Why Waste Waimate

In May 2023, 60% Chinese-owned company South Island Resource Recovery Limited (SIRRL), applied with the Overseas Investment Office (OIO) to acquire sensitive land and significant business assets. This followed the lodgement of resource consents with Waimate District Council and Environment Canterbury in September 2022 to build and operate a $350m waste-to-energy plant in Glenavy (in a classic case of greenwashing, it is called Project Kea. Ed.). At the request of local and regional councils, former Environment Minister David Parker called in the resource consent application, referring it to the Environment Court for determination.

On the advice of Land Information NZ (LINZ - which includes the OIO), former Land Information Minister, Damien O'Connor, called in the OIO application. Former Finance Minister Grant Robertson also determined SIRRL's OIO application to be of "National Interest", therefore, requiring the Finance Minister's sign-off as not contrary to NZ's national interests. Following Finance Minister Nicola Willis' determination that the investment was not contrary to NZ's national interests, LINZ Minister Chris Penk and Associate Finance Minister David Seymour granted SIRRL consent to acquire the 14.85 hectares of farmland and significant business assets on March 18, 2024.

Inconsistent Reports

Ministers Penk and Seymour received a LINZ-generated recommendation report to assess the OIO application, and Minister Nicola Willis was provided with a LINZ-generated National Interest Assessment Report (NIR). Both reports were prepared by the same authors at the same time. However, they have significant inconsistencies.

The recommendation report stated that SIRRL's application would provide the following benefits to New Zealand: increased jobs, significant capital expenditure, the introduction of new technology and business skills, and energy production. The recommendation report described the economic benefits as "Strong"; in contrast, the NIR report stated that the financial benefits were positive and negative and that the investment posed a medium risk to the economy and society. The recommendation report listed the creation of long-term jobs as a benefit, yet the NIR report clearly shows that the investment will displace employment elsewhere, offsetting any benefit.

The recommendation report listed new technology and skills as benefits; however, the NIR report states that current Government policies don't support technology reliant on waste generation. The recommendation report cited energy production as a benefit, yet the NIR report stated that the plant's energy production may detract from the Government's renewable energy goals.

The recommendation report accepted the applicant's projected energy output calculations as fact without providing any reference source to support this claim. The report also listed the $350 million capital expenditure as a benefit. However, China Tianying, which will fund most of the investment, is carrying about NZ$2.4 billion in debt, which raises questions about the applicant's ability to realise the capital expenditure, a fact that should have been present in the recommendation report.

Furthermore, the 33-page document that Penk and Seymour received contained significant inaccuracies, false information and errors. It grossly inflated the applicant's credentials and discredited submitters' concerns while accepting the advice of the applicant's legal counsel that its resource consents were likely to be approved by the Environment Court. This came despite LINZ receiving Ministry for the Environment (MfE) information suggesting the applicant's claims needed revision and contestability.

Additional MfE material questioned many aspects of the applicant's proposal, casting doubt on the likelihood of the applicant being granted resource consent. Instead, LINZ contradicted this material by stating there was "no evidence" that the resource consent wouldn't be approved. The recommendation report provided reference (albeit, only in the small print) to REL founder Gerard Gallagher's conviction for fraud⁽¹⁾ However, there was no mention of the company's illegal waste storage at Belfast⁽²⁾, Christchurch.

Third-Party Submissions

SIRRL's application received 30 third-party submissions to the investment, all of which were opposed. The recommendation report provided the following about the submissions; "generally, the submissions are not relevant to the assessment of whether to grant consent, as they do not relate to the benefits likely to occur". However, submitters' concerns included:

The applicant's character and history; the investment's inconsistency with Government policy; the questionable benefits including projected energy generation, renewable energy claims, and long-term employment figures; the proposal's viability including economics, waste availability; the lack of infrastructure to support the plant; and the $350 million budget which research shows to be well below comparative European benchmarks for similar sized proposals. All were deemed irrelevant by LINZ.

Application Not Fully Notified

LINZ received an application to acquire sensitive land assets and significant business assets on April 13, 2023. On May 25, 2023 (30 working days later), LINZ sent a letter to two parties who had made earlier enquiries as to whether SIRRL had made an application with the OIO to acquire land. The May 25 letter stated that LINZ had now received an application from SIRRL to acquire sensitive land assets but omitted that the application also included the acquisition of significant business assets. The letter also said: "If you wish to make a submission, please do so by June 15, 2023".

Upon receiving the application on April 13, 2023, LINZ waited 30 working days before sending a confirmation to potential submitters. This delay significantly reduced the submission timeframe from a possible 45 working days to a mere 15 days, leaving the Waimate community with a minimal window to voice their concerns. This raises the question: why did LINZ wait so long before acknowledging the application?

