New Zealand and coal

New Zealand has extensive, well-explored coal resources in both the North and South Islands. It has been estimated that there are total resources of over 15 billion tonnes of coal, of which some 8.6 billion tonnes are economically recoverable. 80% of this is South Island lignites. In 2011 New Zealand exported more than 2.1 million tonnes of the 4.9 million tonnes of coal produced. State-owned company, Solid Energy, is responsible for over 80% of national production, 93% of which is of bituminous and sub-bituminous coal. [2] In 2012, however, the fall in global demand and prices for coking coal resulted in major operational and staffing cutbacks for the company, which until then had been undergoing a period of expansion and diversification.

Reserves
New Zealand’s economically recoverable coal reserves are estimated by the Ministry of Economic Development at 8.6 billion tonnes (Energy Data File). Of this, 80% (6.8BT) is lignite in Southland and Central Otago. The rest is 5% high quality bituminous (coking) coal on the West Coast and 15% sub-bituminous or thermal coal in the Waikato, West Coast and Southland.

Coal production and domestic use
In March 2012 the Ministry of Economic Development listed four underground and 15 opencast operational mines with granted permits. According to the Ministry, over 58% of national production in 2011 was from two large opencast operations, at Rotowaro near Huntly and Stockton on the West Coast. The government owned mining company Solid Energy was responsible for over 82% of national production and a number of smaller private coal mining companies produced the remainder.

The New Zealand coal mining industry produced 4.9 million tonnes in 2011 of which 0.32 million tonnes were lignite. 1.8 million tonnes were produced from Waikato mines, including supplies for the Huntly Power Station, which consumed around 0.7 million tonnes, and the Glenbrook Steel Mill of New Zealand Steel, which consumed approximately 0.8 million tonnes. Electricity generation accounted for 39% of domestic coal use. However, this fluctuates considerably as all four units at the power station are able to run on coal or gas. The third largest user, by a considerable margin, is Fonterra in its milk drying plants, particularly in the South Island. Other industrial uses include cement and lime production; food processing; and timber and paper production. Commercial use (2%) was mainly for heating public buildings such as schools and hospitals.

Coal exports
Historically, most coal production in New Zealand was for the domestic market. However, in response to high global prices -- especially for coking coal -- in the Asian market, export production increased between 1990 and 2006, but by 2011 was back below the 2003 level. [2] In most recent years roughly half of total coal production has been exported. West Coast coking coal is exported to India, Japan, China and Brazil for steel making; thermal coal is also exported for power stations.

Operating Coal Mines
In 2010 the Ministry of Economic Development listed five underground and 16 opencast mines operating. However, since then there have been several changes of ownership and mines closed. According to the Ministry of Economic Development over 59% of national production was from two large opencast operations, at Rotowaro and Stockton. The government owned mining company Solid Energy was, according to the Ministry, "responsible for over 82% of national production. A number of smaller private coal mining companies produced the remainder."

The Ministry of Economic Development's list of operating coal mines in New Zealand has been updated and and closed mines excluded and listed in a separate table below.

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NZ Incorporated Companies with interests in Coal and/or Coal Seam Gas
7 Mile Mining Limited Bathurst Resources Birchfield Coal Brookdale Mining Limited Buller Coal Limited Canterbury Coal (2013) Limited Canterbury Coal Cascade Coal Limited Comet Ridge NZ Limited Crusader Coal Francis Mining Glencoal Energy Limited GTL Energy Limited Harliwich Carrying Company Limited Heaphy Mining Limited Kai Point Coal Company Limited L&M Group New Brighton Collieries Limited New Creek Mining Limited New Dawn Energy Limited NZCC Limited O’Reillys Opencast Limited Puke Coal RJ Banks ROA Mining Company Rochfort Coal Rockies Mining Rogers Mining Limited Solid Energy South Pacific Resources Limited Terrace Mine Takitimu Coal Limited

Major expansion plans
Mineral resource extraction is a central plank of the current government’s economic strategy. There has been a period of expansion in the coal mining industry but 2012 has been a period of uncertainty, especially for New Zealand’s biggest producer, Solid Energy. The company plans to expand its operations on the Stockton Plateau by opening Mount William North Mine but by September 2012 resource consents were still under appeal. The Australian based company, Bathurst Resources, has been granted resource consents for its proposed Escarpment mine on the Denniston Plateau, as part of the Buller Coal Project, but these consents are likewise still under appeal. Production of thermal coal for industrial heat and power stations is increasing in Southland where the pilot Mataura Lignite Briquetting Plant is expected to open in October 2012, squeezing the water out of lignite to make a boiler fuel that is more economically transported. There are also plans for conversion of lignites to fertilizers and fuels.

New underground technologies are beginning, with very large areas under prospecting licences for coal seam methane. A coal seam gas demonstration plant has been operating on Solid Energy’s Huntly coalfield but this development work has now been shifted to Taranaki.

