A proposed lignite mine near St Bathans could potentially yield enough fuel a day to meet New Zealand's daily diesel requirement, as well as creating 2700 jobs, says the company behind the project.
L and M Coal Seam Gas Ltd and L and M Central Otago Lignite Ltd hold exploration permits for the Hawkdun lignite deposit, over 98sq km in the upper Manuherikia Valley, near St Bathans.
The boundaries of the 65,000ha Oteake Conservation Park were amended last year to exclude a 195ha area over the Hawkdun deposit.
Although the L and M group has yet to make a decision on whether it will proceed with its plans to mine the Hawkdun lignite and convert it into fuel, further details about the project emerged at a recent business forum held in Alexandra.
L and M Group financial controller Shirley Herridge said Hawkdun was one of five lignite projects in Otago and Southland being explored by the company.
It was one of three the company was looking at "very seriously", she said.
The others were at Kaitangata and Ashers-Waituna, near Invercargill.
New Zealand Forest and Bird conservation advocate Quentin Duthie said the organisation was likely to oppose any move by L and M to seek a mining permit for the Hawkdun deposit.
"That's the sort of thing we would think was inappropriate for an area beside a conservation park, both from a climate-change point of view - converting the coal to fuel involves the production of greenhouse gases- and the impact mining would have on conservation values," he said.
L and M Group exploration director David Manhire said yesterday it had not been decided for which projects the company would seek mining permits.
"With these projects, we're talking about an awful lot of money being spent, so it's not a decision we make lightly.
"Obviously, we want to do a lot of research before any decision is made and that's what the exploration phase is about.
"We may decide to go ahead with the project when the exploration permits expire or may seek to extend the exploration permit longer to carry out other studies, so there's no deadline for a decision set in concrete."
The company's main exploration permit for the Hawkdun coalfield expires in February 2012.
The Hawkdun mine was expected to yield 775 million tonnes of lignite, worth $120 billion over 25 years.
During the 3-year construction phase, 2700 jobs would be created, Miss Herridge said.
Once the plant was operational, 675 staff would be employed.
"The maximum daily production is expected to be 51,000 barrels of fuel a day and that meets all of New Zealand's daily diesel requirements," she said.
The lignite would be dried and processed into fuel on site.
The planning was "well advanced" and environmental studies were being carried out, Miss Herridge said.
Obtaining the necessary resource consents was one of the possible obstacles to the project proceeding, she said in response to a question from the floor at the forum.
The site is in a location defined in the Central Otago district plan as an "outstanding landscape".
It bordered the Oteake Conservation Park, which will be officially "opened" later this week.
Minister of Energy Gerry Brownlee said last year the boundaries of the park had been amended to "exclude this important lignite deposit".
