Silica project would need $300m
The company behind a $300 million silicon smelting project in Southland plans to go to the NZX stock exchange to raise capital.
Silicon Metal Industries wants to mine silica at Pebbly Hills, between Invercargill and Gore, and smelt it into silicon for manufacturing.
Southland holds an estimated 350,000 to 400,000 tonnes of high-purity silica – the type needed for high-grade products – as well as one billion tonnes of potentially useable lower-grade silica.
Silica is found as quartz and can be smelted into silicon, which is used in computer chips and photovoltaic solar energy panels.
Consultant Peter Trickey, who works for SMI's South African holding company, said it hoped to have a feasibility study started later this year and completed within 18 months.
It had secured capital for the study, he said, but more would have to be raised if construction of the plant was to go ahead.
It estimated the project would cost more than $300m, he said.
"The feasibility study needs to come back positive, of course, but if it does, I don't think there will be any problem to raise the capital."
SMI needed to be restructured before it would be eligible for the NZX, he said.
The restructure was in the advanced planning stage, he said.
The silicon market had suffered setbacks because of the global economic slowdown, he said.
The price of a kilogram of silicon was about $400 at its highest, but it had halved in the past few years.
China was becoming a more important market, he said.
"There are two markets – the American and the Chinese market," he said.
"Normally the American market is significantly higher than the Chinese [but] ... with the slowing down of the European and American economies, demand has dropped off."
Silica is seen by Venture Southland and councils as one of the most promising resources in the region and its potential has been talked about for several years.
The Southland Times