Latest / Best of Business / Patrick Phelps: Minerals West Coast manager explains why coal stockpiling deal is needed

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Patrick Phelps: Minerals West Coast manager explains why coal stockpiling deal is needed · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk SEDB. Follow
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  Speaker 2: We are talking about the use of New Zealand coal
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  Speaker 2: to keep our electricity network stable. Joining us now is
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  Speaker 2: Patrick Phelps. He is someone who knows a fair bit
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  Speaker 2: about coal. He's the manager of Mineral's West Coast, a
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  Speaker 2: group representing the mining industry on the West Coast, and
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  Speaker 2: he joins us now. Patrick, Good afternoon.
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  Speaker 3: Good afternoon to you all.
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  Speaker 4: Patrick House, shaky is z agred. Why do we need
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  Speaker 4: to have this huge coal stockpile?
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  Speaker 5: And Huntley, Well, there's a lot of people take a
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  Speaker 5: point of national pride, and you alluded to it before.
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  Speaker 5: We've got quite a substantial hydro fleet around the country.
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  Speaker 5: We've got Jeffermore, we've got wind. But even over the
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  Speaker 5: last ten years, as we've become ever more renewable, and
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  Speaker 5: looking at the figures for the previous decade generated anywhere
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  Speaker 5: between eighty to eighty eight percent of electricity from renewables,
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  Speaker 5: there's a balance there of anywhere between ten and twenty
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  Speaker 5: percent that's not available from renewables, and you've got to
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  Speaker 5: fill that gap, just as each of us needs one
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  Speaker 5: percent of the oxygen that we breathe. We need every
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  Speaker 5: percentage of electricity that we generate and use, and when
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  Speaker 5: that's not renewables, it has to be some combination of
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  Speaker 5: natural gas and coal.
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  Speaker 4: And why Indonesian coal do we not dig this kind
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  Speaker 4: of coal up in New Zealand?
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  Speaker 3: This is a question I get a lot, so I
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  Speaker 3: guess first things first is to just get some sense
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  Speaker 3: of scale. New Zealand's coal industry as it is today
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  Speaker 3: produces anywhere between two and three million tons of coal
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  Speaker 3: per year. You know, at the highest I think New
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  Speaker 3: Zealand's production has ever been, we might have produced about
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  Speaker 3: five million tons a year back when there was more abundant,
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  Speaker 3: low cost coal and YadA, as well as some other factors.
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  Speaker 3: So if you sort of work off that figure of
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  Speaker 3: anywhere between two to three million now and our peak
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  Speaker 3: production never having been five million tons a year, Indonesia exports,
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  Speaker 3: not produces, exports more than five hundred million tons of
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  Speaker 3: coal internet nationally every single year. And it's thermal coal
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  Speaker 3: for use in electricity generation or possibly direct heat in
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  Speaker 3: some boilers. But you know, half a billion tons of
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  Speaker 3: coal each year, and so that's one bit of the context.
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  Speaker 3: Another bit of context is that in New Zealand, the
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  Speaker 3: demand for that coal is largely, not exclusively, but largely
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  Speaker 3: in the electricity sector, where some years Genesis Energy may
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  Speaker 3: find that there's enough demand to justify burning two to
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  Speaker 3: three hundred thousand tons of coal a year. Other years,
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  Speaker 3: if the late levels are low, or potentially gas levels
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  Speaker 3: gas productions low, it might earn more than a million
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  Speaker 3: tons of years the coal a year. So that volatility
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  Speaker 3: is quite substantial for a New Zealand industry that already
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  Speaker 3: had a lot of customers. And you know, some of
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  Speaker 3: the coal that we produce isn't used for generating electricity.
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  Speaker 3: It's used for making steel, and so it's exported to
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  Speaker 3: steel producers, and so that volatility is a big factor.
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  Speaker 3: And then you just have to come to the conclusion
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  Speaker 3: that well, as far as Genesis is consumed earned for
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  Speaker 3: the cost that they're willing to pay and the price
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  Speaker 3: that producers out of Indonesia can supply it, it's clearly
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  Speaker 3: just quite competitive for them to get it off short.
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  Speaker 4: Right, And you mentioned natural gas there. How does that
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  Speaker 4: factor into this whole unstability in the power system in
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  Speaker 4: New Zealand.
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  Speaker 3: Yeah, so of the two fossil fuels that we've got,
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  Speaker 3: and more ways than my natural gas has generally been preferable,
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  Speaker 3: in part because people like to say less emissions intensive,
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  Speaker 3: it's a transition fuel or whatever. It certainly seems to
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  Speaker 3: be more palatable for some people than what coal does.
