Media Release

New Underground Coal Mine Investigated in Southland

Coal producer and distributor, Solid Energy New Zealand Ltd, has started seismic investigations at Ohai in Southland to establish the commercial viability of a new underground mine to meet the needs of South Island industrial customers and in particular the dairy sector.

The investigations involve drilling around 1,500 two-metre and five-metre holes to the south west of the existing Wairaki underground mine where it is estimated there is 30 million tonnes of coal, with around 8.7 million tonnes recoverable through mining. The survey will use high resolution 3D seismic mapping computer techniques, developed by Solid Energy for use in New Zealand's unique geological conditions, to more accurately identify coal deposits, structural geology and potential hazards.

The current on-site investigations, which are due to be completed in February, are the first stage in an extensive feasibility study to confirm the commercial viability of a new underground mine. The study is due for completion at the end of 2002.

The Wairaki Mine at Ohai is the main supplier of coal to domestic and industrial customers in the lower South Island, but is due to close in two to three years. If confirmed as viable, the new mine would help meet projected demand for coal from South Island industrial customers, particularly the dairy industry.

Steve Riddell, General Manager of Solid Energy South, comments: "The expansion of the dairy industry in the South Island - which is projected to grow by at least 5% over the next five years and beyond - is a significant opportunity for Solid Energy, not only in own business, but in supporting New Zealand's flagship primary industry. We are hopeful that the coal resources identified at Ohai will provide a long term opportunity for the company and it employees in Southland, an area with a long-established mining tradition."

By 2006 Solid Energy expects demand to drive a doubling of production to 6 million tonnes per annum, with a third for the New Zealand market, growing further to 7 million tonnes a year by the end of the decade. Last year 1.3 million tonnes of coal was sold in New Zealand, almost all to industrial customers, while 1.66 million tonnes was exported.