The resurgence of coal has been underscored with news that Genesis Power and New Zealand's Tranz Rail expect to soon sign a deal for the transportation of up to one million tonnes of imported coal annually to the energy company's Huntly power station.

The two companies yesterday confirmed they were in the final stages of negotiations to move the imported coal - mostly from Indonesia but also from Queensland - to the dual-fired Huntly station from the Port of Tauranga.

Genesis chief executive Murray Jackson admitted the deal would create some tension between the three Indonesian mines which competed on the spot market. Imported coal was necessary as New Zealand mines could not supply for Genesis' needs.

The first trial shipment arrived from Indonesia last month and had burnt very successfully at Huntly because of its low ash and high energy characteristics.

Genesis still plans to have a new gas-fired power station at Huntly by 2006, probably running on Pohokura gas and later gas from the more southern Taranaki Kupe field, in which it presently holds a 70% interest.

Even with the new 365MW combined gas turbine plant, the existing 1000MW Huntly facility will still be run largely as a base-load power station to feed the energy hungry Auckland, Waikato and northern Bay of Plenty regions.