Small coal suppliers ready to replace Solid Energy

Small domestic coal suppliers could fill the gap in the market left when Solid Energy stops selling coal to Otago and Southland households, a move that could take effect in about five years time.

Solid Energy announced last week it planned to stop supplying coal to the domestic market within two years, citing concerns it had about the contribution coal and wood made to air pollution.

But chief executive Dr Don Elder said it would be "closer to five years" before Otago and Southland stopped receiving supplies of bagged Ohai coal.

The cut-off date had not been finalised because Solid Energy were still working with regional councils and retailers. The views of domestic customers would also be taken into account, he said.

Harliwich Holdings owner Ken Harliwich, which runs Roxburgh Coal, said he regarded the exit of Solid Energy as a business opportunity. He hoped to provide more coal in Dunedin.

"We certainly will not pull out of the market until we have to," Mr Harliwich said when contacted.

Roxburgh Coal, which had been mined since 1916, supplied 5000 tonnes a year, mostly to Roxburgh and Alexandra, and was capable of supplying much more.

It used to supply 35,000 tonnes a year when it sold to the former Dunedin cement works.

The coal was a lower grade called lignite, which burned at a lower temperature.

The environmental effect of using coal was a concern and customers were given leaflets on the best way to burn coal to minimise smoke, Mr Harliwich said.

"Make sure you have a nice clean grate and it gets plenty of air into it. The worst thing is putting coal on top of a pile of ash, it sits there and smoulders."

Newvale Coal, near Gore, has said it was considering bagging its coal rather than selling by the trailer load, in light of the change.

But McKay Group owner Stan McKay said coal from some of the smaller suppliers produced far more pollution because it was a lower grade.

McKay Group was the largest domestic coal provider in Otago and Southland and owned The Woodshed in Kaikorai Valley, Dunedin. It sells mostly Solid Energy coal.

Mr McKay said he was unconcerned about the decision as he did not see it happening in the near future.

Wood sales had increased considerably in the past few years.

Mr McKay said environmentally friendly wood pellets, promoted by Solid Energy as an alternative to coal, were not a viable option for the consumer as the price still needed to drop by 30 per cent to be competitive.

Dr Elder said Solid Energy was committed to investing in the pellets, which require a special burner, and it was economic in the long run as they put out more heat.

Some wood pellet burners were available for under $4000 and a project providing subsidies for low-income families to buy cheaper burners in Christchurch would be extended to Southland and Otago.

Solid Energy could make bigger profits from continuing to sell "bad coal" in the domestic market, but switching to pellets, which dominated the market in Scandinavia and Canada, was a responsible decision, he said.

- NZPA