August 4, 2025 • 10 mins
New Zealand's biggest energy players - Genesis, Meridian, Mercury and Contact - have formed a deal to stockpile coal at Huntly Power Station, and questions have been raised.
The energy companies say the shared strategic energy reserve will secure supply for the next decade.
Minerals West Coast manager Patrick Phelps explained the nuances of this deal to the Afternoons team.
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Speaker 1 (00:09):
You're listening to a podcast from News Talk SEDB. Follow
this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
We are talking about the use of New Zealand coal
to keep our electricity network stable. Joining us now is
Patrick Phelps. He is someone who knows a fair bit
about coal. He's the manager of Mineral's West Coast, a
group representing the mining industry on the West Coast, and
he joins us now. Patrick, Good afternoon.
Speaker 3 (00:33):
Good afternoon to you all.
Speaker 4 (00:35):
Patrick House, shaky is z agred. Why do we need
to have this huge coal stockpile?
Speaker 5 (00:39):
And Huntley, Well, there's a lot of people take a
point of national pride, and you alluded to it before.
We've got quite a substantial hydro fleet around the country.
We've got Jeffermore, we've got wind. But even over the
last ten years, as we've become ever more renewable, and
looking at the figures for the previous decade generated anywhere
(01:00):
between eighty to eighty eight percent of electricity from renewables,
there's a balance there of anywhere between ten and twenty
percent that's not available from renewables, and you've got to
fill that gap, just as each of us needs one
percent of the oxygen that we breathe. We need every
percentage of electricity that we generate and use, and when
that's not renewables, it has to be some combination of
(01:22):
natural gas and coal.
Speaker 4 (01:23):
And why Indonesian coal do we not dig this kind
of coal up in New Zealand?
Speaker 3 (01:27):
This is a question I get a lot, so I
guess first things first is to just get some sense
of scale. New Zealand's coal industry as it is today
produces anywhere between two and three million tons of coal
per year. You know, at the highest I think New
Zealand's production has ever been, we might have produced about
five million tons a year back when there was more abundant,
(01:49):
low cost coal and YadA, as well as some other factors.
So if you sort of work off that figure of
anywhere between two to three million now and our peak
production never having been five million tons a year, Indonesia exports,
not produces, exports more than five hundred million tons of
coal internet nationally every single year. And it's thermal coal
(02:11):
for use in electricity generation or possibly direct heat in
some boilers. But you know, half a billion tons of
coal each year, and so that's one bit of the context.
Another bit of context is that in New Zealand, the
demand for that coal is largely, not exclusively, but largely
(02:32):
in the electricity sector, where some years Genesis Energy may
find that there's enough demand to justify burning two to
three hundred thousand tons of coal a year. Other years,
if the late levels are low, or potentially gas levels
gas productions low, it might earn more than a million
tons of years the coal a year. So that volatility
is quite substantial for a New Zealand industry that already
(02:52):
had a lot of customers. And you know, some of
the coal that we produce isn't used for generating electricity.
It's used for making steel, and so it's exported to
steel producers, and so that volatility is a big factor.
And then you just have to come to the conclusion
that well, as far as Genesis is consumed earned for
the cost that they're willing to pay and the price
that producers out of Indonesia can supply it, it's clearly
(03:14):
just quite competitive for them to get it off short.
Speaker 4 (03:17):
Right, And you mentioned natural gas there. How does that
factor into this whole unstability in the power system in
New Zealand.
Speaker 3 (03:27):
Yeah, so of the two fossil fuels that we've got,
and more ways than my natural gas has generally been preferable,
in part because people like to say less emissions intensive,
it's a transition fuel or whatever. It certainly seems to
be more palatable for some people than what coal does.
But if you go back to sort of twenty seventeen,
twenty eighteen, New Zealand was producing close to two hundred
(03:49):
pedadules of gas each, yeah, somewhere about one hundred and
eighty two, one hundred and ninety. Now as of this year,
we're down to producing one hundred and six peda duels. Now,
a pedagol is just a unit of energy. It works
out about twenty eight liters of petrol. But if you
just accept the fact that our gas production has pretty
much halved over the last seven years and over the
next five years, we're going to be down to about
(04:11):
sixty six petidule. So our gas production is down and
on a tradictory to continue falling. And so if you've
got a need for fossil fuels to firm up the grid,
coal is the most logical choice.