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  Speaker 3: But if you go back to sort of twenty seventeen,
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  Speaker 3: twenty eighteen, New Zealand was producing close to two hundred
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  Speaker 3: pedadules of gas each, yeah, somewhere about one hundred and
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  Speaker 3: eighty two, one hundred and ninety. Now as of this year,
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  Speaker 3: we're down to producing one hundred and six peda duels. Now,
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  Speaker 3: a pedagol is just a unit of energy. It works
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  Speaker 3: out about twenty eight liters of petrol. But if you
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  Speaker 3: just accept the fact that our gas production has pretty
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  Speaker 3: much halved over the last seven years and over the
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  Speaker 3: next five years, we're going to be down to about
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  Speaker 3: sixty six petidule. So our gas production is down and
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  Speaker 3: on a tradictory to continue falling. And so if you've
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  Speaker 3: got a need for fossil fuels to firm up the grid,
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  Speaker 3: coal is the most logical choice.
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  Speaker 4: So as that as that gas production decreases, we're going
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  Speaker 4: to have and increase in coal importing.
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  Speaker 3: That would be my guests. Yes, I mean there has
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  Speaker 3: been talk of liquefied natural gas imports into New Zealand.
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  Speaker 3: How cost effective or likely that is, I'm not sure.
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  Speaker 3: But in the meantime, I mean, coal is a pretty
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  Speaker 3: simple fuel. You can use it and abuse it to
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  Speaker 3: your hearts. Contend, you can cut it around on a truck,
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  Speaker 3: you can leave it in the rain. It's you know,
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  Speaker 3: you don't have to keep it in bottles like gas.
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  Speaker 3: It's not like electricity that has to run down lines.
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  Speaker 3: So yeah, it's a solid, transportable fuel that's easy to store,
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  Speaker 3: just in a large pile of up to six hundred
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  Speaker 3: thousand tons. Obviously, so as these electricity companies are concerned.
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  Speaker 2: So are there policy hurdles that have been put in
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  Speaker 2: the way of coal producers and mine companies or is
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  Speaker 2: it more the facts that the market value that they
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  Speaker 2: can get from opening up a new coal mine, just
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  Speaker 2: as and what it used to be.
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  Speaker 3: I would say it's definitely a bit of both.
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  Speaker 6: I mean, I heard one of your callers say earlier.
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  Speaker 6: Once in the good old days, all of these coal
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  Speaker 6: mines were owned and operated by the state up to
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  Speaker 6: a point where solid energy went broke under the government's
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  Speaker 6: management and then had to be sold off for you know,
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  Speaker 6: in its various parts. And so there were coal mines
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  Speaker 6: running in the White Keatdow like Huntly Underground and the likes,
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  Speaker 6: and as far as I can recall, when solid energy
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  Speaker 6: was broken up into you know, it's parts and sold off,
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  Speaker 6: there were about three or four coal mining companies that
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  Speaker 6: bought what were going concerns, and then there were other
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  Speaker 6: so called assets that were not taken on because presumably
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  Speaker 6: they weren't viable, and I imagine that was the case
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  Speaker 6: for hunt the Underground. But yeah, this, I mean, it's
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  Speaker 6: hard to do anything in this country, as anyone who
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  Speaker 6: ever tries to do anything knows, whether that's building a house,
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  Speaker 6: whether that's trying to set up a hydro scheme on
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  Speaker 6: the west coast of the South Island, and mining is
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  Speaker 6: no exception. But I think all of those renewables are
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  Speaker 6: under the same under the same constraints. You know, there
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  Speaker 6: was an attempt to solar farm down in the mckenzy
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  Speaker 6: country a year or two ago and that got stuck
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  Speaker 6: in the consenting process as well. But yea, certainly there
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  Speaker 6: are a lot of regulatory hurdles to more coal production
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  Speaker 6: in this country than otherwise. Otherwise might be the case
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  Speaker 6: because you know, a boggy paddock with a few tussics
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  Speaker 6: growing and it can be considered a wetland and so
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  Speaker 6: that can make it quite difficult if you want to
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  Speaker 6: dig it up to get the coal that's underneath it.
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  Speaker 6: So yeah, there's I'd say that there's a whole heap
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  Speaker 6: of different factors at play, but coal production in this
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  Speaker 6: country could be higher than otherwise.
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  Speaker 4: As we're talking to Patrick Felts, Minerals West Coast Manager,
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  Speaker 4: what do you say to people like the lady that
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  Speaker 4: we've all just heard on the news was saying every
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  Speaker 4: ton of coal that has burnt leads to the crazy
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  Speaker 4: weather and events like the Canterbury wildfires that we're experiencing.
