Solid Energy, Government-owned Coal mining Company, hopes that lignite processing plant will become operational by late next year in Mataura.

The company yesterday formed a joint Venture with Colorado-based GTL Energy Ltd in a bid to develop a briquetting plant in the former paper mill at Mataura with an estimated procession capacity of 100,000 tonnes of lignite a year.

The plant would come just 10km east of its New Vale coal mine where Solid Energy mined 240,000 tonnes of lignite in the previous financial year. Vicki Blyth, Solid Energy Communications Director, informed that the company is studying the technical and financial feasibility of the project and final decision may be taken before the next financial year.

The move will help to tap New Zealand's vast and relatively Southland resources making way for the country to provide a higher grade and cleaner energy source, lignite briquettes used in home heating.

Solid Energy pledges to comply with the National Environmental Standards for air quality and it would not supply coal for household supply from 2013.