Speaker 4 (04:24):
So as that as that gas production decreases, we're going
to have and increase in coal importing.
Speaker 3 (04:31):
That would be my guests. Yes, I mean there has
been talk of liquefied natural gas imports into New Zealand.
How cost effective or likely that is, I'm not sure.
But in the meantime, I mean, coal is a pretty
simple fuel. You can use it and abuse it to
your hearts. Contend, you can cut it around on a truck,
you can leave it in the rain. It's you know,
you don't have to keep it in bottles like gas.
It's not like electricity that has to run down lines.
(04:54):
So yeah, it's a solid, transportable fuel that's easy to store,
just in a large pile of up to six hundred
thousand tons. Obviously, so as these electricity companies are concerned.
Speaker 2 (05:03):
So are there policy hurdles that have been put in
the way of coal producers and mine companies or is
it more the facts that the market value that they
can get from opening up a new coal mine, just
as and what it used to be.
Speaker 3 (05:16):
I would say it's definitely a bit of both.
Speaker 6 (05:18):
I mean, I heard one of your callers say earlier.
Once in the good old days, all of these coal
mines were owned and operated by the state up to
a point where solid energy went broke under the government's
management and then had to be sold off for you know,
in its various parts. And so there were coal mines
running in the White Keatdow like Huntly Underground and the likes,
and as far as I can recall, when solid energy
(05:40):
was broken up into you know, it's parts and sold off,
there were about three or four coal mining companies that
bought what were going concerns, and then there were other
so called assets that were not taken on because presumably
they weren't viable, and I imagine that was the case
for hunt the Underground. But yeah, this, I mean, it's
hard to do anything in this country, as anyone who
(06:00):
ever tries to do anything knows, whether that's building a house,
whether that's trying to set up a hydro scheme on
the west coast of the South Island, and mining is
no exception. But I think all of those renewables are
under the same under the same constraints. You know, there
was an attempt to solar farm down in the mckenzy
country a year or two ago and that got stuck
in the consenting process as well. But yea, certainly there
(06:21):
are a lot of regulatory hurdles to more coal production
in this country than otherwise. Otherwise might be the case
because you know, a boggy paddock with a few tussics
growing and it can be considered a wetland and so
that can make it quite difficult if you want to
dig it up to get the coal that's underneath it.
So yeah, there's I'd say that there's a whole heap
of different factors at play, but coal production in this
(06:43):
country could be higher than otherwise.
Speaker 4 (06:44):
As we're talking to Patrick Felts, Minerals West Coast Manager,
what do you say to people like the lady that
we've all just heard on the news was saying every
ton of coal that has burnt leads to the crazy
weather and events like the Canterbury wildfires that we're experiencing.
Speaker 3 (07:03):
Yeah, I mean every unit of fossil into the atmosphere,
if we're measured in tons of carbon dioxide and contributes
to climate change cold no exception. Nor are our diesel
and petrol petrol that we use for transport, more of
the jet engines that bring into national travelers here. I mean,
(07:23):
I think it's still upwards of eighty or ninety percent
of all of the world's energy comes from fossil fuel,
the balance coming from renewables and nuclear. So yeah, coal
makes a contribution. But what I would say to that
as well is that in New Zealand, of all of
our fossil fuels, oil, transport, gas and coal, because we
don't use as much of that as we use of
(07:44):
other fuels, it's the minority of our carbon dioxide emissions.
But ultimately Genesis is using coal. They have revenue, they
have got the ability to borrow money. If they thought
the best bet was to just go and build the
Holy p solar farms, or go and build the whole
Yaper wind farms, that's what they'd be doing. There's clearly
a demand in the market to keep a fossil fuel
(08:04):
plant going in our electricity generation folio.
Speaker 4 (08:09):
So what would you like to see happen, you know,
in the short, medium and long term in terms of
coal usage and New Zealand and just power generation in
New Zealand in general.
Speaker 3 (08:22):
I'd get rid of all of the other energy sources
and just use coal for everything. Go back to steam train.
