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Solid Energy $800m coal supply deal with Genesis Energy falters

<p>New Zealand’s state coal miner Solid Energy may not be able to deliver on a $800m (A$742m) coal supply deal with Genesis Energy.</p> <p>A Macquarie Equities report has found that higher levels of rock above coal seams, and problems with Solid Energy’s contractor, Henry Walker Eltin, may force a renegotiation of the deal.</p> <p>This could force Genesis to import more Indonesian coal and increase its prices.</p> <p>Two weeks ago it was revealed that Solid Energy’s coal reserves in the Waikato had fallen, undermining its claims that coal can substitute for declining gas supplies and prevent an energy crisis.</p> <p>Solid Energy chief executive Don Elder said there is no substance to the rumour that higher levels of overburden required a renegotiation of the contract with Genesis.</p> <p>Meanwhile, Solid Energy has on order 60 new 50 tonne coal wagons. </p> <p>The first 30 are now under construction at Toll Rail’s Hillside workshops in Dunedin, with delivery due at the end of June. </p> <p>The company’s chief operating officer Billy Bragg said, On Track, the government owner of the rail network, is making steady progress with work on the Midland line between the West Coast and the Port of Lyttelton. </p> <p>Toll Rail is on target to move more than 2m tonnes of coal by rail in 2004&#4705. </p> <p>"While it is not an ideal solution, we need to continue trucking coal from Ngakawau to Reefton, along with trucking to the Westport Wharf, to deliver the increased distribution capacity we need to meet customer demand,&#8221 Mr Bragg said. </p> <p>Over the next few months Solid Energy expects to move between 15 and 20,000 tonnes of coal each month by barge from Westport to Lyttelton.</p> <p>Solid Energy operates underground and opencast mines on the West Coast, in Southland and at Huntly in the Waikato,.</p> <br />