The recent expansion of the mining industry to develop Lignite in Southland and Otago represents a very real and major threat to our climate. Coal Action Network has prioritised this as a major focus and have vowed to fight this incredulous expansion of the industry.

Click to download Coal Action Network Lignite Backgrounder

The background information from local group Lower Mataura Landcare is available here…

Keep reading for Coal Action Network compiled facts on the proposals…

Two companies, State-owned Solid Energy and privately owned L & M Lignite, are currently assessing the feasibility of lignite conversion schemes in Southland. Solid Energy will soon announce resource consent applications for the first of its projects.

At least 6.2 billion tonnes of lignite is technically and economically recoverable in 10 major deposits in Otago and Southland. The in-ground lignite resource is approximately 11 billion tonnes.

What is Lignite?

Its a yellow to dark brown, rarely black, coal that has been formed from peat under moderate pressure; it is one of the first products of coalification and is intermediate between peat and subbituminous coal. Dry lignite contains about 60 – 70% carbon. Almost half of the world’s total coal reserves contain lignite and subbituminous coal, but lignite has not been exploited to any great extent because lignite is inferior to higher-rank coals (e.g., bituminous coal) in heating value, ease of handling, and storage stability.

Solid Energy is currently investigating several options for converting its lignite resources in Southland (estimated at 1.35 billion tonnes) to energy forms and products. This includes developing a lignite-briquetting plant, a lignite to diesel plant, and assessing the viability of a lignite-to-urea plant with Ravensdown. These could all be built in one large Industrial Park. Three possible sites for this plant have been mentioned, one near the New Vale mine, one near a disused Mataura paper mill, and another near a mine pit south of Mataura. Solid Energy has applied for consent to build their pilot briquetting plant at their disused Craig Rd Mataura mine site.

Lignite Briquetting– Solid Energy recently announced plans to next year (2011) start building a lignite briquetting plant producing 65,000 to 100,000 tonnes a year for the domestic market with a proposed expansion to 1 million tonnes for the export market by 2014. Domestically briquettes would most likely be going to Fonterra. Internationally, the briquettes would have to compete with sub-bituminous coal on the international market. The site for this plant would most likely be part of the proposed industrial park discussed below.

Lignite to Liquids- Solid Energy recently announced it will next year (2011) start construction of a lignite to liquids pilot plant. This plant will initially be capable of converting lignite or biomass into higher quality coal or synthetic crude oil. Solid Energy had an agreement with Australian company, Ignite Energy Resources Pty Ltd (IER) securing the exclusive New Zealand rights to a technology which converts low energy feedstocks, such as lignite and biomass, to high-grade coal and synthetic crude oils which have the potential to be upgraded to transport fuel. The proposed commercial pilot plant initially produce 10,000 barrels of crude and 5000 tonnes of char, a powered form of pure carbon. Solid Energy hope it will be capable of expansion to a 1 million tonnes per annum facility in 2017.. UPDATE: In October 2010 Solid Energy ended its existing agreement with Ignite Energy Resources after being unable to seal a license agreement.

Lignite to urea plant- In September last year Solid Energy announced it had engaged a joint venture with agricultural fertiliser supplier Ravensdown to assess the viability of building a US$1 billion plus coal-to-fertiliser plant with a view to making New Zealand self sufficient in, and potentially an exporter of, urea- a nitrogen fertiliser used to enhance grass growth. Solid Energy recently announced the plant could be built in 2016, producing up to 1.2 million tonnes a year of urea from up to 2 million tonnes a year of lignite. Government subsidy-In September 09 the Sustainability Council raised the fact that the proposed urea plant would qualify for subsidies worth more than $500 million over the first 20 years of the plant’s life under changes to the ETS.

L & M Lignite are the other big player in lignite. Part of the larger L & M Group their Lignite subsidiary L&M Lignite Limited currently has five exploration permits covering 210 square kilometres in Hawkdun, Mataura, Edendale, Morton Mains, Waimatua, Kaitangata and Ashers Waituna. Their exploration has identified resources of approximately 2 billion (plus privately held coal which may be able to be acquired). Environmental and feasibility studies into the production of liquid fuels, petrochemicals, electricity generation and methanol are being conducted.

At an Otago Chamber of Commerce meeting in Alexandra in May, L&M Group financial controller Shirley Herridge said the company was “looking at (the possible Hawkdun plant) very seriously”. Conceptual plans for a mining plant at their Hawkdun site near St Bathaans in Central Otago reveal a multibillion-dollar refinery covering 70ha. The firm proposed using the Fischer-Tropsch method to convert lignite to gas, which in turn can be converted to diesel