Steams were what a time.
Speaker 4 (08:31):
Growing up in Toned and I do miss the smell
of papagas.
Speaker 6 (08:35):
No.
Speaker 3 (08:36):
I was just going to say that the I think
in the name, we've got to make it easy to
do a lot of things in you deal in, including
electricity generation I still have on the West coast has
borne and raised here and in my lifetime I've seen
two attempts at reasonably large hydro projects. Would have you know,
they wouldn't have gone rid of all fossil fuels, but
they would have shifted the needle in terms of our supply.
They've both got held up in that process, and the
(08:57):
same is true for pretty much every other renewable asset
that you could attempt to build. So I think making
it easy to do everything is quite important. I think
repealing the oil and gas and was I think quite
a good move because it gives us more options. But
if there's more gas out there, it's going to take
a while to be found and come online. In the meantime,
(09:17):
must think making it easier to produce coal in this country,
but still just being willing to live with the fact that,
just like anything else we can't produce enough of or
produce cheaply enough in New Zealand, we're probably going to
have to live with important bear in mind we export
goods all over the world. We import things we don't need.
We live, we live in a global economy, and I
think that that's a good thing. We've actually, funnily enoughve
got a trade surplus with Indonesia because they can send
(09:40):
a lot of our meat and dairy products which are
produced with coal in a slightly conflated way. And I
do think it's some stage New Zealand. Look, maybe not today,
maybe not tomorrow, but I do think it's some stage
being open minded to some form of nuclear generation in
New Zealand. It's something that I think people should consider
because after hydro, it's the world's largest source of lower
mission's energy.
Speaker 4 (10:01):
All right, so let's get some nuclear power going. Let's
find a rivet advand basically yeah, pretty.
Speaker 3 (10:05):
Much, yeah, and just steam trains and steamships. I think
if you didn't.
Speaker 2 (10:07):
Mis sell us lover, Patrick, really good to catch up.
Go well and we'll talk again soon.
Speaker 4 (10:13):
Bring back the traction engines on our farms.
Speaker 2 (10:16):
That is Patrick Phelps, the manager of Mineral's WIST coach.
Speaker 1 (10:20):
For more from News Talk set B listen live on
air or online and keep our shows with you wherever
you go. With our podcasts on iHeartRadio.
You're listening to a podcast from News Talk SEDB. Follow
this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
We are talking about the use of New Zealand coal
to keep our electricity network stable. Joining us now is
Patrick Phelps. He is someone who knows a fair bit
about coal. He's the manager of Mineral's West Coast, a
group representing the mining industry on the West Coast, and
he joins us now. Patrick, Good afternoon.
Speaker 3 (00:33):
Good afternoon to you all.
Speaker 4 (00:35):
Patrick House, shaky is z agred. Why do we need
to have this huge coal stockpile?
Speaker 5 (00:39):
And Huntley, Well, there's a lot of people take a
point of national pride, and you alluded to it before.
We've got quite a substantial hydro fleet around the country.
We've got Jeffermore, we've got wind. But even over the
last ten years, as we've become ever more renewable, and
looking at the figures for the previous decade generated anywhere
(01:00):
between eighty to eighty eight percent of electricity from renewables,
there's a balance there of anywhere between ten and twenty
percent that's not available from renewables, and you've got to
fill that gap, just as each of us needs one
percent of the oxygen that we breathe. We need every
percentage of electricity that we generate and use, and when
that's not renewables, it has to be some combination of
(01:22):
natural gas and coal.
Speaker 4 (01:23):
And why Indonesian coal do we not dig this kind
of coal up in New Zealand?
Speaker 3 (01:27):
This is a question I get a lot, so I
guess first things first is to just get some sense
of scale. New Zealand's coal industry as it is today
produces anywhere between two and three million tons of coal
per year. You know, at the highest I think New
Zealand's production has ever been, we might have produced about
five million tons a year back when there was more abundant,
(01:49):
low cost coal and YadA, as well as some other factors.
So if you sort of work off that figure of
anywhere between two to three million now and our peak
production never having been five million tons a year, Indonesia exports,
not produces, exports more than five hundred million tons of
coal internet nationally every single year. And it's thermal coal
(02:11):
for use in electricity generation or possibly direct heat in
some boilers. But you know, half a billion tons of
coal each year, and so that's one bit of the context.
