Solid Energy is at a crisis point, with a Government bailout almost inevitable, mine closures possible and further job cuts likely in another restructure to try to salvage the debt-ridden coal mining company.
The state-owned enterprise yesterday revealed it was in talks with its banks and the Government over its future after its debt rose to $389 million and a further “significant loss” would be in its half-year result.
The company posted a $40 million loss last year…
Solid Energy’s financial condition has deteriorated over the past two years, a slump it attributed to a 40 per cent fall in coal prices and low returns on investment attempts in areas such as biofuels.
So state-owned Solid Energy geared itself for debt which it used to pay massive salaries to its executives and boost dividends to the state. Now it’s collapsed and the taxpayer will bail it out.
Good old long-suffering taxpayer.
I guess that’s the advantage of having your companies state-owned: they bring the benefit of government monopolies and freedom from commercial imperatives to bear on steadily and progressively diminishing the value of the assets they oversee—transforming their capital over time from assets into dead losses. And all the losses they make every year are socialised.
Good old long-suffering taxpayer, who loses twice over—once in the blundering mismanagement of assets ever-dwindling in value; twice in the losses for which he is always and every time on the hook.
Meanwhile, dullards scream for more companies like this, the lietmotif of all such entities being that they produce fewer resources than they consume.
And this is supposed to be an era that values “sustainability.”
[Hat tip, sort of, to Dim Post’s post]