Labour backs coal-fired NZ steel mill to process ironsands

Labour supports coal-fired NZ steel mill to process ironsands

By Pattrick Smellie

Feb. 17 (BusinessDesk) – A Labour-led government would support the processing of offshore ironsands into high-grade steel at a coal-fired steel mill in New Zealand, says Labour’s energy and economic development spokesman David Parker.

While cagey on whether such a major new greenhouse gas-emitting plant should be granted free carbon credits to encourage its establishment, Parker said Labour would “not rule out conversion in New Zealand” of ironsands to steel if the alternative was to send unprocessed ore offshore to steel mills in China or other countries.

But it should not be assumed that Labour would agree to “the cost of additional greenhouse gas emissions being put to the taxpayer, he said.

Several international resource companies and a New Zealand-based start-up, Trans Tasman Resources Ltd., are exploring the potential to mine extensive deposits of iron ore contained in ironsands off the west coast of the North Island.

TTR is the most publicly advanced in its plans. While it does not see itself building a steel mill, the company has argued that a steel mill using high-grade New Zealand coking coal would add value in the local economy to a resource that would otherwise be processed in similar mills offshore.

“If you could process in New Zealand, it’s a much better value opportunity that could compete with doing the same thing in China under the right circumstances,” Solid Energy’s chief executive, Don Elder, told the select committee.

There would also be savings in transport costs, since the steel produced would weigh around half as much as the raw ironsands, which would otherwise be shipped long distances before being used for steel-making.

Parker posed several questions on the issue to the chief executive of Solid Energy, Don Elder, at commerce select committee hearings on the state-owned coal miner’s future plans. Solid Energy is currently the largest local producer of coking coal, an increasingly valuable international resource sought after by steel-makers internationally.

Coking coal prices had risen ten-fold over the last decade to around US$300 a tonne for the highest quality coal that Solid Energy produces, said Elder.

Parker also quizzed Elder on the potential to regard underground coal gasification technology as a backstop source of thermal fuel for electricity generation in dry years, as an alternative to costly stock-piling of coal.

“Underground coal gasification in principle is well under half the price of internationally traded coal on an energy content basis,” Elder told the committee. “It’s hugely attractive,” although the technology was still in its infancy internationally.

“The ability to ramp it up and down is relatively untested, but it would better to have UCG wells that we aren’t using when the (hydro storage) lakes are full. That would be lower cost than stockpiling coal.”

Solid Energy was using base projections of around 30 Petajoules per annum of energy from both UCG and coal-seam gas developments which it has identified, “around 50% more than is require to run the E3P (gas-fired electricity generator) at Huntly,” Elder said.

(BusinessDesk)

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