Had the full scope of SIRRL's application, including the acquisition of significant business assets, been made available to submitters, the content of the submissions received would have been significantly different. The community's understanding of the potential impact of the application would have been more comprehensive, leading to more informed and relevant submissions. Despite the lack of information, the Waimate community made significant efforts to submit its concerns. However, LINZ used this lack of information to discredit the relevance of the submissions, stating that they "do not relate to the benefits likely to occur".

Applicant's Credentials Inflated

SIRRL is 40% owned by Renew Energy Limited (REL). The LINZ recommendation report described REL as follows: "REL is a New Zealand company which provides sustainable landfill diversion solutions for waste. It has spent three years conducting extensive research and feasibility assessment for the establishment of New Zealand's first waste-to-energy plant".

REL, with the involvement of CNTY, have been trying to establish a waste-to- energy plant in New Zealand since 2017, involving failed proposals in Westport and Hokitika⁽¹⁾. REL's involvement in previous proposals has embroiled the company in controversy, including the illegal storage of waste at a site north of Christchurch, which is well documented on the Environment Canterbury Website⁽²⁾.

While attempting to commission a plant in Westport, REL worked with ERP Group, which operated a waste shredding and baling plant in Sockburn, Christchurch; REL allegedly owned the baling plant. ERP was then illegally storing this baled waste in two locations in Christchurch. In a Stuff article dated May 28, 2022⁽³⁾, ERP owner Michael Corcoran stated that the waste in question was being baled and stored to fuel a waste to energy (W-t-E) plant proposed for Waimate. In 2023, ERP was placed in liquidation, resulting in the company walking away, leaving behind around 10,000 bales of waste at a significant cost to its landlords to dispose of⁽³⁾.

After Environment Canterbury (ECan) served ERP Group abatement notices to remove the waste from the Christchurch sites, REL and SIRRL director Paul Taylor attempted to secure a heads of agreement (HOA)⁽⁴⁾ between Timaru District Council and ERP to store the baled waste at Redruth Landfill in Timaru. The HOA had provisions for ERP to transport the waste from the Christchurch locations to the Timaru landfill for storage while a W-t-E plant was being commissioned in Waimate. Around the same time, the companies also attempted to store waste in Oamaru, Palmerston, and Burnham, south of Christchurch. These negotiations show how closely ERP Group and REL were working together.

The LINZ recommendation report did not provide any information about REL and ERP Group's illegal waste storage, even though third-party submissions provided LINZ with that information. To date, REL's operations have included undercutting alternative waste management companies to acquire waste it has illegally stored in the hope of getting a W-t-E plant commissioned.

A November 27, 2021, Stuff article⁽³⁾ highlighted the impacts on ERP's competitors, including WasteCo: "Pressure on the local authorities to do something about the bales is also coming from ERP's competitors, who believe ERP can undercut them by not paying the costs of disposing of the rubbish at an approved disposal facility such as Kate Valley. The advantage ERP gained by not paying disposal costs was in the millions of dollars, Storm claimed" (Storm was the boss of WasteCo. Ed).

REL does not operate waste transfer stations, collection, or recycling services and is listed on the NZ companies' register as a waste disposal company. While the company may have been able to temporarily divert waste away from landfills, the illegally stored waste was ultimately landfilled. So, having been made aware of this information through submissions, how can LINZ justify describing REL as "providing sustainable landfill diversion solutions for waste"?

China Tianying (CNTY)

In its recommendation report, LINZ described CNTY, the 60% Chinese owner of SIRRL, as follows: "CNTY operates more than 400 waste processing facilities spread across 34 countries in Asia, Africa, Europe, the Middle East and America". The report continued: "On available information, it is assessed that CNTY is involved in the operation of approximately 20% of global W-t-E plants".

The small print contained at the foot of the page states the following: "This figure (the 20%) is calculated through the operation of 400 or more waste processing facilities that CNTY operates globally compared to the reported 1700 identified W-t-E plants operating globally. It is realistic that not all of CNTY's 400 plants involve W-t-E facilities; however, this is its core business". The small print admits that the information LINZ used to reach the 20% calculation is misrepresented, yet they still included it.