Solid Energy is pursuing the development of other unconventional coal projects. The Huntly Underground Coal Gasification Pilot Plant, a commercial trial of underground coal gasification on private land within its Huntly coal lease, was commissioned in 2012. On 29 August Solid Energy announced that it was planning to move more rapidly with the commercial development of this project.

Proposed coal mines and potential coal-related projects
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Coal mining and New Zealand law
Coal prospecting, exploration and mining, and environmental consenting are governed by the Crown Minerals Act 1991 and the Resource Management Act (RMA) 1991.

Minerals permits for prospecting, exploration and mining are obtained from the Ministry of Economic Development, Crown Minerals Division. All permits are mapped and available online.

There is no public input into the process of issuing a permit, which is mainly intended to ensure that the company is serious about mining, solvent and capable of carrying out the work. Permits are then an exclusive property right to access the minerals in a specific area, but before mining begins a number of environmental consents are needed under the RMA. These will include consents for land use, taking of water, discharge into water and air, and potentially many others.

The RMA is operated by local authorities. Territorial Local Authorities (districts) control land use consents; regional councils control water use and air discharge. (In a few cases these council functions are all combined in a unitary authority.) Usually no RMA consent is needed until the company wants to begin mining, thus exploration and prospecting are often discovered by the public when they are already underway. RMA applications for full scale mining (underground or open cast) will normally be publicly notified by the councils involved, and citizens can make submissions, both in writing and in person at the hearings. Councils will often appoint professional hearings commissioners to hear the evidence and decide whether the consents should be granted.

Section 5 of the RMA appears to set a very high environmental threshold but in fact, amendments and case law over the years have meant that it doesn’t really mean what it says any more and most consents are granted because it is argued that the economic benefits outweigh the environmental damage.

An appeal on the facts to the Environment Court is possible, as is in train currently for the Escarpment mine on the Denniston plateau on the West Coast of New Zealand's South Island. The argument is about whether the outstanding biodiversity and landscape values of the plateau outweigh the economic benefits of mining. Recently the courts have found that climate change cannot be argued in such a case (see the 'Coal mining and Climate Change Law section below). After the Environment Court hearing, appeal is only possible on points of law to the High Court and potentially to the Court of Appeal and Supreme Court.

Some limited legal aid to hire expert witnesses is available to bona fide environmental groups who are incorporated societies and who are arguing a matter of wider public interest.

If mining will take place on, or need access through, Conservation land, a concession will be required from the Department of Conservation. This approval process sometimes involves public input.

An important provision of the Crown Minerals Act is that landowners can veto access to or over their land for mining. This is a major safeguard our counterparts in Australia do not have and was fought for over many years. It is not perfect, as mining under owners’ land with access from outside the boundary may still be possible. The minerals industry is lobbying hard to change this right of veto but so far there is no sign of an intention to do that in the current review of the Crown Minerals Act.

Coal mining and climate change law
A major legal issue at present is whether the contribution to climate change which will result from eventually burning the coal can be taken into account by the Environment Court when considering a consent for land use for mining.

In 2004 Parliament passed an amendment to the RMA, the RMA Amendment (Energy & Climate Change) Act 2004, removing the ability of councils to consider greenhouse gas emissions when considering an application for an air discharge consent, because the government at the time intended to introduce a carbon tax, dealing with emissions centrally rather than locally. This was intended to deal with emissions sources such as a new power station which would already be subject to the carbon tax. There was no thought at the time of the situation where no discharge consent is sought and the coal will be burned elsewhere at a future date. Ironically the carbon tax plan was axed, and eventually the government brought in an Emissions Trading Scheme instead which is full of loopholes. On the basis of the 2004 amendment the courts have ruled that emissions from coal cannot be taken into account when considering a consent to mine that coal.

However, a coal mine does not require an air discharge consent and coking coal from West Coast mines will all be exported and burned largely in China or India where there is no price on carbon and no target or obligation under the Kyoto Protocol. Environment groups argued the amendment did not apply in the case of the Escarpment mine on the Denniston plateau and are currently appealing the declaratory judgement (May 2012) by the Environment Court, which ruled that it did.

Unfortunately it is likely that the substantive appeal against the consent for the mine will be heard in October 2012, before the legal appeal against the declaratory judgement has been finalised, so opponents will not be able to argue climate change as an issue.

Royalties and taxes
Coal mining in New Zealand does not pay royalties as gold and silver mining do. The tax regime is generally regarded as concessionary.

