Pike may shut down NZ coal mining: Key

NEW Zealand’s nascent coal mining revival may be stopped in its tracks because of the Pike River disaster, says Prime Minister John Key, who announced over the weekend that a Royal Commission would be conducted into the mine.
Pike may shut down NZ coal mining: Key Pike may shut down NZ coal mining: Key Pike may shut down NZ coal mining: Key Pike may shut down NZ coal mining: Key Pike may shut down NZ coal mining: Key

New Zealand Prime Minister John Key

Lou Caruana

The findings of the Royal Commission will effectively determine the future of underground coal mining in New Zealand, where there are currently four underground mines employing 450 people on the West Coast, he said.

“The future of Pike River and actually underground coal mining in New Zealand rests on this. We can't put people into mines that are dangerous,” Key said.

While New Zealand produced 4.6 million tonnes of coal in 2009, compared to Australia’s 409Mt, the government had been hoping it could ramp up exports of coking coal and harness the growth in Chinese and Indian demand.

New Zealand's onshore minerals are worth about $A150 billion, according to its Economic Development Ministry.

The South Pacific nation is keen to diversify its economy out of agriculture and tourism and stop the “brain drain” to Australia. It has attempted, with limited success, to reform its environmental and labour laws to facilitate underground mining.

In a controversial move, the New Zealand government flagged changes to national parks legislation earlier this year.

It published a discussion paper in March that proposed permitting of mining in national parks, but in July the government backed down after environmental protesters campaigned against any plans to extend the area available for prospecting and extraction.

The recent events at Pike River, which had agreed sales contracts with international customers for as much as 90% of output for the life of the mine, have not deterred other mining groups which are keen to export hard coking coal from New Zealand.

Australia-listed Bathurst Resources is continuing with plans to invest about $57 million into its Buller open pit hard coking coal tenement in the Denniston plateau next year.

The Buller project is targeting total production of 2Mt per annum by 2015, whereas Pike was targeting 1Mtpa.

On Friday Bathurst managing director Hamish Bohannan told the New Zealand Herald that a total $110 million capital raising would be dedicated to the Buller project, with $18 million for working capital, $35 million for the acquisition of the field from L&M Group, and $57 million to be used on capital expenditure.

Bohannan said contracts for the premium-quality hard coking coal were expected to be announced shortly, possibly for 50% of overall production with 50% for later sale on the global spot market. Development should be underway in about 15 months, with production due to begin in mid to late 2012.

The Escarpment area, where there is an estimated 7.3Mt of coal, would be targeted first while the Deep Creek prospect potentially holds almost 11Mt.

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