LINZ provided a reference for the above information, including a link to an obscure source in Indonesian. What is evident when visiting the source is that the information provided by LINZ is not entirely the same; LINZ included additions. Nowhere in the Indonesian reference text does it describe CNTY as being "involved in the operation of approximately 20% of global W-t-E facilities". SIRRL's planning report⁽⁵⁾ contained in its resource consent application provides the following description of CNTY:

"CNTY is a Chinese registered company with significant experience in energy recovery and waste handling. Since 2009, CNTY has designed and delivered 14 EfW (energy from waste) plants throughout Asia and have a further eight currently under construction". Therefore, according to the applicant's information, CNTY has delivered a maximum of 22 waste-to-energy plants throughout Asia. This misuse of information by LINZ questions the reliability and honesty of the report Ministers Penk and Seymour used to determine this application.

Resource Consent Likely To Be Granted

The LINZ recommendation report states: "The applicant has provided a copy of advice which considers it more likely than not that consent (for the resource consent applications) will be granted by the Environment Court". And goes on to say: "We are unaware of any evidence that the relevant consents will not be granted. Although there is some uncertainty, based on current evidence we consider the development of the facility is likely to proceed".

The small print reference for the above text states that the information was provided in a letter of advice to Robert Hughes, a partner at Anderson Lloyd law firm acting on behalf of LINZ. The small print also credits the source of the letter as SIRRL's lawyer, Mark Christensen. Waimate District Council and ECan have confirmed to Why Waste Waimate, a local community group opposed to the incinerator proposal, that LINZ approached them for an opinion on the likelihood of the Environment Court granting SIRRL's consent to build a W-t-E plant. Both councils responded that commentary would be inappropriate.

LINZ asked the Ministry for the Environment the same question, to which it responded: "It is a decision of the Court, not MfE". Therefore, the recommendation report suggests LINZ has formed its view of a future Environment Court decision based only on a letter provided by the applicant's lawyer. Of course, it's in SIRRL's best interests for LINZ to believe that resource consent will likely be granted, as this decision will affect the LINZ recommendation and the Ministers' final decisions. However, it is ridiculous to recommend to the Ministers that the applicant's resource consent was likely to be granted based on advice provided by the applicant's legal counsel.

MfE Advice

If we consider LINZ's comment, "based on current evidence, we consider the development of the facility is likely to proceed", then we have to ask the question: what evidence? On February 16, 2024, the LINZ recommendation report was provided to Ministers Penk and Seymour, and the LINZ National Interest Assessment report was supplied to Finance Minister Nicola Willis the same day. The same two people authored both reports.

The LINZ report that Minister Willis received stated that it was prepared with advice from the Standing Committee for Overseas Investment (SCOI), a cross-Government agency group of advisors. This group included members from the Ministry for the Environment (MfE), New Zealand Security Intelligence Service (NZSIS), Ministry of Foreign Affairs and Trade (MFAT), and Health New Zealand/Te Whatu Ora.

Unlike the recommendation report provided to Penk and Seymour, the national interest assessment report contained numerous references from MfE questioning multiple aspects of the applicant's resource consent application, including the applicant's figures. "MfE officials consider the applicant's environmental claims may be inaccurate or do not take into account the NZ context and that the presentation of the claims is not robust and appears at times to be misleading. MfE considers the life cycle assessment provided by the applicant does not include the necessary assumptions and calculations to explain how it reached its emission figures".

MfE went further by saying: "The extent to which the investment may be regarded as contributing to 'renewable' energy is unclear. The applicant claims glass, metal, and concrete will provide 8% of the 'renewable' energy generated by the facility. However, MfE has noted that these are non-combustible materials and will not contribute to renewable energy and that claims such as these call into question the reliability of the applicant's other calculations".

MfE also stated that the proposal does not support current Government waste minimisation policies and renewable energy goals and threatens recycling initiatives, saying: "The applicant is likely to enter into waste supply contracts with waste companies and local councils and may seek to impose penalties on local councils for not supplying enough waste. This may increase the risk of recyclable material being sent as feedstock to the facility".

The national interest report also stated that the investment posed a medium risk to NZ's economy, society, and national interest and that there is "significant regional and national public opposition to the facility, significant public opposition to the investment, and concerns around the impact of possible emissions on the health and well-being of people, animals, and crops". Mention was made of additional W-t-E proposals throughout NZ that had also received significant public resistance.

The report mentioned that Te Whatu Ora intends to submit on the applicant's resource consent application concerning air quality and human health, and potential visual and landscape effects will be the subject of expert witness evidence in the environmental court process. The report states that the EPA and regional and local councils have requested further information from the applicant concerning the proposal's technology, logistics, and effects.

Finally, MfE doubted the company's ability to acquire the required 365,000 tonnes of waste annually from the South Island to fuel the plant. This shows that, at the time of preparing its reports, LINZ was aware of significant evidence casting doubt on the likelihood of SIRRL's resource consent application being granted. Therefore, stating: "We are not aware of any evidence that the relevant consents will not be granted" is untrue. This is another example of Ministers Penk and Seymour being provided with inconsistent and incorrect information in the report they used to determine SIRRL's OIO consent.

