NZ the lucky country, mining conference told

The Government and the mining industry appear to be at loggerheads over the potential for turning billions of tonnes of southern lignite into what some predict could be cheap diesel fuel.

The Minister for Energy and Climate Change, David Parker, delivered a wait-and-see message to 300 delegates attending the opening of the three-day Australian Institute of Mining and Metallurgy New Zealand branch annual conference in Wellington yesterday.

In contrast, however, the chief executive of state-owned enterprise Solid Energy, Don Elder, believed New Zealand was poised to become the lucky country of the 21st century.

Alongside developing renewable energy resources, he said in excess of 10 billion tonnes of lignite in Southland and South Otago could bring us back to the days of $1 per litre of diesel.

It is estimated each tonne of lignite, processed through a gasification plant, could produce a barrel of fuel.

The gasification plant could, however, cost more than $6 billion.

Mr Elder first delivered some bad news to delegates, outlining the inter-relation of oil prices and the worldwide effects on energy, transport, land, primary resources and ultimately food.

The world was in serious trouble, with demand for a range of essentials well ahead of supply, he said.

While promoting the development of geothermal, wind and to a lesser extent solar energy, Mr Elder said lignite had potential.

Solid Energy had spent more than $50 million acquiring Southland land and would be spending tens of millions researching gasification options and technology, he said.

Mr Parker, who believes the process of turning lignite into fuel through a gasification plant costs too much in carbon emissions, said the Government would wait until the technology of carbon capture and underground storage became viable and the costs known.

The major undertaking would be funded outside New Zealand.

It (carbon capture and storage) was not central to New Zealand's economy, as it was for Australia's, he said.

Mr Elder said lignite gasification was a long-term project and while carbon capture and storage was an issue, its capture in the gasification process was relatively simple and Southland had both on-shore and off-shore potential for storage sites.

Mr Elder said the Minster for Energy should not also be Minister for Climate Change, saying energy, natural resources and possibly infrastructure should all be in one portfolio.

Outside the forum, he said he was not calling for Mr Parker to step aside, but was targeting all three sectors to be under one portfolio because they were so closely linked.

Mr Elder also said coal was globally estimated to peak in 100 years.

However, New Zealand had more than 1000 years' supply of coal to develop.

If China could sign a cheque tomorrow (to lock up coal exports) it would, he predicted.

Reporter Simon Hartley is a guest of AusIMM