The Baillieu government wants to ramp up brown coal mining. Photo: Justin McManus

MINING companies are preparing bids to extract billions of tonnes of brown coal from the Latrobe Valley under controversial plans being promoted by the Baillieu government, raising the prospect of a new South Gippsland port to export it.

Coal technology firm Exergen says it will bid for up to 1 billion tonnes of brown coal for export to Japan and India and for use in a new demonstration power plant.

Another firm, Australian Energy Company Limited, is seeking up to a billion tonnes of coal for export as briquettes and for a fertiliser project.

The state government has confirmed details of a draft cabinet submission outlining plans for a competitive tender of brown coal allocations and a public relations push to convince the public of its merits in the era of climate change.

Energy Minister Michael O’Brien said Victoria was ”the energy hub of the country” and the government wanted to ramp up mining to exploit the state’s vast brown coal reserves to generate jobs and investment.

Exergen head Trevor Bourne told The Age the company had been talking with the offices of Premier Ted Baillieu and Mr O’Brien about its plans.

He said Exergen would use technology to remove moisture from brown coal, lowering its carbon emissions and making it more suitable for export. It had backing from Indian energy company Tata Power and Itochu Corporation of Japan.

He said Exergen also wanted to build a 7 to 10 megawatt $20 million demonstration power plant, backed by Australian firms Thiess and Sedgman.

”I think our technology fundamentally shifts that paradigm on brown coal. We can reduce the CO2 emissions using our technology on brown coal to that of using gas with combined-cycle technology,” he said.

Australian Energy Company Limited chairman Allan Blood, who believes low-emissions centrifuge technology to remove moisture from the coal could be applied on a large scale, said a rail line could easily be built from the Latrobe Valley to a bulk shipping wharf at Port Anthony in south Gippsland, which is already being developed.

He said the private sector would foot the entire bill, with several infrastructure funds and global groups expressing interest to finance, build and operate the facility, and allowing other industries rail access to the port.

”Chemically it will be probably the most pristine coal in the world,” Mr Blood said.

His former company, Australian Power and Energy Limited, previously won an allocation of coal in 2002, which was later sold to another firm. Exergen lobbied the former Bracks and Brumby governments in 2005 and in 2009 for coal allocations, seeking support for a $1.5 billion export plan which was later dumped.

A Labor source involved in the 2002 allocation and who was around for the 2005 lobbying said: ”The brown coal export push is led by a group of fairly anonymous businessmen with no track record of success in project delivery or job creation.

”They spent most of the last decade pestering Bracks and Brumby and now they see a new target in Baillieu.”

Environment Victoria’s Mark Wakeham said Exergen was making ”the same bold claims” as it had before ”and it appears the Baillieu government is taking the bait”.

Federal Energy Minister Martin Ferguson cautiously welcomed the brown coal push, saying: ”Brown coal exports represent the potential to develop new technologies, industry and jobs in the Latrobe Valley.”

University of Melbourne climate change scientist Professor David Karoly said current use of brown coal for electricity generation had made Victoria’s carbon intensity worse than in China.