While the Ravensdown fertiliser co-operative is excited about the potential for producing urea nitrogen fertiliser from Southland coal, its hopes of becoming self-sufficient in another mineral have proved less fruitful.
Ravensdown and Solid Energy are investigating the feasibility of building a plant to manufacture urea from lignite.
Last year, Ravensdown also began exploratory mining of New Zealand's only known commercial-scale phosphate rock deposits, near Milton in South Otago.
The co-op said it hoped to become self-sufficient in superphosphate for more than 20 years.
But chief executive Rodney Green now says the deposits are not as large as had been hoped.
Late 2014 operating date
The lignite-into-urea plan aspires to produce more than a million tonnes of urea - worth $1.5 billion - each year. Solid Energy chief executive Don Elder says up to 500 new jobs could be created.
At present, New Zealand has to import most of the urea it uses on farms to boost grass growth, and is thus at the mercy of international commodity prices and exchange rates.
If the plan goes ahead, a urea plant could be operating in eastern Southland by late 2014. A feasibility study will be completed by early next year.