the reduction in Westland coal production will see the railway's tonnage fall, too

A coal train from the West Coast is seen on Cass Bank, east of the Alps. (Darryl Bond)

The movement of coal from Ngakawau to Lyttelton has long been the major source of KiwiRail freight traffic over that route, but at Solid Energy's Stockton mine, production is to be cut from 1.4 million to 1 million tonnes a year as from July with the net loss of 113 jobs, the company announced today.

The government-owned Solid Energy says the proposed changes are necessary to stem Stockton's losses which have averaged $2.1 million a month this financial year and which, without change, are forecast to worsen.  The company is said to be $300 million in debt.

Solid Energy chief executive Dan Clifford, who gets $650,000 a year, says that since mid-2014 the Stockton Mine has found cost savings and efficiency gains, but these improvements are more than cancelled by the continuing fall in the export price, which has gone from $US 120 to $83 per tonne in under a year.

According to TVNZ, about half the coal exported goes to India, about a quarter to Japan and the rest to China and South Africa.  Video