Solid Energy examines lignite-fired power project in Southland

Solid Energy chief executive Don Elder said the company would own and operate the lignite mine but it was likely a separate company would build and operate the power station. A mine and power station could employ about 200 people.

About 20 potential sites in Southland could be suitable for a lignite-fired plant but the final location would be determined by its proximity to a key customer NZ Aluminium Smelters Ltd plant near Invercargill, and a water source for cooling the plant.

Southland contains Lignite resources of approximately 9.2 billion tonnes (as identified by LFTB studies) which constitutes the largest coal resource in the country. Most of the lignite deposits lie between Gore and Invercargill.

Dr Elder said the company's focus was on establishing a power station as part of a national strategy.

The company is working towards developing a plant that would not only guarantee a stable electricity supply to the aluminium smelter but also allow export of power to the rest of the country.

Because power transmission costs would be low to local users, local electricity would be cheaper as a result of building the power station.

Lignite was found closer to the surface than in the western Southland Ohai sub-bituminous coal field and was a much cheaper option. But because lignite had a higher moisture content, it was expensive to transport. That meant any lignite-fired plant would have to be close to the fuel source.

Solid Energy said recently it planned to stop supplying its relatively clean burning Ohai coal from western Southland to New Zealand households within five years. The company cited pollution and health concerns as the reasons behind its decision.