NZ's coal story

NZ's Coal Story

Click here to see a map of New Zealand’s coal fields.

New Zealand has 16 producing coal mines (December 2020) - with the major coalfields located in the Waikato, the West Coast, Otago and Southland. These are all opencast mining operations, which in 2019 produced an estimated 3.5 million tonnes of coal, for domestic use and for export. A further site is in post-closure rehabilitation, one is in care-and-maintenance, and a closed mine (Spring Creek) may reopen.

Coal is highly variable in quality and in its impurities from one mining operation to another. For this reason, blending is an important part of the value chain for export coal, and for domestic use. An entire industry has grown around the purchase of coal from diverse sources; blending to client specifications; and transport, handling and support to individual users. The greater the number of coal mines in operation, the more efficient and effective is this part of the New Zealand coal economy.

Coal is New Zealand's most abundant known energy resource, with an estimated 15 billion tonnes to which there is ready access - 80 per cent of this is brown coal or lignite. Link to lignite article.

Coal has played a key role in the development of modern New Zealand. At present there is no practical alternative to coal as a source of affordable, industrial process heat for fuelling our industrial processes - especially in the South Island which has no reticulated gas. Alternative technologies are in development, e.g. partial conversion to wood waste (biomass) and electrification (link to other articles) but for the immediate future major New Zealand companies such as the Fonterra dairy co-operative, Synlait and Open Country Dairy still rely heavily on coal as energy for their manufacturing facilities.

Coal's annual economic contribution to the country runs into many billions of dollars, thinking of steel, cement and lime, food, wood and wool products, as examples of goods produced. If we didn't have extensive domestic supplies, coal would be imported, and, at times it is, mostly from Indonesia, currently in significant quantities, more than 1 million tonnes a year.

Learn more about how New Zealand uses coal.

Coal mining plays a substantial role in underpinning several regional economies. On the West Coast  for example, 7.1% of regional GDP is earned directly and indirectly from mining, mainly gold and coal. 2010 studies indicated around 8,000 people were employed directly and indirectly in the minerals sector (including quarries), with salaries on average more than double the national average - many in areas with limited employment opportunities.

Today the coal industry is highly regulated, as is the case for industry in New Zealand generally, including in relation to CO2 emissions.

For more information, read how coal is regulated in New Zealand.

The coal industry has a keen interest in New Zealand's energy future, and the types of pathway New Zealand could take in varying its energy mix. It is inevitable that the role of coal in the New Zealand economy will change over time. Straterra has supported the work of the BusinessNZ Energy Council (BEC) in producing energy scenarios for New Zealand out to 2050. Click here for more information about New Zealand's energy future. We also participate in government policy consultations on climate change action.

History

Historically, Tainui Māori were the first to burn waro (coal) in New Zealand, for cooking, and early European settlers swiftly began prospecting.

The first mine in New Zealand was established in Dunedin in 1849 and by the 1860s most of the main coalfields had been discovered and large-scale mining established. A number of heritage-protected mine sites are managed by the Department of Conservation, for example, on the Denniston plateau on the West Coast.

Coal became integral to New Zealand's growth. In the 1870s Premier Julius Vogel issued bonds to fund railway construction - and coal was needed to power the trains, as well as steam ships. Initially a significant amount of coal was imported from Australia - but the domestic industry quickly became self-sufficient.

By 1900 New Zealand was producing more than a million tons of coal annually and it had become the country's main energy source. From 1900 to 1914 production more than doubled fuelling export growth for dairy factories and freezing works, and municipal gas works supplying energy to homes.

During WWII coal was considered so important that mining became an 'essential industry' in New Zealand with miners prohibited from changing jobs. Large-scale open cast mines - open pits excavated with explosives and earthmoving machinery - also began to be developed.

Demand for coal declined in the 1960s and 1970s with transport modes switching to diesel and petrol, and increased use of hydroelectric power. However, in the 1980s oil prices rose and demand for coal revived.

BT Mining, Bathurst Resources, NZ Coal & Carbon, Birchfield Coal Mines, and Greenbriar are the major producers today.

Some New Zealand coal has highly sought-after properties, such as low-sulphur and ash content, and superior "swelling" properties for use in blast furnaces. This coal is exported to steel makers in Japan, India,  Korea and Australia.

New Zealand coal qualities

Types of coal depend on various factors including the plant matter it was formed from. As coal becomes compressed underground over geological time it gradually changes from peat, to lignite or brown coal, then to sub-bituminous and bituminous coal and, in some parts of the world, into the hard and shiny anthracite.

New Zealand's main coals are:

  • Bituminous, a high-grade premium coal exported for processes like steel making

  • Sub-bituminous, lower-grade coal, used in New Zealand, mainly as thermal energy for industrial and commercial purposes, and at the Glenbrook steel mill.

  • Lignite, very low grade of coal, used for industrial heat, e.g. dairy processing.

 New Zealand Petroleum and Mineral's website details information on current New Zealand coal mines.