Coal export terminals
The three coal export terminals or ports are:
 * the Lyttelton Port of Christchurch, on the east coast of the South Island, exports coal railed across the Southern Alps from Solid Energy's Stockton mine as well as from other West Coast mines. The port currently has an export capacity of approximately 2.5 million tonnes of coal a year. It suffered major damage in the 2011 earthquakes and the Lyttelton Port Company had to withdraw its applications for resource consents that would have allowed a doubling of its coal-handling capacity. According to Bathurst Resources the Westport to Lyttleton railway has a capacity of 5 million tonnes per annum. The company has an agreement with Solid Energy that it will export approximately 25% of its project coal through the Port of Lyttleton.


 * Port Taranaki is owned and operated by Port Taranaki Limited, a business owned by Taranaki Regional Council. The port, which is located on the west coast of the North Island, has entered into an agreement to export coal from Bathurst Resources coal mines on the West Coast. Small scale exports are already underway. The port has the ability to load Panamax capable ships, which have a capacity of approximately 52,500 tonnes.


 * Westport Harbour, is owned by Westport Harbour Limited, a subsidiary 	of the Buller Regional Council. Coal export facilities are currently being planned to handle a significant volume of exports from 	Bathurst Resources existing and proposed mines. The company aims to export approximately 50-75,000 tonnes per annum from the Cascade mine and approximately 1-2 million tonnes per annum from its proposed Escarpment mine and Deep Creek mine. The three mines are part of the larger Buller Coal Project.

Mining safety
On November 19 2010 an explosion rocked the new underground Pike River mine located near Greymouth on the South Island. The explosion caused the death of 29 miners. A Royal Commission chaired by High Court judge Graham Panckhurst was appointed to inquire into the tragedy. The Royal Commission finished its hearings on 6 April 2012 and is scheduled to complete its final report by 28 September 2012.

Coal Opposition
For more see Opposition to coal in New Zealand.

May 1, 2010: huge protest opposes mining on conservation land
In Auckland on May 1, 2010 an estimated 40,000–50,000 people marched in opposition to the Government’s plans to allow mineral exploration on conservation land listed in Schedule 4 of the Crown Minerals Act, where access for mining is currently prohibited. Supporters of the Greenpeace-organised march included NZ actresses Lucy Lawless and Robyn Malcolm.

Following the protests in Auckland and other centres, the Government extended the deadline for making submissions on its Schedule 4 stocktake discussion document. This “stocktake” proposed that more than 7000 ha of land, including parts of Great Barrier Island, the Coromandel Peninsula and Paparoa National Park be removed from Schedule 4 protection so that mining companies would have easier access. More than 37500 submissions were received, most of which opposed the mining proposals.

On July 20, 2010 Energy Minister, Gerry Brownlee, and Conservation Minister, Kate Wilkinson, held a press conference at which Mr Brownlee announced that proposals to mine on Great Barrier Island, Coromandel and Paparoa National Park had been scrapped. No land would be removed from Schedule 4 for mining, although the government would look to undertake aerial magnetic surveying of non-Schedule 4 land in Northland and the West Coast. Kate Wilkinson stated that, "In future, all areas given classifications equivalent to Schedule 4 areas - such as national parks and marine reserves - will automatically come under Schedule 4."

Aug. 13, 2005: Save Happy Valley Coalition coal train blockade
On August 13, 2005, a group of 25 Save Happy Valley Coalition activists and allies blockaded train tracks leading from Solid Energy's coal mines to the port of Lyttelton in protest of Solid Energy's plans to build a coal mine in Happy Valley. Two people locked themselves to the tracks, while a third suspended himself from a tree 30 m in the air, attached to a support rope that was tied to the tracks. Four Solid Energy trains stood on the tracks for five hours, while police cleared the blockade; the company claimed in court that the blockade cost them $150,000. The three blockaders were arrested.

The Save Happy Valley coalition has disbanded but many of the members now work with Coal Action Network Aotearoa.

Mar. 6, 2005: Save Happy Valley Coalition occupation of Solid Energy headquarters
On March 6, 2005, four Save Happy Valley Coalition activists locked down at the corporate headquarters of Solid Energy in Christchurch, New Zealand, in protest of Solid Energy's plans to build a coal mine in Happy Valley, a pristine valley of rare red tussock wetland with endangered brown kiwi and endemic native carnivorous land snails. Supporters hung banners and pitched tents on Solid Energy's property. The occupation came one day after Solid Energy sued three activists for defamation.





Citizen groups campaigning on coal

 * CANA and regional CANA groups: http://coalactionnetworkaotearoa.wordpress.com/regional-groups/#regional

Related SourceWatch Resources

 * Coal moratorium
 * New Zealand Mining Industry Association
 * Genesis Energy
 * Solid Energy

External Resources

 * Pike River Royal Commission, "Chronology One - New Zealand Mining and Coal Production Profile", Pike River Royal Commission, July 2011.
 * International Energy Agency, "Coal and Peat in New Zealand in 2009", International Energy Agency website, accessed May 2012.
 * Pui-Kwan Tse, "The Mineral Industry of New Zealand", U.S. Geological Survey, December 2011.