The award of the contract to Stevenson's and Coleman Mining puts the company right on track towards proving the long term viability of an opencast mine at Ohai. Investigations to date have been very positive in supporting our view that coal resources at Ohai will continue to provide a long-term mining opportunity for the company and for the township, which has a long mining tradition. In the medium to long term we will continue to investigate all opportunities for both underground and opencast mining in Southland.

"The company is in on-going discussions with our staff about how we manage the transition between underground and opencast mining at Ohai. Staff with underground skills have already been offered the opportunity to work at other Solid Energy sites."

Solid Energy currently employs 47 people at Ohai, over half on the surface in processing, bagging and distribution. Wairaki Underground Mine opened in 1981 and has produced more than 2.66 million tonnes to date. Opencast mining was last carried out at Ohai between 1979 and 1984.

For further information contact: Vicki Blyth,
Communications Director,
Solid Energy New Zealand Ltd
Tel: 03 353 0100