Mines face tough decisions as fuel costs soar

ONE West Coast goldminer’s fuel bill has soared to $250,000 for just one month, as prices remain high.

With diesel now over $2 a litre, and petrol over $3, the region’s mining industry is trying to work smarter to reduce consumption.

West Coast Goldminers’ Association president Ian Cummings said he might have to close his mine site in a month if prices did not ease.

Most sites were remote and had no mains power so everything was run off fuel, from generators to excavators, dump trucks and mobile plant.

Mr Cummings’ own fuel bill had gone from $36,000 a month to $70,000.

He said the Government could help by relaxing GST — which accounts for 15% of the price — noting that moves by the Government to help motorists had not benefited the mining sector.

‘‘We are probably going to close in a month, park everything up. And it’s not just me. You can only defer maintenance so long before you end up with a pile of scrap.’’

They had tried everything they could to cut back, and did not run machinery unless they had to, he said.

‘‘We are trying to save everywhere we can.’’

At Rimu, Ian Whyte has also been making changes to cut costs at his mine site.

He said his business would keep operating, as the gold price had gone up just as the price of fuel rose.

Mr Whyte said he had a plan of attack, including lessening the number of screens, using more productive screens and moving screens closer to the wash hole so trucks had less distance to travel.

Additions to his conveyors meant he could do away with a big loader.

‘‘We just got to be smart about everything.’’

His fuel bill for March was the largest he had received since starting mining, despite usage not being up.

‘‘It hurts.’’

Birchfield Coal Mines chief executive Phil McKinnel said the cost of production was increasing with the rise in fuel price.

‘‘We are always looking for fuel efficiencies.’’

Minerals West Coast manager Patrick Phelps said costs were also going up because of the Government’s emissions trading scheme.

‘‘This isn’t a failure of the scheme, it’s a success. The unit price is currently $76.80 a tonne. That means every litre of diesel carries 21c as an ETS component, and petrol 18c.’’

That equated to $9 or $10 filling a 50litre fuel tank.

Mr Phelps said the Climate Change Commission had said the price might need to go as high as $250 a tonne of CO2, which would work out to about 70c a litre of diesel, and 60c a litre of petrol — about $30 to $35 just in ETS costings to fill a standard 50litre fuel tank.

By the same numbers, depending on the grade of coal, a tonne of coal at today’s price of $76.80 a tonne of CO2 emissions ended up costing about $150 just for the ETS price, though it does vary depending on the coal specifications.

‘‘Coal is used to produce the lion’s share of New Zealand’s milk, and a good chunk of our meat and veggies. It’s freighted by liquid fuels. As the price of these inputs rise, the people producing the goods people are buying have little choice but to pass the costs on to people buying them, or stop producing them altogether,’’ he said.

‘‘The assumption is there are economic alternatives available. There aren’t, at this stage anyway.

‘‘About 78% of emissions worldwide aren’t priced under any form of carbon tax or emissions trading scheme. Of the 22% that are, the average price works out to about $4.50 a tonne of carbon dioxide. New Zealand’s price is sitting about 16 times that average — and to repeat, 78% of the world’s emissions aren’t priced at all.’’ — Greymouth Star