Todd leaves coal game to other players

Todd Energy is pulling out of the coal business, selling its interest in a West Coast mine and leaving state-owned Solid Energy as the only big player left in the game.

Todd Energy, part of Todd Corporation, was a joint venture partner in Greymouth Coal with Solid Energy. However, Todd decided coal was not part of its core business and was weeks away from selling its stake in the mine.

Managing director Richard Tweedie said there was overseas interest in the stake.

Solid Energy was also interested, and had pre-emptive rights of purchase.

The Greymouth Coal underground mine project at Rapahoe on the West Coast was on "care and maintenance" - temporarily shut down because of geological problems, after initial development and some coal production.

If the mine was fully developed it could produce as much as 1 million tonnes a year, making it the biggest on the West Coast and employing between 50 and 80 people.

The project had been years in development, costing Todd millions of dollars, but the company expected to recover most of its investment on sale, Tweedie said.

"We are not coal miners," he said. Todd would stick to its interests in oil, gas and some electricity.

So far about $20 million had been spent on developing the mine, but a similar amount might be needed to fully develop it, Tweedie said.

The mine had struck "significant surprises" with extremely variable geology, and a halt was called until the partners got a "better fix on where to go next", Tweedie said.

The coal seams were interrupted by fault lines.

That meant the coal source moved down several metres in a short space, which made mining more expensive as waste rock was dug out.

That made mine planning difficult, and production was not continuous.

To get the right production costs the partners may have to move to "hydraulic monitor" coal recovering - blasting a high-powered water jet at the coal and sluicing it out, but that meant greater investment.

The Rapahoe mine was across the road from the former Moody Creek mine, which was run by Todd but has since shut.

Rapahoe coal had good heating values with low sulphur content - ideal for power station generation plants overseas.

Todd looked to coal for domestic sale, rather than export.

South Island coal was also widely used in industrial plants and by big energy users such as hospitals and dairy factories.

There was plenty of coal around the world that could be mined easily and it could be shipped to New Zealand for electricity generation.

So there was no guarantee New Zealand coal would be cost effective, especially if it had to be moved to the North Island for sale, Tweedie said.

If New Zealand moved to coal-fired power stations they would be north of Auckland, close to its big market, near a deep water port like Whangarei where big volumes of coal could be brought in.

- NZPA