Quarrying & Mining Magazine

South Island reliance on coal

In the South Island there remain few viable alternatives to coal for many domestic, business, and industrial users that depend on coal for energy. NEIL RITCHIE explains.

The South Island’s dependence on coal supplies will get worse if the current Government bans new coal mines as it has done with new offshore oil and gas licences.

Coal is converted into energy in the South Island by a number of sectors, both domestic, commercial and Government (schools). It is extensively used by industries such as dairy processing plants (eg milk powder), and specialised industrial applications, including medicines and filters.

This is on top of an international demand for quality coking coal for large-scale steel making. And there is no viable and economic alternative.

There are very few economical alternatives to coal for most South Island energy users.

The South Island has no reticulated natural gas and only limited liquefied petroleum gas (LPG) transportation, storage and distribution outlets for use in such places as schools, hospitals, and food and dairy processing plants.

In the last decade the Government initiated a disastrous bio-fuel industry in the South that eventually cost the country millions with no return.

Even the “clean green” and seemingly abundant hydroelectricity generated in the South Island is inadequate sometimes because of low hydro lake levels, increased electricity demands of North Island users, or constraints on the Cook Strait cable.

In early 2018 constrained hydro generation (primarily because of low hydro lake levels in both islands) meant North Island thermal generation had to increase, with natural gas up 27 percent and coal up 105 percent to ensure adequate electricity for the country.

“The mining of coal, silver and gold, iron and some other minerals is a key industry in New Zealand.”

Coal is our cheapest source of energy

It is estimated that electricity generated in the South Island can cost about $20 for the equivalent of one gigajoule (GJ) of energy, diesel about $15-20 per GJ, renewables (wood waste) about $15 per GJ, and LPG about $10-15 per GJ. However, coal can cost as little as $5-7 per GJ on a delivered basis.

While Energy and Resources Minister Megan Woods suggests there could be a halt to issuing new coal permits sometime in the future, fortunately there are currently no plans to make that happen. And she concedes to not asking Government officials for advice on banning coal exploration. Woods does admit her Government is working on a proposal to ban all new mining on conservation land (which also includes old marginal Land & Survey land that was absorbed into the Department of Conservation many years ago).

Meanwhile, National Party leader Simon Bridges says a future National Government will have no problem approving coal mining on conservation land “that isn’t pristine”, while referring to the present Labour-led Government declining an application to build an open-cast mine across 12 hectares in the Mt Rochfort Conservation Area on the South Island’s West Coast

The reality of our coal industry

In 2016 there were 25 mines across our country producing about 2.8 million tonnes of coal.

In fact, the mining of coal, silver and gold, iron and some other minerals is a key industry in New Zealand, whether the Government likes it or not.

This industry contributes almost $2 billion to the country’s gross domestic product (GDP) and povides around 8000 jobs at an average wage of almost double the national average, and provides opportunities that seriously support communities, particularly on the West Coast.

One prospective miner, the private L&M Group, is still pressing ahead with its South Island coal plans, which involve coastal Kaitangata (a large coal resource of about 300 million tonnes south of Dunedin) and White Cliffs (south of Christchurch). And there is no Department of Conservation land involved with Kaitangata and any future development will mainly involve exporting coal to Chile.

“Coal is still very much alive, particularly in the South Island,” says the mining company.

Important to the future of South Island energy is the fact the flows of natural gas to the south will slow as the Taranaki gas fields falter. This will also mean less LPG will be available to be transported across Cook Strait – undoubtedly increasing the need for South Island coal.

Stockton Mine when it was operated by Solid Energy (now Bathurst Talleys).

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