Environment Court Just As Likely To Rule Against Project Kea

The Environment Court is just as likely to rule against SIRRL's resource consent application to build and operate a waste-to-energy plant for a raft of reasons, including the proposed site is within a flood zone with the applicant intending to develop the facility and store large amounts of waste and hazardous materials within that flood zone, activities outside of the district plan. Emissions are argued to be dangerous to human and environmental health.

The site is currently productive farmland. There is a lack of infrastructure to support the W-t-E plant. The application requires a water take consent to subtract 2.5 million litres from proposed onsite bores daily. Waste incineration contradicts the Government's waste minimisation policy and threatens the Government's global commitments to reduce greenhouse gas emissions. And lastly, there is strong opposition.

Company Operating In NZ Without OIO Approval

SIRRL was registered on the NZ Companies' Register in March 2021, and at the time, it was 60% overseas-owned. However, SIRRL's application to acquire significant business assets was not lodged until May 2023. In these two years, SIRRL lodged two resource consent applications in late 2021 to build and operate a waste-to-energy plant. These resource consent applications included multiple technical reports commissioned by SIRRL.

Page 23 of the resource consent application "Operational Technical Overview"⁽⁶⁾ report states that SIRRL has engaged with waste suppliers and "has signed conditional Heads of Agreements to provide the yearly waste volumes to the plant". This activity has involved SIRRL building relations with suppliers to compete against legitimate NZ waste management companies.

In July 2021, SIRRL engaged the services of public relations firm Convergence, which has built and operated a Website to promote SIRRL's proposal to construct a W-t-E plant in Waimate and has provided public relations outreach for SIRRL. These practices show that SIRRL has been operating as a business since registering on the NZ Companies' Register in March 2021, without prior approval from the OIO to acquire significant business assets. Does this constitute a breach of the Overseas Investment Act? LINZ says no. However, NZ has an Act that ensures overseas companies seek the appropriate consent to operate in NZ.

Communication With LINZ

On April 22, 2024, a suspected breach of the Overseas Investment Act was lodged on the LINZ Website. The complaint stated that SIRRL had been operating in NZ as a business for over two years without OIO consent. A letter was received on April 30, 2024, stating that LINZ has investigated this claim and found no evidence of SIRRL breaching the Act.

Further communication from a LINZ Senior Solicitor, who was also a co-author of both LINZ reports, stated the following: "When a business is considered to have been 'established' will depend on the circumstances of each case. In this case, we consider that SIRRL will 'establish' its business when it has constructed and is operating the waste-to-energy plant".

However, page 9 of the LINZ recommendation report, under the heading Business Activities, states the following: "The Applicant was 'established' in March 2021 for the sole purpose of constructing and operating the facility, which will convert both municipal and construction solid waste, otherwise destined for landfill, into electricity".

Furthermore, under the heading Applicant Business Operations on page 7 of the LINZ-prepared National Interest Assessment report, it states: "The applicant was established in March 2021 for the sole purpose of constructing and operating the Facility". Both LINZ-generated reports clearly state that the applicant (SIRRL) was established as a business in March 2021. However, the same LINZ solicitor inconsistently states that SIRRL is yet to be established.

CNTY Carrying Enormous Debt

An article⁽⁷⁾ in the Changjiang Business Daily states that CNTY carries a considerable debt of 8.5 billion yuan. When writing this, that debt has ballooned to 10.7 billion yuan ($NZ2.4B). This debt increases the risk of SIRRL not fulfilling the capital expenditure benefit of the investment. Therefore, this information should be relevant to the benefit test. However, it was not disclosed in either report.

Chinese Government Ownership

The national interest report also contained information about China Tianying and its shareholders and directors. Although the small print mentions the company is partly owned by the People's Republic of China (PRC), large amounts of the national security section about CNTY and the PRC have been redacted.

Willis Vetoes LINZ Condition

As mentioned, the national interest report provided to Nicola Willis cast doubt on the applicant's ability to acquire the 365,000 tonnes of waste required annually to fuel the plant, from within the South Island. The report also included a condition by LINZ that the applicant only source waste from within the South Island to fuel the plant.

When Willis determined the investment was consistent with NZ's national interests, she went further. She removed the LINZ condition, effectively allowing the importation of waste into the South Island. If the company requires the importation of waste to fuel the plant, it casts serious doubt on the validity and viability of the proposed incinerator.

