As new information came to hand, the OIO tried to assess whether the proposed mine would benefit New Zealand, whether the company could stay afloat and if exporting ground-up fossils was legal.
The Overseas Investment Office has revealed Plaman Resources’ application to buy 432 hectares neglected to mention the fossils despite having commissioned an ecological report which stated the scientific importance of fossils found there.
It said it also asked Plaman Resources serious questions about its financial viability and whether the export of ground-up fossils was legal before the company went into receivership.
Plaman Resources was applying to buy 432 hectares of land in Middlemarch to expand a proposed mining operation to the point of commercial viability. The maar it intended to mine for diatomite contains important climate and fossil records.
The application is now on hold while the OIO waits for information from receivers. Third party submissions are still being accepted.
The application to purchase the land was lodged in February 2018. Normally applications take six months to process. The OIO said “complexities” are the reason for the delay in assessing Plaman Resources’ application.
When Plaman Resources made the application to purchase the land it did not refer to any fossils at the site. Further inquiries driven by the OIO in mid-2018 unearthed an ecological report which Plaman Resources had commissioned but not included in the application.
“This report refers to the site’s scientific values, including its significance for fossils. We considered the report as part of our assessment of Plaman’s application.”
Plaman Resources is pointing to the OIO application delay as being the reason it ran into financial issues.
The OIO process includes an investor test to ensure the investor is of good character, has the business experience or acumen relevant to the investment and has demonstrated a financial commitment to the investment.
For non-residential land the purchaser must prove the purchase is of benefit to New Zealand and for areas over five hectares a rural land directive applies, which also assesses whether there is identifiable benefit.
It was estimated the mining operation would create 100 jobs and the mine would be in operation for 27 years.
“The OIO consulted several organisations and individuals about the scientific, heritage, ecological and investment implications of the application. On several occasions the OIO sought additional information from Plaman to help with the OIO’s assessment of the application.”
In April 2019 the OIO asked Plaman Resources for further information about the financial viability of their plan to turn diatomite into stock food for pigs, chickens and turkeys.
Business commentator Rod Oram pointed out the claim Plaman Resources would generate US$1 billion per year in revenues meant the diatomite mine would earn 22 times more revenue per employee than New Zealand’s most profitable goldmine.
Animal nutrition experts also expressed doubt the product would be a sought-after item for industrial animal farmers suggesting it would be an expensive way to add minerals to animal food.
The backlash and protected objects
The OIO said new information it received regarding the high value New Zealanders place on Foulden Maar raised concerns and a letter was sent to Plaman Resources June 17.
“The new information raised concerns that, when considering the factors collectively, Plaman’s proposed benefits may not be substantial and identifiable in the context of this investment and the unique values of the land.”
A further wrinkle was added in the form of the Protected Objects Act. Among other things, the Act prohibits the export of fossils, which it lists as natural science objects. The OIO has revealed it asked Plaman Resources to consider how this could affect its plans.
Even with a team of scientists on hand, if the mine operated everyday, 24 hours a day, it would be impossible to sift through and remove fossils from 163 tonnes of diatomite likely to be excavated each hour.
When Newsroom talked with animal nutrition experts, one assessed the local market for the product to be likely confined to organic farmers and suggested sales might amount to three buckets per year. At peak production Plaman Resources expected to produce 500,000 tonnes of stock-food additive.
The OIO also noted local concerns “placed doubt on the ability of Plaman to obtain the resource consents it needs to mine on a large scale”.
Receivers Kordamentha has said all options are on the table, including recapitalisation or a full or partial sale of the assets.
Any offshore investor would need to apply to the OIO to purchase the 42 hectares of Foulden Maar Plaman Resources currently own.
The OIO decision would need to be approved by Minister for Land Information Eugenie Sage and Associate Minister of Finance David Clark. If either of the ministers conclude that an assessment criterion is not met, the application will be declined.