Port Taranaki is in talks with its staff following the announcement from Methanex. Photo: Supplied / Port Taranaki
The announcement of 70 potential job losses at Methanex's plant in Taranaki is sending shock waves through the region, with Port Taranaki already in talks with its staff about reconfiguring its business.
Methanex, which uses gas to produce methanol for export, said policy settings had not been conducive to securing sustainable gas supply for its business since 2018.
About 300 people work at Methanex's Motunui plant, but when a deal to sell its gas supply to electricity generators Genesis and Contact Energy ends later this year that number could take a hit.
The Canadian-based multinational has told staff that rather than firing up two production plants it wanted to scale back to a single unit.
The company shut down and indefinitely mothballed its Waitara Valley plant in 2021.
Port Taranaki talks with staff after Methanex cuts production
E Tū organiser Rachel MacIntosh said workers at Motunui were disappointed but not surprised at the move.
"They're feeling pretty terrible. You know they are skilled workers and will probably find work. Whether they find work in New Zealand is another question."
She said any job losses would have a wide-ranging effect.
"To have this many jobs going in Taranaki is terrible for the whole community and so a lot of the people affected are worried about the whole community and what's going to happen."
Methanex was among the top beneficiaries of free carbon credits from the government, under a scheme to shield exporters from being disadvantaged by New Zealand's carbon price.
The value of the subsidy currently was about $60 million for last year, which was roughly $200,000 per employee of Methanex.
MacIntosh said the situation at Methanex was the latest symptom of New Zealand's failure to have an effective energy strategy.
New Plymouth mayor Neil Holdom said there would be a real price to pay for a scaled back operation at Methanex.
"Methanex not operating at scale has flow-on effects for a whole lot of industries and the port. They're one of the port's biggest customers, so this will rattle the entire New Zealand energy sector because they also underpin oil and gas exploration."
Port Taranaki chief executive Simon Craddock said Methanex was its largest customer and methanol was the largest product by trade volume.
"This is a disappointing development for Methanex, but it is a reality of the decline in gas reserves and production, the challenging operating environment for the energy system, and policy settings.
"In the 2023-24 financial year, methanol trade through Port Taranaki reduced from 1.71 million tonnes to 1.28 million tonnes, and we had anticipated further reduced methanol volumes for 2024-25 and the foreseeable future."
Craddock said further reductions in methanol production would have a significant flow-on effect, including at the port which had 116 staff.
"As such, we are focusing strongly on reducing our operating costs and looking at ways to reconfigure our business to meet the new operating environment.
"We're working with staff on options to achieve this, but no decisions have been made yet. It's an unsettling time for our team and we're looking to support them as best as possible while we work through these changes."
Methanex, meanwhile, said a proposed new structure had been shared with its staff and those plans would be finalised at the beginning of October.