Another bit of context is that in New Zealand, the
demand for that coal is largely, not exclusively, but largely
(02:32):
in the electricity sector, where some years Genesis Energy may
find that there's enough demand to justify burning two to
three hundred thousand tons of coal a year. Other years,
if the late levels are low, or potentially gas levels
gas productions low, it might earn more than a million
tons of years the coal a year. So that volatility
is quite substantial for a New Zealand industry that already
(02:52):
had a lot of customers. And you know, some of
the coal that we produce isn't used for generating electricity.
It's used for making steel, and so it's exported to
steel producers, and so that volatility is a big factor.
And then you just have to come to the conclusion
that well, as far as Genesis is consumed earned for
the cost that they're willing to pay and the price
that producers out of Indonesia can supply it, it's clearly
(03:14):
just quite competitive for them to get it off short.
Speaker 4 (03:17):
Right, And you mentioned natural gas there. How does that
factor into this whole unstability in the power system in
New Zealand.
Speaker 3 (03:27):
Yeah, so of the two fossil fuels that we've got,
and more ways than my natural gas has generally been preferable,
in part because people like to say less emissions intensive,
it's a transition fuel or whatever. It certainly seems to
be more palatable for some people than what coal does.
But if you go back to sort of twenty seventeen,
twenty eighteen, New Zealand was producing close to two hundred
(03:49):
pedadules of gas each, yeah, somewhere about one hundred and
eighty two, one hundred and ninety. Now as of this year,
we're down to producing one hundred and six peda duels. Now,
a pedagol is just a unit of energy. It works
out about twenty eight liters of petrol. But if you
just accept the fact that our gas production has pretty
much halved over the last seven years and over the
next five years, we're going to be down to about
(04:11):
sixty six petidule. So our gas production is down and
on a tradictory to continue falling. And so if you've
got a need for fossil fuels to firm up the grid,
coal is the most logical choice.
Speaker 4 (04:24):
So as that as that gas production decreases, we're going
to have and increase in coal importing.
Speaker 3 (04:31):
That would be my guests. Yes, I mean there has
been talk of liquefied natural gas imports into New Zealand.
How cost effective or likely that is, I'm not sure.
But in the meantime, I mean, coal is a pretty
simple fuel. You can use it and abuse it to
your hearts. Contend, you can cut it around on a truck,
you can leave it in the rain. It's you know,
you don't have to keep it in bottles like gas.
It's not like electricity that has to run down lines.
(04:54):
So yeah, it's a solid, transportable fuel that's easy to store,
just in a large pile of up to six hundred
thousand tons. Obviously, so as these electricity companies are concerned.
Speaker 2 (05:03):
So are there policy hurdles that have been put in
the way of coal producers and mine companies or is
it more the facts that the market value that they
can get from opening up a new coal mine, just
as and what it used to be.
Speaker 3 (05:16):
I would say it's definitely a bit of both.
Speaker 6 (05:18):
I mean, I heard one of your callers say earlier.
Once in the good old days, all of these coal
mines were owned and operated by the state up to
a point where solid energy went broke under the government's
management and then had to be sold off for you know,
in its various parts. And so there were coal mines
running in the White Keatdow like Huntly Underground and the likes,
and as far as I can recall, when solid energy
(05:40):
was broken up into you know, it's parts and sold off,
there were about three or four coal mining companies that
bought what were going concerns, and then there were other
so called assets that were not taken on because presumably
they weren't viable, and I imagine that was the case
for hunt the Underground. But yeah, this, I mean, it's
hard to do anything in this country, as anyone who
(06:00):
ever tries to do anything knows, whether that's building a house,
whether that's trying to set up a hydro scheme on
the west coast of the South Island, and mining is
no exception. But I think all of those renewables are
under the same under the same constraints. You know, there
was an attempt to solar farm down in the mckenzy
country a year or two ago and that got stuck
in the consenting process as well. But yea, certainly there
(06:21):
are a lot of regulatory hurdles to more coal production
in this country than otherwise. Otherwise might be the case
because you know, a boggy paddock with a few tussics
growing and it can be considered a wetland and so
that can make it quite difficult if you want to
dig it up to get the coal that's underneath it.
