Eastern Southland’s lignite coal could be turned in to fertiliser if joint investigations by farmer-owned co-operative Ravensdown and Solid Energy are successful.
Solid Energy, and agricultural fertiliser supplier, Ravensdown, are jointly investigating the viability of building a US$1 billion plus coal-to-fertiliser plant in Eastern Southland, harnessing the region’s world-scale lignite resource and making New Zealand self sufficient in, and potentially an exporter of, urea fertiliser.
The study will consider the economics and possible location of a plant producing up to 1.2 million tonnes a year of urea – a nitrogen fertiliser used to enhance grass growth – from up to 2 million tonnes a year of lignite mined from Solid Energy’s extensive lignite resources. At last year’s urea prices – up to US$800/tonne – this plant would have generated the equivalent of about NZ$1.5 billion per annum in export equivalent revenue – through a combination of import replacement and direct exports.
The venture could created up to 500 new jobs. The study should be completed early next year when the companies will decide if they proceed to the next stage. If they decide to go ahead construction could start by 2012 and the plant might be operating by late 2014.
Solid Energy’s Chief Executive Officer, Dr Don Elder, says: “. . . Agriculture is our most important economic sector . . .. Urea is a key input to increased farm productivity, but is mostly imported at present, which exposes our farmers to world supply volatility, and prices that can fluctuate widely. Producing urea from our vast lignite resources is a prime example of how New Zealand can capitalise on our position as one of the richest countries in the world in natural resources per capita.”
The lignite to uerea study is running in parallel with work to investigate producing diesel.
“Developing a urea plant in advance of constructing a lignite-to-diesel plant would allow New Zealand to have advanced gasification industry competency and capabilities in place at an earlier stage, to substantially facilitate further and larger developments. Alternatively the two developments could take place in parallel and form the basis of a “syngas park”, supplying clean syngas to multiple downstream applications including diesel and urea.”
Federated Farmers president Don Nicolson said the responsible exploitation of our mineral wealth would play an important part in increasing productivity.
“The numbers involved in this feasibility study are mind-boggling. Even if annually it converts two-million tonnes of lignite into fertiliser, there are enough proven lignite reserves to keep the plant ticking over for some 650 years.
“The study opens up the prospect of 500 new jobs and the construction of a state of the art facility in an investment worth some $1.4 billion.
“Given New Zealand imports some half million tonnes of gas or coal based urea each year, the new plant will likely be built to the latest environmental standards. This has obvious benefits from a global climate change perspective.
“The really exciting thing is the potential of turning New Zealand from an importer into an exporter, generating the equivalent of $1.5 billion in export equivalent income each year.
“That amount represents one and a half times the size of the wine industry or three times the current value of the wool clip.
“It’s also an example where companies can leverage off agriculture, New Zealand’s most important industry, into completely new areas. In this case taking a low value mineral which occurs in vast quantities and turning that mineral into a high value export.
Turning a low value resource into fertiliser, replacing imports, creating jobs in rural Southland, doing it all to meet the highest environmental requirements . . . If investigations show the project is feasable it will be very good news indeed.