Pike River Coal - Project Management Challenges

The Pike River Coalfield is located on the West Coast of the South Island of New Zealand near the top of the Paparoa Range approximately 45 km north east of the coastal town of Greymouth. The Pike River Coal Company Ltd (PRCC) is owned jointly by New Zealand Oil & Gas Limited (NZOG) and private investors.   The project has followed a long and difficult road towards project implementation which is now a reality with mine construction scheduled to commence in November 2005. The first stage of the project, the consent and land access process has been the most difficult. Resource consents for the project were first applied for, granted and appealed in 1998. A second round of modified resources consents followed a similar path in 2001. Following consultation with a range of parties including local and central government as well as the Department of Conservation, in March 2004 the Minister of Conservation granted PRCC access through Department of Conservation land. In October 2004, the Environment Court issued a Memorandum of Consent granting resource consents with conditions that had been negotiated between PRCC and the appellants.   The second stage of the project, investigation and design, commenced in December 2004 and was completed in June 2005 with the PRCC board ratifying the project capital and operating budgets. While the investigation and design work was proceeding, PRCC were also engaged in securing private equity and bank debt funding for the project. Formal Board approval to proceed with project construction was granted in September 2005 following completion of fund raising.   The project consists of a number of significant construction activities, namely: +        10.5 km of mine access road through previous logged and virgin rain forest; +        2.2 km of tunnel through metamorphic rock; +        a coal preparation plant about 8.3 km from the mine portal; +        an underground coal preparation plant; and +        a major slurry pump station, high and low pressure underground water supply systems to support hydraulic mining units and underground coal transport respectively.   Project construction is expected to be completed in April 2007 with completion of the ventilation shaft. Mine production will commence in December 2006 with coal from pit bottom development which will be carried out by the mine owner.