Genesis strikes deal with BT Mining to supply coal for Huntly Power Station

BT Mining will supply local coal for the Huntly Power Station under a two-year deal. Photo / NZME

Genesis Energy has struck a two-year deal with New Zealand mining company BT Mining to supply 240,000 tonnes of coal to its Huntly Power Station.

The deal equates to BT Mining providing 10,000 tonnes of coal a month to Huntly, which supports the hydro-dominated electricity system.

Genesis said the agreement further strengthens Huntly’s role in providing flexibility and security to the electricity market by diversifying its fuel supply chain.

BT Mining is 65% owned by ASX-listed Bathurst Resources and 35% by Talley’s Energy.

While the majority of Huntly’s coal is currently sourced from Indonesia, the agreement would provide a significant portion from a domestic source, Genesis said.

In an average year, Huntly burns around 300,000-500,000 tonnes of coal, but gas declines, dry years and low wind can push this total to about one million tonnes, the company said.

Genesis chief operating officer Tracey Hickman said the deal would secure a reliable local source of coal for the Huntly Power Station, reducing the company’s reliance on overseas shipments and protecting it against global supply chain disruptions.

“It’s about keeping the lights on during periods when renewable generation is low,” Hickman said.

BT Mining said it supported balancing the importing of coal with what can be economically mined in New Zealand.

“This deal represents a boost for the local economy and shows the important role BT Mining can play in both maintaining energy security and supporting New Zealand’s commitment to transition to a lower-emission future where possible,” BT Mining chief executive Richard Tacon said.

The parties said the agreement would offer supply chain resilience, reducing reliance on overseas shipments while mitigating risks from global market volatility and shipping disruptions.

Genesis said it remained committed to fuel security and the transition to a secure electricity system that supports a lower-carbon future by developing domestic biomass supply to improve fuel security and support energy transition.

Resources Minister Shane Jones said reintroducing domestically sourced coal as a back-up fuel for electricity generation was a pragmatic move that would bolster New Zealand’s energy resilience and Waikato’s regional economy.

“Gas-powered generation at Huntly has long been how we bridge the gap when renewable sources can’t meet demand but as gas supply tightens, coal generation is now taking a bigger role in ensuring we can keep the lights on,” Jones said.

Jones said the deal also highlighted the significant regional economic benefits of the deal, particularly for Waikato.

Bathurst formed BT Mining with Talley’s to buy assets from Solid Energy in 2017, after the company went into liquidation.

Bathurst, which delisted its shares from the NZX in 2015, is New Zealand’s largest coal miner, producing more than two million tonnes of coal each year for export and domestic markets.

Data from the Ministry of Business, Innovation and Employment (MBIE) show New Zealand imported 539 kilotonnes (KT) of coal in the June quarter, up from 71.5KT in the June 2024 quarter, reflecting the increased stockpile for power generation.

The MBIE data showed total gas use in the economy was down 19.8%, with the quarter seeing Methanex pausing operations at its Motunui facility for eight weeks to free up gas for electricity generation.

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.