Solid Energy - Lignite Conversion Proposals

Lignite Conversion Proposals

In 2010, Solid Energy was promoting a number of 'lignite conversion' projects. Solid Energy considers lignite conversion “could unlock the vast potential of Southland’s multi-billion tonne lignite deposits by making them into high value products”. In January 2011, Southland Chamber of Commerce chief executive Richard Hay predicted that the full lignite to briquette plant and the lignite to fertiliser plant may employ up to 2300 people which would transform Mataura's fortunes.

Briquettes

One project is to make fuel briquettes from lignite. A pilot briquetting plant was planned for either the former Mataura Mine site, or the former Mataura Paper Mill. In July 2010, Solid Energy reported it had run a successful trial of briquettes with US partner GTL Energy. In June 2011, Gore District Council approved resource consents for the Mataura briquetting plant. As of June 2012, construction was under way on a site by State Highway 1, south of Mataura. The briquetting plant is expected to process 148,000 tonnes of low-grade lignite from the New Vale mine into 90,000 tonnes of higher-quality briquettes for fuel. The plant will have a boiler likely to burn 15,000 tonnes of lignite a year.

Fertiliser

One other potential lignite-conversion project is to gasify lignite to produce urea-based fertiliser. Solid Energy was considering the viability of a lignite-to-urea plant with the fertiliser company Ravensdown as partner. Solid Energy and Ravensdown co-operated over a joint concept study and in August 2012 Ravensdown stated it would no longer be involved with any further work with Solid Energy.

Liquid fuel

The other potential lignite-conversion project is to gasify lignite to produce liquid fuels. Solid Energy had an agreement with Australian company, Ignite Energy Resources Pty Ltd, to develop a lignite-to-liquid plant. The technology involved had not been proved viable at a commercial scale.

Implications

In December 2010, Dr Jan Wright, the Parliamentary Commissioner for the Environment, issued a report, “Lignite and climate change: The high cost of low grade coal”, which criticised the lignite conversion proposals for their carbon intensity, their contribution to climate change and the likelihood that they would be eligible to receive a free allocation of carbon credits under the New Zealand Emissions Trading Scheme. Dr Wright said "it makes no sense that the emissions trading system (ETS) rules would lead to taxpayers subsidising, even at a modest level, new investment in outdated dirty technology".

On 22 February 2013, the New Zealand Herald reported that the plans for converting the Southland lignite into diesel, fertiliser and burnable briquettes has been abandoned due to debts and low coal prices.