Over the next three years, the joint venture will invest $25 million in new equipment for the mine, including two new road headers and an upgrade of the coal washery to provide a low ash, low sulfur product for international thermal and steelmaking markets.

The joint venture with Cargill, a major international company in the agriculture and energy sectors, will help secure a long-term future for the mine, provided it continues to meet development and production targets.

Under the conditional agreement, Solid Energy will retain the majority shareholding of 51% and will continue to employ all the 140 staff and to operate the mine.

Solid Energy is currently developing a new area of the mine to access more than 3 million tonnes of coal under a five-year plan agreed in October 2006.

Coal extraction is expected to restart in late 2007 with the current coal output of 7000 tonnes a month ramping up to 65,000 tonnes (800,000 tonnes per annum) a month thereafter.

Solid Energy chief operating officer Barry Bragg said the joint venture company would also begin detailed planning of a subsequent 15-year plan for the Rapahoe sector of the mine, accessing an additional 15Mt of reserves.

“Provided we continue to meet our targets, this will give the mine a future which goes out 20 years, as opposed to the current five,” Bragg said.

Cargill Coal managing director Patrick Bracken said Spring Creek marks the company’s first steps into coal production.

“It expands our presence in the Asia-Pacific region, creates a number of opportunities and allows us to better serve our customers in Asia and elsewhere, offering them premium quality coal.”

Export coal will be transported by rail to Lyttelton Port of Christchurch. Cargill will transport coal to its international customers using its ocean transport business.

Solid Energy will market the mine’s coal in New Zealand and both parties will sell into the international market.