About Coal in New Zealand

The coal industry in New Zealand is growing, high value and accessible - good reasons for Galilee’s subsidiary, Eastern Coal Holdings (NZ) Limited, to have become established there as a coal producer.

Production

New Zealand coal production in 2008 was 4.9 million tonnes. Almost all production is of bituminous and sub-bituminous coals, in approximately equal quantities.

Production is centred on the Waikato (2.2 million tonnes), the West Coast (2.15 million tonnes), and Otago/Southland (0.47 million tonnes).

Domestic Markets

Coal supplies approximately 13% of New Zealand's primary energy supply or about 97 PJ/year. The biggest domestic user is the 1000MW Huntly power station (about 2.5 Mt/year, providing about 12% of New Zealand’s electricity generation), followed by the Glenbrook steel mill (800,000 t/year). Coal is also used extensively in the dairy (300,000 t/year), cement (170,000 t/year), meat processing (120,000 t/year), timber and health industries.

New Zealand coal resources

New Zealand has extensive coal resources, mainly in the Waikato and Taranaki regions of the North Island, and the West Coast, Otago and Southland regions of the South Island. National in-ground resources of all coals are over 15 billion tonnes, of which 80% are South Island lignites.

Sub-bituminous and bituminous in-ground resources are approximately 3.5 billion tonnes, but recoverable quantities of these coals are uncertain.

Ref Dept of Crown Minerals

Coal is well accepted in New Zealand as a cost effective energy source. New Zealand has a long tradition of mining, the industry is highly professional and the government provides experienced, efficient regulation that encourages exploration and development.

The industry is accessible for smaller, entrepreneurial companies. At 4.9 million tonnes in 2008, total coal production is small in global terms. There is a place for low volume mining. While the New Zealand industry is competitive, coal prices are sufficient to sustain a range of small-scale producers.

In such an environment, the barriers to entry into coal mining are low. Smaller companies, whether considering acquisition or project development, can find existing mines and potential projects that are manageable in scale. This allows for immediate or early cash flow to be achieved, and the growing demand for coal both in New Zealand and overseas provides the right conditions for ready expansion.

Source Dept of Crown Minerals 2010