A lignite mine and diesel conversion plant at Ashers-Waituna east of Invercargill has not been ruled out, the company behind it says.

L&M Lignite Ashers-Waituna is a subsidiary of the L&M Group, which also includes L&M Energy, the company involved in coal-seam gas development in Ohai and Kaitangata.

Its permit to explore and develop the area, north of the Waituna Lagoon, expired in January, but the company has applied to extend it.

However, director David Manhire said any possible resource consent application for the plant was years away.

"The international financial crisis hasn't really helped ... [but] the project is still in the evaluation phase."

In the 2000s, L&M developed plans for lignite conversion at Ashers-Waituna and Hawkdun, in Central Otago.

In a 2005 report, it was estimated 876 million tonnes of lignite could be available in Ashers-Waituna and 771 million tonnes in Hawkdun. By 2010, it had concept plans for a $5.5 billion lignite-to-diesel conversion plant at Hawkdun.

Mr Manhire said the plans had not been abandoned but it was potentially a large project which needed a lot of work.

Solid Energy's planned lignite briquetting plant, the first phase of its development of the resource around Mataura, is to be commissioned next month and expected to begin production in September.

alex.fensome@stl.co.nz

- © Fairfax NZ News

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