Solid Energy buys coal converting technology

State-owned coal miner Solid Energy says it has secured exclusive New Zealand rights to technology which converts low-grade lignite and biomass to high-grade coal and synthetic crude oils.

The company today said it had signed a binding heads of agreement with Australian company Ignite Energy Resources (IER).

According to IER its "super critical water reactor" attacks organic polymers, cutting them directly into the higher grade fuels.

When signed, the licence agreement will be worth up to $A15 ($NZ18.4) million, plus royalties.

The two companies will work together to develop and commercialise the technology and will construct and commission a pilot plant able to process lignite and biomass in New Zealand.

The commercial pilot plant, in a yet to be determined location, when expanded will be capable processing 1 million tonnes a year.

IER is currently converting lignite to synthetic crude oil and high-grade coal at a pilot plant in Somersby, New South Wales. The high-grade coal produced has the potential to be used in the steel making process.

Solid Energy's general manager of new energy, Brett Gamble, said that while the technology was still to be proven on a commercial scale, it had great potential for Southland's massive lignite deposits and biomass resources.

Solid Energy had a number of projects running that were looking at converting low-grade coal, including a coal to fertiliser project and lignite to transport fuel project.

Solid Energy was also developing a lignite-briquetting plant near Mataura with GTL Energy and assessing the viability of a lignite-to-urea plant in Southland with Ravensdown.

"The key to the success of all of these is to find the technologies which can best be applied in New Zealand," Mr Gamble said.

Solid Energy already has established biomass and biofuels businesses, producing wood pellets at Taupo, Rotorua and Christchurch, and biodiesel from raw and recycled canola oil, at Christchurch.

IER's technology could equally be applied to biomass to produce a biocrude, he said.

"The application of this technology to biomass could give us a huge step up in advancing the production of third generation technology biofuels."

IER's headquarters are in Melbourne. It has operations in Sydney and United States.