Public Works Act

In November 2019 the Dunedin City Council (DCC) announced, as part of a move to save and possibly purchase Foulden Maar, it had issued "notices of desire" under the Public Works Act to owners Plaman Resources and their receivers KordaMentha. Foulden Maar, the small 23-million-year-old extinct volcanic crater near Middlemarch containing fossils and climate change data of incalculable scientific value, was under threat of total destruction by the transnational mining company.

But media exposure and public outrage stalled the Plaman Resources application with the Overseas Investment Office (OIO) to buy more land surrounding the 42ha it currently owns, and in June 2019, forced it into receivership. Its application with the OIO to buy the 400ha farm surrounding the maar has since been withdrawn (see my articles in the three previous Watchdogs - 151, 150 and 149 - for the full story).

The recently formed Save Foulden Maar Incorporated Society would like to see the site in public ownership, to be preserved in perpetuity as a scientific reserve for future generations and for furthering our understanding of climate change and our geological past. The KordaMentha Website states: "We are an advisory and investment firm that helps clients throughout their lifecycle. We help grow and maximise value. We help protect them against financial loss and reputational damage. And we help them recover value in tough times".

Plaman Resources received a $32m loan from Goldman Sachs through the NZ registered financial service provider NZ Commercial Ventures Ltd (incorporated in January 2018 and 100% owned by Goldman Sachs). At the time of going into receivership, Plaman had cash reserves of $18m, leaving it $14m short to pay back the loan. The 42ha of land Plaman owns has a book value of $631K and the mining licence a book value of $4.9m.

In May 2019 the Dunedin City Council voted to support the preservation and protection of Foulden Maar as a scientific resource and the October 2019 local body elections voted in a new Green Mayor. The November announcement is the new Council's first action. It is designed to prevent any future mining taking place at Foulden Maar and effectively renders the mining licence to be valueless.

Documents recently released from Kiwi Rail under the Official Information Act, show meetings had taken place about the feasibility of using rail rather than road to transport the raw diatomite (diatomaceous earth) 100km from Middlemarch to the processing plant in Milton. Discussions had taken place about the possibility of accessing the Provincial Growth Fund for finance to strengthen the tracks and build specialised locomotives and carriages. These talks, however, had not progressed very far and the documents note that this would require the support of the rail track owners, which is the Dunedin City Council.

Ramping Up The Spin

A newly obtained document - "Information Memorandum From A Site Visit In April 2019" - only two months before it went into receivership, shows Plaman continued to ramp up the spin. In it, the company claims a price of $US1,684 per tonne for processed black diatomite (trademarked Black Pearl) as a stock feed additive and $US855 per tonne for white diatomite. The latest United States Geological Survey Mineral Commodity Summaries 2019 states diatomite prices per tonne vary from $US10 to more than $US1,000 for speciality markets including art supplies, cosmetics and DNA extraction, and the average price is $US380.

Diatomite used in many products and massive reserves exist throughout the world, but it is not widely used or recognised as a stock feed additive. However, Plaman's April 2019 document quoted support from many unnamed 'customers' and also claimed a university study backed the efficacy of their product. But again, it failed to name the university. What's more, black diatomite is wet and when dried, black diatomite becomes a poor quality white.

This April 2019 document states Ministry of Primary Industries (MPI) had given Black Pearl "regulatory status" in New Zealand. What had in fact been given, on 27 March 2019, was a Certificate of Compliance for export with the statement that "...the product is an oral nutritional compound that makes claims only in a nutritional context".

Plaman, however, continued to contravene the Agricultural Compounds and Veterinary Medicines (ACVM) Act 1997 in the document, with a myriad of claims pertaining to mycotoxin binding, increased body weight, improved resistance to disease, its ability to minimise antibiotic use etc. This is despite assurances it gave in an email (4/2/19, and obtained under the Official Information Act) to MPI that it had ceased to do so. It was willing to promulgate these claims without a proven or peer reviewed product, a credible price or market.

