Solid Energy leaves Mataura briquette operation with GTL Energy
Solid Energy is handing over operations at its $29 million lignite briquette production plant in Mataura to GTL Energy as the financially stricken state-owned coal miner looks to exit the investment.
The two companies have been in discussions since May on the commercial arrangements for the plant's ongoing operations, and GTL is being given the opportunity to demonstrate the plant's capabilities on a continuous production basis, and to establish the longer-term value of the plant, Solid Energy interim chief executive Garry Diack says in a statement.
"Although we will continue to mine and market New Vale lignite, it is now certain that Solid Energy will not be continuing with lignite upgrading in the foreseeable future," he says. "While we continue to believe the lignite briquettes produced with GTL Energy's technology have good potential, given our current status Solid Energy does not see itself as the long-term owner of the plant."
Solid Energy is still in talks with its banks and Treasury officials as part of a wide-ranging review of the business, which posted a $40 million loss last year, mothballed its Spring Creek mine and dropped or put up for sale a range of projects including plans to turn lignite into diesel.
GTL Energy's coal upgrading technology is used at the plant as part of a license agreement signed in 2011. The company was set up to commercialise methods of upgrading low-rank coal, and the plant was intended to service the South Island domestic market, plus provide product for export trials.
Fred Schulte, GTL Energy chief executive, says being able to keep the plant running "will underpin the deployment of the GTLE Technology globally, in particular the large-scale project under development in Indonesia".
The two companies set up a joint venture after GTL Energy's June 30, 2012, balance date, where GTL would undertake operations at the plant to process the coal, the company says in its latest financial statement.
GTL Energy was owed almost $400,000 by Solid Energy as at June 30 last year, which was payable on the successful commissioning of the plant and satisfaction of technology performance warranties.