Coal in NZ

New Zealand has 17 producing coal mines (May 2016) - with the major coalfields located in the Waikato, the West Coast, Otago and Southland. These are all open cast mining operations, producing around 4 million tonnes of coal a year, for domestic use and for export.

Coal is New Zealand's most abundant known energy resource, with an estimated 15 billion tonnes to which there is ready access - 80 per cent of this is brown coal or lignite. Link to lignite article.

Coal has played a key role in the development of modern New Zealand. At present there is no practical alternative to coal as a source of affordable, industrial process heat for fuelling our industrial processes - especially in the South Island which has no natural gas. Alternative technologies are in development, of course, (link to other articles) but for the immediate future major New Zealand companies such as the Fonterra dairy co-operative still rely heavily on coal as energy for their manufacturing facilities.

Coal's annual economic contribution to the country runs into many billions of dollars, thinking of steel, cement, food, wood and wool products, as examples of goods produced. If we didn't have extensive domestic supplies, coal would be imported, and, at times it is, mostly from Indonesia.

Learn more about how New Zealand uses coal.

Coal mining plays a substantial role in underpinning several regional economies. On the West Coast 1 for example, 40% of regional GDP is earned directly and indirectly from mining, mainly gold and coal. 2010 studies indicated around 8,000 people were employed directly and indirectly in the minerals sector (including quarries), with salaries on average more than double the national average - many in areas with limited employment opportunities.

Today the coal industry is highly regulated, as is the case for industry in New Zealand generally, including in relation to CO2 emissions.

For more information, read how coal is regulated in New Zealand.

The coal industry has a keen interest in New Zealand's energy future, and the types of pathway New Zealand could take in varying its energy mix. It is inevitable that the role of coal in the New Zealand economy will change over time. Straterra has supported the work of the BusinessNZ Energy Council (BEC) in producing energy scenarios for New Zealand out to 2050. Click here for more information about New Zealand's energy future.

History

Historically, Tainui Maori were the first to burn waro (coal) in New Zealand, for cooking, and early European settlers swiftly began prospecting.

The first mine in New Zealand was established in Dunedin in 1849 and by the 1860s most of the main coalfields had been discovered and large-scale mining established. A number of heritage-protected mine sites are managed by the Department of Conservation, for example, on the Denniston plateau on the West Coast.

Coal became integral to New Zealand's growth. In the 1870s Premier Julius Vogel issued bonds to fund railway construction - and coal was needed to power the trains, as well as steam ships. Initially a significant amount of coal was imported from Australia - but the domestic industry quickly became self-sufficient.

By 1900 New Zealand was producing over a million tons of coal annually and it had become the country's main energy source. From 1900 to 1914 production more than doubled fuelling export growth for dairy factories and freezing works, and municipal gas works supplying energy to homes.

During WWII coal was considered so important that mining became an 'essential industry' in New Zealand with miners prohibited from changing jobs. Large-scale open cast mines - open pits excavated with explosives and earthmoving machinery - also began to be developed.

Demand for coal declined in the 1960s and 1970s with transport modes switching to diesel and petrol, and increased use of hydroelectric power. However, in the 1980s oil prices rose and demand revived.

Breakdown of New Zealand coal production.

For now the State-owned Solid Energy is the country's leading coal producer but there are a number of private mining companies too. The largest is NZ Coal and Carbon Ltd, based on the West Coast. Fonterra dairy co-operative is among mine owners, producing coal to power some of its processing operations.

Some New Zealand coal has highly sought-after properties, such as low-sulphur and ash content, and superior "swelling" properties for use in blast furnaces. This coal is exported to steel makers in Japan, India, South Africa, South America, China and Australia.

New Zealand coal qualities

Types of coal depend on various factors including the plant matter it was formed from. As coal becomes compressed underground over geological time it gradually changes from peat, to lignite or brown coal, then to sub-bituminous and bituminous coal and, in some parts of the world, into the hard and shiny anthracite. (link to graphic).

New Zealand's main coals are:

  • Bituminous, a high-grade premium coal exported for processes like steel making
  • Sub-bituminous, lower-grade coal, used in New Zealand, mainly for thermal energy for industrial and commercial purposes.
  • Lignite, very low grade of coal, used as industrial heat.

New Zealand Petroleum and Mineral's website details information on current New Zealand coal mines. 

The nature of coal is that it is highly variable in quality and in its impurities from one mining operation to another. For this reason, blending is an important part of the value chain, for export coal, and for domestic use. An entire industry has grown around: the purchase of coal from diverse sources; blending to client specifications; and transport, handling and support to individual users. The greater the number of coal mines in operation, the more efficient and effective is this part of the New Zealand coal economy.

Uses

In New Zealand coal is used in:

  • Electricity generation
  • Steel making, and cement and lime-making
  • Food processing - South Island production including milk powder, chocolate and other dairy products, meat, vegetable canning, salt, gelatine and dried herbs.
  • Heating commercial horticultural hothouses during winter
  • Other industrial process including processing of timber, wool and leather
  • Breweries, including drying of hops in the South Island
  • Heating commercial and public facilities in the South Island including schools, universities, hospitals, museums, laundries, hotels, offices and swimming pools

References

  1. http://www.mineralswestcoast.co.nz/westcoast_coal.aspx 

Related stories

In 2015 the BusinessNZ Energy Council (BEC) produced a report entitled “New Zealand Energy Scenarios: navigating energy futures to 2050” (BEC 2050). Straterra was among contributors to this report. This work is based on that of...

04.08.2016

The coal sector in New Zealand is heavily regulated, with an eye to the environment, workplace health & safety, access to land, and property rights to coal. This is as it should be – society has a right to know that resources...

04.08.2016

New Zealand’s 17 coal mines produce 4-4 million tonnes of coal a year. Around half that figure is used in New Zealand – the vast majority of it in different industry sectors.

04.08.2016

In geological terms, lignite is a ‘young’ fossil fuel. A soft brownish-black rock – the stage between peat and sub-bituminous coal - it is considered a low-quality form of coal, producing high carbon dioxide (CO2) emissions on...[more]

03.08.2016