Southland lignite to urea plan could create 500 jobs

Solid Energy is teaming up with a fertiliser producer to investigate the building of a US$1-US$1.5 billion coal-to-fertiliser plant that could create 500 jobs in Southland.

The state-owned coalminer has joined with Ravensdown to look at creating a plant like others being built in China near lignite coal fields in eastern Southland.

The study will consider the economics and possible location of a plant producing up to 1.2 million tonnes a year of urea a nitrogen fertiliser used to enhance grass growth from up to 2 million tonnes a year of lignite mined from extensive lignite resources.

The new mine could outstrip New Zealand's "biggest" coalmine Stockton, on the West Coast, which produces 1.5-2.0m tonnes of coal. But the mine would probably cover a surface area equal to a dairy farm, Solid Energy chief executive Don Elder said.

Solid Energy has spent $60m on land in the region containing the lignite resources, which total about 1.5b tonnes in the Mataura-Gore area.

Dr Elder said it was one of its top three opportunities for growth. The lignite to urea study was running in parallel with existing work to investigate the production of diesel from lignite, but with a "fast track" emphasis on a urea plant.

This month Solid Energy announced a $1m joint venture feasibility study plant near Mataura for lignite briquettes.

Dr Elder said the study was expected to be completed early next year, when they would decide whether to proceed to the next stage of a feasibility study.

Following engineering design, and subject to consenting and financing, construction could start by 2012, and the plant could possibly be operational late 2014.

Project financing was at an early discussion stage, but with both New Zealand and overseas banks or financiers able to be engaged.

Ravensdown chief executive Rodney Green said by harnessing a world-scale lignite resource New Zealand could become self-sufficient in, and potentially an exporter of, urea fertiliser.

The co-operative and its 30,000 New Zealand and Australian farmer shareholders would be interested in staying as long-term investors in a urea plant as well as using much of the annual urea production.

- © Fairfax NZ News