New Zealand’s Largest Coal Company Evaluating NZ$1B Coal-to-Liquids Project

16 November 2005

Bloomberg. Govenrment-owned Solid Energy New Zealand Ltd., the largest coal mining company in the country, is investigating a NZ$1 billion (US$685 million) Coal-to-Liquids project. It joins a lengthening list of energy companies either evaluating or building CTL projects worldwide.

The company has spent the past two years assessing the feedstock qualities of lignite deposits on the New Zealand’s South Island. Another 12 months work will indicate the best fuels to make, the ideal size of the plant and which technology to use, according to Chief Executive Don Elder.

“This is an idea whose time has come,” Elder said in an interview. “Oil prices of about $35 to $40 a barrel means coal-to-liquids is probably viable here.”

New Zealand, a nation of 4.1 million people, has about 15 billion tons of coal, Solid Energy said, citing a 1994 estimate. More than 80 percent of that is damp lignite, or brown coal, located in the sparsely populated Southland region of the South Island.

Turning that coal into jet fuel, gasoline and diesel would deliver more value than supplying a relatively small power station in the region where electricity demand is limited, Elder said.

Elder wouldn’t say with whom the company has been working with on the project, nor where it would be located. Should the project proceed, production could begin in five to six years.