In a joint statement released yesterday, Solid Energy and GTL Energy revealed plans to run the lignite-to-briquette plant for an extended period to allow GTL Energy to demonstrate the production capabilities of the plant and its technology, and allow for product combustion testing and handling.
The two companies have been in discussions since May - when the plant was commissioned - over the commercial arrangements for the plant's ongoing operations.
Solid Energy interim chief executive Garry Diack said GTL Energy was being given the opportunity to demonstrate the plant's capabilities on a continuous-production basis, and to establish the longer-term value of the plant.
''Although we will continue to mine and market New Vale lignite, it is now certain that Solid Energy will not be continuing with lignite upgrading in the foreseeable future.''
While the company believed the lignite briquettes produced with GTL Energy's technology had good potential, ''given our current status'', Solid Energy did not see itself as the long-term owner of the plant, Mr Diack said.
Earlier this year, the Government revealed the state-owned mining company was struggling under a $389 million debt.
Solid Energy spokesman Bryn Somer-ville confirmed the eight staff based at the Mataura plant would not be affected.
The pilot briquetting plant in Craig Rd, south of Mataura, was the first of three projects planned by Solid Energy for lignite from the Waimumu, Croydon and Mataura areas.
The briquetting process removes the high amount of moisture in lignite to make briquettes, which burn hotter and cleaner to produce more energy.
Gore Mayor Tracy Hicks said it was ''gratifying'' to see the briquetting plant still had a future.
''I don't think there was any doubt about it. It was just a question of who will keep it cranking until it is productive.''
The district had one of the most significant deposits of lignite in the country, he said.
''I hope they [GTL Energy] can make a go of it.''
GTL Energy chief executive Fred Schulte said he was pleased to have arrived at a solution with Solid Energy which ensured the plant could continue to operate.
''This will underpin the deployment of the GTLE technology globally, in particular the large-scale project under development in Indonesia. It will also establish the depth of the market for briquettes in New Zealand.''
''Ultimately, the long-term future of the Mataura plant will be dictated by the local market. However, the immediate near term sees a continued production phase and product sales.''
Opponents of lignite mining have welcomed Solid Energy's withdrawal from Mataura.
Coal Action Network Aotearoa spokeswoman Rosemary Penwarden said GTL Energy should follow Solid Energy's lead and also walk away from the plant.
''Solid Energy has no money to pay for the at least $1.6 million required to get the lignite plant in Southland going and is right to walk away.''
