US gives green light for plant to dry NZ-sourced lignite

American regulators have approved an experimental North Dakota coal drying plant that has imported more than 400 tonnes of New Zealand lignite to test in the hope the same process can be used in Southland.

But the processing of the coal has been put back to late March or early April, after delays to construction of the plant by a fierce winter, said a Solid Energy project manager, Greg Visser.

"There have been days of minus-40degC where workers were able to throw a glassful of water in the air and see it freeze before it hit the ground," Mr Visser said.

Ice and snow storms had stopped the workers getting to the site for four or five days at a time.

GTL Energy USA is building the plant to test a process called beneficiation that removes water and pollutants from low-quality lignite coal – a low-grade brown coal, also plentiful in western North Dakota and Wyoming.

Solid Energy sent its trial shipment of Southland lignite to see whether the process can be used here to start exploiting its $100 million worth of land with access to about two billion tonnes of lignite.

The plant's developers say the mechanical technique, which produces chunks of coal the size of charcoal briquettes, decreases the coal's weight, increases its energy value and allows it to burn more cleanly.

The coal is first finely ground, and the process will work regardless of whether the water in it is frozen, Mr Visser said.

North Dakota regulators said the coal drying plant did not require a state mining permit, the Seattle Times reported.

Lignite coal contains 30-60% water, which degraded its energy value and made it too expensive to ship – unless the water could be removed.

GTL, a subsidiary of Australian coal mining company GTL Energy, began building the plant in October 2008.

Solid Energy hopes the process will remove enough water so the low-quality coal can be shipped back to New Zealand as briquettes. It has a joint venture with GTL Energy to investigate building a briquetting plant at the former paper mill at Mataura, 10km east of its New Vale coal mine in eastern Southland.

The plant could create about 10 jobs and process an estimated 100,000 tonnes of lignite a year.

The North Dakota plant is expected to produce 280 tonnes of briquettes, which will burn cleaner and more intensely than the brown coal, Mr Visser said. Nearly 200 tonnes will be sent back to New Zealand for trials in the boilers of potential clients, and the remainder will be tried out in American boilers, which are similar to those used in this country.

A decision on whether to go ahead will be taken after the company has trialled the briquettes in commercial boilers. Small amounts of NZ ignite have already gone through a pilot plant in Denver.

The company has said it will also look at the potential for trucking briquettes to the closed Ohai Mine, to be bagged for the household market, which Solid Energy has plans to eventually quit.

Separately, Solid Energy is investigating a $1.4 billion joint venture with farmer-owned fertiliser company Ravensdown to convert two million tonnes of lignite each year to urea fertiliser.

This plant could create 500 new jobs and produce enough urea to supply a $1-2 billion export industry in five years, but it would not be built until after 2014.