Land Information Minister Sage says Sullivan Mine didn't meet economic benefit test
By Jonathan Underhill
Feb. 7 (BusinessDesk) - Bathurst Coal couldn't persuade Land Information Minister Eugenie Sage that its plan to buy Solid Energy's mothballed Sullivan Mine on the Denniston Plateau was a good enough deal for New Zealand.
She declined the application using the sensitive land test and said the deal failed to provide a convincing economic benefit or job creation case.
“Given the ongoing volatility of the coal price there is considerable uncertainty about whether the proposal would result in any economic benefit or jobs for the West Coast," Sage said. "Indeed, Bathurst has itself suspended operations at the larger Escarpment Mine in Denniston."
Solid Energy's creditors will get at least 60 cents in the dollar when the failed state-owned enterprise's mines are all sold, up from the previous range of 45 cents to 55 cents. In August, a Bathurst-Talley's Group company gained Overseas Investment Office approval to buy Solid Energy's Stockton, Rotowaro and Maramarua mines and other property for $96 million. Bathurst stock has soared 214 percent in the past 12 months on optimism it would benefit from a recovery in coking coal prices.
But Sage says the lack of activity at 19 hectare Sullivan Mine site is likely to continue, so the sale doesn't provide a benefit.
"I don’t consider the benefit will be, or is likely to be, ‘substantial and identifiable’ as required by the Overseas Investment Act," she said. "The Sullivan mine has not been operational since 1995 and Bathurst had no plans to re-open it."
She made clear that her decision went against official advice. “As Minister of Land Information, I weighed up the OIO’s information on this matter very carefully. While its advice was, on balance, in favour of allowing the purchase, I decided there was insufficient benefit to New Zealand to consent."
The decision was made jointly with associate Finance Minister David Clark. But Sage wears two hats in looking over resource-rich Crown land with the conservation portfolio. Forest & Bird is appealing against the green light given to Stevenson Mining to mine coking coal at Te Kuha on the Buller River. The conservation minister must give their assent to the project because it extends over into stewardship land administered by her department.
The value of the Sullivan Mine deal wasn't disclosed in the public version of the OIO decision, which noted the mine hadn't been operational for 20 years and that Bathurst "had no firm plans" to re-open it and wouldn't do so until coal prices were more favourable.