Palmer joined the board of Solid Energy in November 2006 and was appointed chairman in January 2007. He presided over the purchase of the Pike River mine – where 29 miners lost their lives – in March.

“This had been a very difficult decision to make,” Palmer said in a statement.

“In the next three years the company has not only a strong growth strategy to implement but must also prepare for partial privatisation, which I continue to strongly support.

“This will create a heavy workload for the board and the chairman. My personal situation means I will not be able to continue when my current term concludes next year and it is preferable to allow a new chair to get well established as soon as possible to provide continuity and lead the company through this period.

“I am passionate about Solid Energy and its prospects. Despite the current international market conditions the company has an exciting future.

“Importantly, Solid Energy has the leadership, management and technical capability to be an increasingly important part of the New Zealand economy.”

Solid Energy suspended development and coal extraction at Huntly East mine in accordance with a prohibition notice from the Department of Labour last Wednesday.

The company argued that at no time has there been a safety risk at the mine from an accumulation of methane in a recently-mined area which the Department of Labour’s High Hazard Unit inspectors identified during a visit on Wednesday.

The department lifted the notice on Friday, following a meeting with the inspectors, and replaced it with a prohibition notice on extraction only.

Solid Energy’s chief operating officer Barry Bragg said the company as confident there was never any risk to safety and the company deeply regretted any anxiety this incident and the resulting speculation had caused for its staff, their family and friends, and the local community.

This has allowed underground crews to resume work preparing coal blocks for mining. Solid Energy is providing the inspectors with more information which they have requested about ventilation.

Bragg said: “The company remains confident that the mine is operating safety and that there was never any risk to personnel. The inspectors’ initial notice – allowing all other underground work to continue – bore this out. Our workforce continued working underground on other duties, mainly maintenance and other ‘housekeeping’ throughout this time.”

The naturally occurring methane from the area in question, and all other potential hazards, were being managed in accordance with the mine’s standard operating procedures for this situation, Bragg said.

“At no time did methane in this area exceed mining regulations standards,” he said.

“Solid Energy is cooperating fully with the High Hazard Unit and providing inspectors with the further information they have requested. We cannot see any reason why the second prohibition notice cannot be lifted very soon so that we can restart coal extraction.”

At Huntly East mine, the coal mining is done by removing coal in a hatch pattern of intersecting corridors, resulting in a grid of tunnels with coal pillars between them.

All coal produces methane gas and the mine’s ventilation system is designed to pull sufficient quantities of fresh air into the mine, direct it past areas where any methane is being produced and ensure it is systematically drawn into in the main body of air, diluted so that it presents no threat, and carried from the mine.

In the same way, the ventilation system safely dilutes and carries out of the mine engine exhaust and the exhaled air of staff members working underground.

The area under investigation had been “no-roaded” – meaning it is not a working area, contained no mechanical or electrical equipment and could not be entered apart from by qualified supervisors making their regular checks. No-roading virtually eliminated any risk of an ignition source, the company said.

“By the mine’s standards and procedures, the area’s ventilation was appropriate and well managed,” it said.

“Fans set well back from the faces were directing fresh air through long sleeves toward the far ends of the area to safely dilute the proportion of any naturally occurring methane and temporary screening had been rigged to direct the airflow back out into the mine’s main body of air.”