About Coal in New Zealand

The coal industry in New Zealand is growing, high value and accessible, good reasons for Eastern Corporation to have become established there as a coal producer.

New Zealand’s coal production increased by 60% from 1998 to 2005 to meet the country’s rapidly growing energy requirements.

The record 2005 production included a strong export sector to meet the demand for good coking coal from Japanese and Indian steel mills.

The high value nature of the New Zealand industry was emphasised by the huge 23% increase in the value of coal mined from 2004 to 2005.

The opportunity for local mines to increase their production and domestic sales is underlined by the continuing need of New Zealand power stations for imported thermal coal which reached a record level in 2005. There is ample availability of thermal coal in New Zealand to replace the imports.

Coal is well accepted in New Zealand as a cost effective energy source. There are extensive in-ground coal resources in a country in which the geology is well known. New Zealand has a long tradition of mining, the industry is highly professional and the government provides experienced, efficient regulation that encourages exploration and development.

The industry is accessible for smaller, entrepreneurial companies. At 5.3 million tonnes in 2005, total coal production is small in global terms. There is a place for low volume mining. While the New Zealand industry is competitive, coal prices are sufficient to sustain a range of small-scale producers.

In such an environment, the barriers to entry into coal mining are low. Smaller companies, whether considering acquisition or project development, can find existing mines and potential projects that are manageable in scale. This allows for immediate or early cash flow to be achieved, and the growing demand for coal both in New Zealand and overseas provides the right conditions for ready expansion.