Plaman also continued to claim it would export annually 500,000 processed tonnes of Black Pearl. This would increase international production by an incredible 15% and virtually overnight turn New Zealand into the second biggest producer in the world. Confirming arguments made in earlier Watchdog articles, emails to MPI from Plaman show that Black Pearl, as a stock feed additive, would make up only 2% of bulk. This would entail finding stock feed producers willing to purchase and add Black Pearl to 250 million tonnes of stock feed annually. Of course, much of Black Pearl may still have been intended as bulk fertiliser additive on palm plantations in South East Asia, as was the original 2014 plan.

Selling Sophisticated Products To Unsophisticated Clients

Plaman co-founder and Chief Financial Officer, Geordie Manolas, had worked for Goldman Sachs, and to quote Netflix comedian and political commentator Hasan Minhaj "...every time someone says Goldman Sachs, you know something bad happened". In his show former Goldman Sachs Vice-President Greg Smith describes how it operates. "The quickest way to make money is to take the most sophisticated product and sell it to the least sophisticated client".

The latest Plaman documents obtained had a Goldman Sachs logo printed on every page. It would seem that Manolas and co-founder Pete Plakidis were playing on Goldman Sachs' reputation as being synonymous with money and success, hoping the investment bank's involvement would make the mining of Foulden Maar appear legitimate and more realistic than it really was.

But in the end, Goldman Sachs has been left with $14 million owing to it. Local trade creditors are owed $145,000. Plaman New Zealand General Manager, Craig Pilcher, has returned to his old job with coal miner Bathurst Resources. Malaysian tech giant Iris Corporation, the majority shareholder (51%) of Plaman Resources, invested $A13m in the mining venture back in 2014, but since the receivership has disappeared from the story.

The only asset left of any value appears to be the 42ha of Foulden Maar. Receivers KordaMentha were about to put this up for sale on the open market, but this has been pre-empted by the Dunedin City Council. The Public Works Act allows for forcible acquisition to create public reserves, but the process could take a year, during which the Council must demonstrate at least three months of good-faith negotiations before it can enact a compulsory purchase. What sort of money will be involved is not yet known. Back in 2014 Plaman paid $650,000 for the purchase of the 42ha, rather more than the reported current capital and rateable valuation of $365,000.

KordaMentha is not allowing geologists onto Foulden Maar. The Otago University Geology Department has been visiting the site since the early 1960s. The current crop of geology students is missing out on this valuable education, and internationally significant climate change research is on hold. It is unlikely the Dunedin City Council will want to be the sole purchaser and will probably look to the Government for a contribution.

Deafening Silence From Government

However, the Government has been conspicuous with its' total silence. Recent decisions allowing the toxic mining waste dump at Waihi to go ahead, OMV oil and gas exploration permits, and the expansion of goldmining at Macraes, along with exempting agriculture from the emissions trading scheme, all suggest this Government does not take climate change or ecological protection seriously and does not want to get off-side with big business.

In 2003, Goldman Sachs created a significant nature reserve in Tierra del Fuego in Southern Chile, effectively gifting it to the Chilean people, after sustained opposition stopped the logging of an ancient beech forest. Emeritus Professor of Botany at Otago University, Sir Alan Mark, has written to Goldman Sachs requesting a similar action be taken with Foulden Maar.

It took the investment banker over 40 days to reply with an unsigned and undated letter, sent via snail mail, from "Mailroom Services" with the one line stating his correspondence "...will be forwarded to the appropriate constituents for response". Such a philanthropic act would greatly enhance Goldman Sachs' somewhat tarnished image.

Saved From Destruction For Private Profit

The DCC's move to use the Public Works Act to possibly force a sale, has not resulted in a backlash from the few Councillors who voted against preserving Foulden Maar, nor from business lobbyists or from amongst the general public. There is widespread understanding of the importance of the fossil record, and climate change data the maar contains and a healthy cynicism towards a rapacious transnational company wanting to destroy it all for private profit.