There is also the question of why Willis removed the LINZ condition. In an article⁽⁸⁾, Newsroom's David Williams asked Willis why she removed the condition. She responded, "having read the assessment report, I formed my own view which was that the Environment Court was better placed to assess any impacts through the resource management consent process".

However, the subsequent fast-tracking of the incinerator proposal has removed SIRRL's resource consent from the Environment Court. This raises a further question: was the Minister aware that SIRRL was on the pending fast-track list when she made those comments? In the same article, Willis was also asked if she was lobbied to remove the condition; her response was, "I do not recall having been lobbied on this matter".

Fast Tracking Inclusion

When the Government released the list of 149 projects that made the fast-track list, it stated that the screening process for these proposals was robust and included input from MfE. However, given the amount and nature of the material provided by MfE to LINZ for its national interest report, it is hard to accept that MfE approved SIRRL's inclusion for fast-tracking. Therefore, was MfE advice again disregarded by Government Ministers, this time to get this proposal included for fast-tracking?

Waitaki National MP

Waitaki National MP Miles Anderson met with the incinerator opposition group Why Waste Waimate (WWW) on September 20, 2023. The National candidate was asked: If his electorate opposes the plant, would he submit against it? His response was: "Yes, it's my job". On September 27, 2023, at a pre-election meeting of the candidates in Waimate, Mr Anderson was asked for a yes/no answer to the question; do you support the incinerator proposal? His response was NO.

In May 2024, Mr Anderson was again invited to meet with WWW and a group of farmers who live near the proposed incinerator site. Concerns were raised by the group about the potential of SIRRL pursuing fact-tracking of its incinerator proposal. Mr Anderson stated that he didn't think the Government would fast-track the proposal as it didn't meet with the Government's renewable energy manifesto requirements. He also suggested that the Government couldn't fast-track anything in the Environment Court. Mr Anderson said he was unaware whether SIRRL had lobbied Ministers to fast-track the proposal, something he reiterated in a follow-up email to WWW in July 2024.

Following the release of the fast-track list and SIRRL's inclusion, Mr Anderson was quoted in an Otago Daily Times article⁽⁹⁾ as saying: "We need the energy", and that the environmental effects were "debatable". As Mr Anderson knew, the incinerator proposal had earlier been referred to the Environment Court, which is undoubtedly the best place to "debate" the environmental effects. Since Mr Anderson believes the Environmental effects are "debatable", and fellow National Minister Nicola Willis has said the best place to determine the environmental impacts is the Environment Court, why has this Government then removed the proposal from the Environment Court?

Government Lobbying

WWW and the wider Waimate community have fought hard since September 2022 to get SIRRL's resource consent heard in the Environment Court, where it would be afforded the scrutiny that this proposal requires to determine its environmental and human health impacts. Only to have the coalition Government recklessly remove it from the Court, taking with it the community's ability to submit on the resource consent.

Since the public release of its proposal, the company behind the incinerator has said it will request that its resource consent be publicly notified so community can have input in the process. However, with the help of its public relations firm, Convergence, which describes itself as "Government lobbying specialists", it has in fact, been manoeuvring to exclude community input by expediting its proposal through the fast-track process. Fast-tracking the incinerator is applying a significant shortcut to a highly complicated and involved proposal, which will lead to mistakes with dire consequences for the environment and human health well beyond the 35-year life of this plant.

OIO Consent Should Be Retracted

Considering the reach and resources available to LINZ, it is alarming that a proposal of such significance has resulted in numerous errors, misuse of information, essential information omissions and significant inconsistencies. Why Waste Waimate believe that LINZ's recommendation report should be discredited and SIRRL's OIO consent should be retracted.

References

1. "A Burning Question" (North & South, George Driver, October 2024)
2. "REL waste bale storage - information for the community" (ECAN, 6 May 2021)
3. "Landowners left with mountain of rubbish after waste operator goes bust" (Stuff, Martin Van Beynen, 28 May 2022)"
4. Local Government Official Information & Meetings Act Request
5. Project Kea: Energy from Waste Plant; Planning Report
6. Project Kea: Operational & Technical Overview Report
7. "China Tianying's 8.5 billion debt is overwhelming, and the pledge rate of major shareholders is 83%, and the 70 billion project has no progress, and another 17 billion investment has been signed" (LaiTimes, Shen Yourong, 4 August 2024)
8. "Finance Minister overrules advice on waste-to-energy facility" (Why Waste Waimate)
9. "Waste-to-energy plant could skip consultation rounds" (Otago Daily Times, Nic Duff, 11 October 2024)

Watchdog - 167 December 2024