Solid Energy: Cash no problem for fertiliser plan

Solid Energy is in the final stages of assessing whether to push on with its proposed joint-venture lignite-to-fertiliser plant but is confident of easily funding the project, which would cost up to $2 billion.

The state coal miner and fertiliser company Ravensdown are investigating the viability of the plant in Southland which could allow New Zealand to become self-sufficient in urea fertiliser and potentially export it. Solid Energy chief executive Don Elder said the two companies were nearing the end of an internal review of the project.

The next stage would be a feasibility study of the plant which could be up and running within four years.

"We haven't seen any red flags to say we shouldn't be going ahead with any of this," he said. Solid owns about $100 million of land with access to about two billion tonnes of lignite, a low-grade brown coal.

Elder said his company had funded most of the work so far and if the project went ahead he saw no funding barriers. "Frankly the money is no issue. Any number of people want to fund that project. It's a question of who we let fund it as opposed to how would we fund it."

Both companies were capable of raising the money themselves, he said.

"Both of us would rather keep a tight control over the project and see it owner-operated in New Zealand."

Urea is currently produced worldwide using either coal or gas as a feedstock. In New Zealand urea is made by Ballance Agri-Nutrients at Kapuni in Taranaki using natural gas.

Ravensdown says this country imports about 500,000 tonnes of urea a year, mostly from the Middle East (gas based) and China (coal based).

The plant in Southland could allow the country to be self-sufficient in urea, and in addition export up to 750,000 tonnes annually, says Ravensdown.

When the proposal was announced last year the debate was revived over the high use of nitrogen-based fertiliser in New Zealand, with opposition to another carbon dioxide-producing industry.

Elder said the political momentum to back capturing and storing carbon was growing.

This month United States President Barack Obama set up a task force to develop a comprehensive and co-ordinated federal strategy to speed the development and deployment of clean-coal technologies. He called for five to 10 commercial demonstration projects to be up and running by 2016.

Elder said the technology existed and Solid Energy had done scoping work of potential reservoirs in Southland and the necessary pipelines. "CCS [carbon capture and storage] globally is no longer a political issue. There's a real commitment to getting it done."

Further down the track Solid wants to build a lignite to liquids (diesel) plant which Elder said could be the biggest single project ever undertaken.

A $10 billion plant could produce $5 billion in fuel a year, depending on the oil price.