AETI Investments Unit Trust, which was founded by experienced former Dyno Nobel executive Ian Smith, wants to develop a chemical and fertiliser facility to service the local market, predominantly focused on the production of ammonium nitrate, and believes Marathon’s gas could meet its feedstock demands.

Smith, who worked with Dyno Noble for 37 years, and has since overseen the construction of similar ammonium nitrate projects in Egypt and Indonesia, has spent the past three years with his Australian Explosive Technologies Group developing a $300 million proposal at Gladstone in South Australia.

By moving the 350,000 tonne per annum proposal some 250km to the north he gains the benefits of having a gas supply on his doorstep.

Marathon said the advantage of the Leigh Creek project was that it would provide hydrogen and nitrogen for the direct synthesis of ammonia.

In addition the field would be able to supply carbon dioxide, power steam and water.

The ammonium nitrate facility will utilise technology already being used in two existing Queensland-based ammonium nitrate manufacturing plants.

South Australia imports its 100% of its ammonium nitrate requirements and nitrate based fertiliser.

AETI is already in contact with potential strategic partners that wish to secure the supply of ammonium nitrate via long-term offtake contracts. That is likely to include major mines such as Prominent Hill and Olympic Dam, and could take in the Eastern Goldfields of Western Australia.

The Gladstone proposal, which Smith had originally hoped to develop in a former explosives factory in the Beetaloo Valley from 2013, was expected to be built offshore in Asia, with the modular plant assembled in Australia.

A former mining company, Marathon completed a reverse takeover to secure the Leigh Creek coal assets, and resumed trading a month ago.

It intends to drill out the unmineable coal resource to JORC 2012 status by September to better define the size of the in-situ gas resources.

Past work suggests there could easily be 350 million tonnes of coal in the ground.

Marathon started marketing its potential sales gas in December, with first sales targeted within three years.

The Leigh Creek project in central SA is about 550km north of Adelaide, over and around the existing coal field that Alinta Energy recently said was effectively depleted of surface minable coal.

Marathon’s proposed project intends to develop an in-situ gasification process at coals between 400m and 1500m deep.