So yeah, there's I'd say that there's a whole heap
of different factors at play, but coal production in this
(06:43):
country could be higher than otherwise.
Speaker 4 (06:44):
As we're talking to Patrick Felts, Minerals West Coast Manager,
what do you say to people like the lady that
we've all just heard on the news was saying every
ton of coal that has burnt leads to the crazy
weather and events like the Canterbury wildfires that we're experiencing.
Speaker 3 (07:03):
Yeah, I mean every unit of fossil into the atmosphere,
if we're measured in tons of carbon dioxide and contributes
to climate change cold no exception. Nor are our diesel
and petrol petrol that we use for transport, more of
the jet engines that bring into national travelers here. I mean,
(07:23):
I think it's still upwards of eighty or ninety percent
of all of the world's energy comes from fossil fuel,
the balance coming from renewables and nuclear. So yeah, coal
makes a contribution. But what I would say to that
as well is that in New Zealand, of all of
our fossil fuels, oil, transport, gas and coal, because we
don't use as much of that as we use of
(07:44):
other fuels, it's the minority of our carbon dioxide emissions.
But ultimately Genesis is using coal. They have revenue, they
have got the ability to borrow money. If they thought
the best bet was to just go and build the
Holy p solar farms, or go and build the whole
Yaper wind farms, that's what they'd be doing. There's clearly
a demand in the market to keep a fossil fuel
(08:04):
plant going in our electricity generation folio.
Speaker 4 (08:09):
So what would you like to see happen, you know,
in the short, medium and long term in terms of
coal usage and New Zealand and just power generation in
New Zealand in general.
Speaker 3 (08:22):
I'd get rid of all of the other energy sources
and just use coal for everything. Go back to steam train.
Steams were what a time.
Speaker 4 (08:31):
Growing up in Toned and I do miss the smell
of papagas.
Speaker 6 (08:35):
No.
Speaker 3 (08:36):
I was just going to say that the I think
in the name, we've got to make it easy to
do a lot of things in you deal in, including
electricity generation I still have on the West coast has
borne and raised here and in my lifetime I've seen
two attempts at reasonably large hydro projects. Would have you know,
they wouldn't have gone rid of all fossil fuels, but
they would have shifted the needle in terms of our supply.
They've both got held up in that process, and the
(08:57):
same is true for pretty much every other renewable asset
that you could attempt to build. So I think making
it easy to do everything is quite important. I think
repealing the oil and gas and was I think quite
a good move because it gives us more options. But
if there's more gas out there, it's going to take
a while to be found and come online. In the meantime,
(09:17):
must think making it easier to produce coal in this country,
but still just being willing to live with the fact that,
just like anything else we can't produce enough of or
produce cheaply enough in New Zealand, we're probably going to
have to live with important bear in mind we export
goods all over the world. We import things we don't need.
We live, we live in a global economy, and I
think that that's a good thing. We've actually, funnily enoughve
got a trade surplus with Indonesia because they can send
(09:40):
a lot of our meat and dairy products which are
produced with coal in a slightly conflated way. And I
do think it's some stage New Zealand. Look, maybe not today,
maybe not tomorrow, but I do think it's some stage
being open minded to some form of nuclear generation in
New Zealand. It's something that I think people should consider
because after hydro, it's the world's largest source of lower
mission's energy.
Speaker 4 (10:01):
All right, so let's get some nuclear power going. Let's
find a rivet advand basically yeah, pretty.
Speaker 3 (10:05):
Much, yeah, and just steam trains and steamships. I think
if you didn't.
Speaker 2 (10:07):
Mis sell us lover, Patrick, really good to catch up.
Go well and we'll talk again soon.
Speaker 4 (10:13):
Bring back the traction engines on our farms.
Speaker 2 (10:16):
That is Patrick Phelps, the manager of Mineral's WIST coach.
Speaker 1 (10:20):
For more from News Talk set B listen live on
air or online and keep our shows with you wherever
you go. With our podcasts on iHeartRadio.
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