9 Sep 2015

Fonterra places open cast coal mine on hold.

10:07 am on 9 September 2015

Fonterra has placed a large open-cast coal mine at Mangatangi, in the north Waikato region of Maramarua, on hold.

coal mine

Photo: 123rf

The mine would have been run by its energy subsidiary, Glencoal. It would have covered more than 76 hectares and would last for eight years.

The mine proposal was criticised by environmentalists, but it won resource consent almost two years ago.

At the time, Fonterra said it needed the mine to replace coal from its nearby Kopako mine, which was due to run dry in 2017.

It was not clear where Fonterra would get its coal from when that happens, if it did not revive Mangatangi.

But it buys plenty of coal from other producers, including Solid Energy, as well as from its own subsidiary.

Fonterra has said little about the move to put Mangatangi on hold.

But in a statement it said it was assessing its energy options and is committed to optimising its energy mix towards cleaner, more efficient forms of energy.

The statement went on: "We will continue to investigate secure, cost effective alternatives to reduce emissions intensity and contribute to energy efficiency."

Fonterra needs vast amounts of energy to turn liquid milk into milk powder.

It does so with natural gas, but also uses plenty of coal, especially in the South Island.

Earlier this year, Fonterra denied its Mangatangi mine was on hold, rather that it was delayed.

The latest admission is being interpreted by Fonterra's environmental opponents as more than a semantic distinction.

They said it was a more significant setback for the mine than a delay would be, and they attributed it to Fonterra's financial stress, caused mainly by low dairy prices world wide.

Environmental activists have turned their guns on Fonterra since Genesis Energy decided to phase out coal from its Huntly plant.

But Fonterra says it needs energy and adds it has improved its energy efficiency by 16 percent in 12 years.