Greenpeace slams Solid Energy briquette plant plan

Environmental groups have slammed plans by state-owned Solid Energy to use lignite, or low-grade coal, to produce briquettes in Southland for local use and export.

Solid Energy will apply for resource consents from Gore District Council and Environment Southland next month to build and operate a demonstration plant at the former Mataura mine site.

Greenpeace said briquette production at the plant would be a "crime of global significance", opening up six billion tonnes of lignite in Southland.

The environmental group has also urged dairy co-operative Fonterra -- a large user of coal to power its milk production facilities -- not to buy any briquettes from the project.

Fonterra already burns lignite at its Edendale milk powder factory near Mataura.

A Fonterra spokesman told NZPA that the company had no plans to use briquettes to fuel any of its plants.

Solid Energy had not finalised any sale contracts for briquettes, but some existing commercial customers -- not including Fonterra -- had already successfully tested them, Solid Energy spokeswoman Sarona Iosefa told NZPA.

The former Mataura mine site was chosen because it is close to a reliable power supply, has a range of transport options nearby and is already zoned industrial with some existing consents for a coal operation.

Lobby group Coal Action Network also criticised Solid Energy's plans.

"These 'Think Big' style lignite projects are for the benefit of a number of huge local and foreign companies, not for the rest of us," said spokeswoman Frances Mountier.

"At a time when we should be doing everything we can to reduce carbon emissions, this state-owned enterprise is rushing headlong into massive coal extraction."

In order to receive resource consents for the project, Solid Energy had to prove it would comply with conditions covering air emissions, noise and water discharge, Ms Iosefa said.

Any decision about its commercial viability would be made once the demonstration plant successfully produced low-moisture, higher-energy briquettes.

The proposed plant -- capable of producing about 90,000 tonnes of briquettes a year from 150,000 tonnes of Southland lignite -- would supply the New Zealand industrial market with briquettes, and trial their value for export.

It is a joint venture with American-based GTL Energy, and one of three lignite conversion projects proposed by Solid Energy in Southland.

In November, Parliamentary Commissioner for the Environment Jan Wright raised concerns about the increase in greenhouse gas emissions if lignite resources were exploited, saying it would be better for the environment if it remained in the ground.

Other uses for lignite include conversion into diesel or being made into the fertiliser urea.

New Zealand has 10 to 15 billion tonnes of lignite resources, mostly in Southland.