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  Speaker 3: Yeah, I mean every unit of fossil into the atmosphere,
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  Speaker 3: if we're measured in tons of carbon dioxide and contributes
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  Speaker 3: to climate change cold no exception. Nor are our diesel
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  Speaker 3: and petrol petrol that we use for transport, more of
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  Speaker 3: the jet engines that bring into national travelers here. I mean,
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  Speaker 3: I think it's still upwards of eighty or ninety percent
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  Speaker 3: of all of the world's energy comes from fossil fuel,
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  Speaker 3: the balance coming from renewables and nuclear. So yeah, coal
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  Speaker 3: makes a contribution. But what I would say to that
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  Speaker 3: as well is that in New Zealand, of all of
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  Speaker 3: our fossil fuels, oil, transport, gas and coal, because we
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  Speaker 3: don't use as much of that as we use of
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  Speaker 3: other fuels, it's the minority of our carbon dioxide emissions.
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  Speaker 3: But ultimately Genesis is using coal. They have revenue, they
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  Speaker 3: have got the ability to borrow money. If they thought
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  Speaker 3: the best bet was to just go and build the
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  Speaker 3: Holy p solar farms, or go and build the whole
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  Speaker 3: Yaper wind farms, that's what they'd be doing. There's clearly
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  Speaker 3: a demand in the market to keep a fossil fuel
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  Speaker 3: plant going in our electricity generation folio.
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  Speaker 4: So what would you like to see happen, you know,
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  Speaker 4: in the short, medium and long term in terms of
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  Speaker 4: coal usage and New Zealand and just power generation in
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  Speaker 4: New Zealand in general.
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  Speaker 3: I'd get rid of all of the other energy sources
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  Speaker 3: and just use coal for everything. Go back to steam train.
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  Speaker 3: Steams were what a time.
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  Speaker 4: Growing up in Toned and I do miss the smell
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  Speaker 4: of papagas.
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  Speaker 6: No.
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  Speaker 3: I was just going to say that the I think
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  Speaker 3: in the name, we've got to make it easy to
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  Speaker 3: do a lot of things in you deal in, including
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  Speaker 3: electricity generation I still have on the West coast has
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  Speaker 3: borne and raised here and in my lifetime I've seen
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  Speaker 3: two attempts at reasonably large hydro projects. Would have you know,
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  Speaker 3: they wouldn't have gone rid of all fossil fuels, but
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  Speaker 3: they would have shifted the needle in terms of our supply.
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  Speaker 3: They've both got held up in that process, and the
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  Speaker 3: same is true for pretty much every other renewable asset
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  Speaker 3: that you could attempt to build. So I think making
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  Speaker 3: it easy to do everything is quite important. I think
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  Speaker 3: repealing the oil and gas and was I think quite
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  Speaker 3: a good move because it gives us more options. But
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  Speaker 3: if there's more gas out there, it's going to take
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  Speaker 3: a while to be found and come online. In the meantime,
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  Speaker 3: must think making it easier to produce coal in this country,
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  Speaker 3: but still just being willing to live with the fact that,
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  Speaker 3: just like anything else we can't produce enough of or
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  Speaker 3: produce cheaply enough in New Zealand, we're probably going to
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  Speaker 3: have to live with important bear in mind we export
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  Speaker 3: goods all over the world. We import things we don't need.
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  Speaker 3: We live, we live in a global economy, and I
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  Speaker 3: think that that's a good thing. We've actually, funnily enoughve
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  Speaker 3: got a trade surplus with Indonesia because they can send
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  Speaker 3: a lot of our meat and dairy products which are
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  Speaker 3: produced with coal in a slightly conflated way. And I
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  Speaker 3: do think it's some stage New Zealand. Look, maybe not today,
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  Speaker 3: maybe not tomorrow, but I do think it's some stage
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  Speaker 3: being open minded to some form of nuclear generation in
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  Speaker 3: New Zealand. It's something that I think people should consider
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  Speaker 3: because after hydro, it's the world's largest source of lower
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  Speaker 3: mission's energy.
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  Speaker 4: All right, so let's get some nuclear power going. Let's
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  Speaker 4: find a rivet advand basically yeah, pretty.
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  Speaker 3: Much, yeah, and just steam trains and steamships. I think
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  Speaker 3: if you didn't.
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  Speaker 2: Mis sell us lover, Patrick, really good to catch up.
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  Speaker 2: Go well and we'll talk again soon.
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  Speaker 4: Bring back the traction engines on our farms.
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  Speaker 2: That is Patrick Phelps, the manager of Mineral's WIST coach.
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