Jobs on the line as Methanex considers downsizing

Wednesday, 11 September 2024

Dozens of workers at Taranaki’s Methanex operation could soon be out of a job as the company looks to downsize its New Zealand operation.

The Canadian head-quartered company, which manufacturers methanol in Taranaki, is consulting with workers about their roles and it is understand around 70 could be facing redundancy.

Methanex New Zealand employs around 300 people.

In a written response to questions, Methanex New Zealand managing director Stuart McCall said they had started consulting on how to operate its assets and what structure was required to move from a two-plant operation to a one-plant operation.

He said the change was to match the “current gas outlook”.

“This is a disappointing outcome for us. It means we are likely to lose many valued and experienced people,” he said.

Last month the company announced it was shutting the Taranaki methanol plant until the end of October and selling its gas to Contact Energy and Genesis.

At the time, economist Brad Olsen of Infometrics said Methanex's facilities were never meant to operate forever, and workers in the region needed a planned transition if the plant reduced operations or closed.

He said the roughly 300 jobs at the company represented about 1% of employment in the New Plymouth area.

McCall would not confirm how many people were impacted by the restructure but said they expected to finalise their plans by the beginning of October.

He said the decision to consult with staff and indefinitely idle one of their Motunui plants came almost three years after they shut down and indefinitely idled their Waitara Valley plant in 2021.

Without naming names, he laid the blame for the dwindling production on the 2018 decision by Labour to ban new petroleum exploration outside onshore Taranaki. The coalition Government has since moved to reverse that ban.

“Policy settings since 2018 have not been conducive to sustain gas supplies at sufficient levels to operate more than one plant,” McCall said.

“The impact of under-investment and the lack of success of the upstream activities that have been undertaken have driven this decision and have contributed to the recent energy crisis.”

McCall said Methanex was not closing their New Zealand business and their intention was to continue to operate their last remaining Motunui plant.

He said the country’s gas supply required significant and immediate action by the Government to “incentivise upstream developers to arrest declining supplies and return New Zealand energy and natural gas markets to their potential”.

“Without such action, we are compromising the country’ s economic prosperity, energy security and our ability to continue to operate beyond the near-term. We remain committed to our long-standing role in the country’ s energy sector; however, our primary concern right now is the well-being of our people and their families,” he said.

Last month the company announced that instead of making methanol, which it exports from Port Taranaki, it would sell the gas it used for that process to Contact Energy and Genesis Energy so they can use it to generate electricity – which, like gas, was in short supply.

Those two companies would get 3.5 petajoules and 3.2PJ respectively.

Contact Energy said the 3.5PJ of gas it would receive from Methanex would allow it to run its Taranaki Combined Cycle gas-fired power station through the remainder of the year “if required by the market”.

“With national hydro storage levels at just 46% of the average for this time of year, and an ongoing decline in domestic gas production, we have taken this step to support security of electricity supply to New Zealanders,” Contact chief executive Mike Fuge said.

At the time, New Plymouth mayor Neil Holdom said the deal was another clear sign the country needed a bipartisan long-term energy strategy agreed by all major parties and developed with the energy sector.

“I’m really interested in what the leader of the Opposition has to say about our national energy policy and strategy and whether Labour are prepared to put party political objectives to the side and focus on working with the coalition Government to develop a long-term energy strategy that works for all New Zealanders.”

He said the alternative was more manufacturers closing, job losses and the loss of export earnings that accompany that.