Howard's End: Magnesium Opportunity Raises Issues

The Government says it is seeking partnerships with local authorities to help drive economic development forward, but it's behaviour suggests something quite the opposite. John Howard writes.

Eyebrows were raised at an economic development forum last Thursday when Deputy Prime Minister Jim Anderton told more than 100 delegates, including many of the country's Mayors, that he and Industry NZ had been working on a plan to bring Australian company Pima Mining to New Zealand to establish a magnesium smelter which will use large amounts of electric power.

Trouble is, most of the Mayors at the forum knew nothing about the smelter proposal, but it has subsequently been revealed through media statements that Gisborne/Wairoa, Taranaki and Southland are the favoured districts.

Not surprisingly, some Mayors at the forum from the depressed areas said they were shocked that negotiations between the Government and the company had been going on behind the scenes of which they were unaware. They said they had not been given the chance to compete in an open and transparent process which has clearly involved the Government.

Two mayors said, "this magnesium smelter idea has just come out of the blue", and they were most surprised.

The establishment of the smelter is still at the feasibility stage but New Zealand is looking strong, according to a press release issued by Pima Mining Chairman, Pat Elliott.

The company plans to barge the magnesite raw material to a proposed $70 million smelter which would ultimately create 340 jobs. To cater for anticipated demand for light-weight magnesium metal used in motor vehicle manufacture, the proposed NZ smelter would have a capacity in excess of 50,000 tonnes per annum.

What is deeply concerning to me, is that by its allegedly secretive actions the Government has likely undone all the goodwill between itself and local authorities which it has tried to establish over many months.

So I have some serious public interest questions.

1. How is it that only some districts have insider knowledge and have been involved in the proposed smelter venture?

2. Why hasn't the Government advised all districts so that everyone could compete fairly in an open and transparent process?

3. Is the Government using its insider knowledge to direct overseas inquiries for NZ ventures to certain areas - perhaps for its own electoral advantage?

4. Is the Government withholding approvals for certain projects, like the proposed Dobson hydroelectric power station in Greymouth, for its own advantage in other districts.

The U.S. Government is renowned for making decisions surrounding pork-barrel politics but we don't want them here.

The sequence of events are these:
- Scoop carried a press release by Pima Mining on Wednesday 4 April
- Pima announced the NZ venture to the Australian Stock Exchange the same day
- Jim Anderton made his statement at the economic development forum the next day (Thursday) that he had been involved
- a report about the proposed smelter was carried in The Dominion last Friday
- Grey Councillor, Tony Kookshorn, was also reported Friday saying the proposed smelter is proof the West Coast needs the new hydroelectric power station at Dobson.

What is also worrying, is that one Mayor from the North, told me at the forum that he felt his district, after spending thousands of dollars in an attempt to attract a new venture, was gazzumped by the Government and the substance of the new venture went elsewhere.

Clearly, with a deregulated power industry, a power station and a port which can take barges, all the districts who wanted to, would be able to handle the capacities needed for a magnesium smelter.

But that's their choice to make through an open, transparent and accountable process.

The Government will likely be receiving correspondence from the districts expressing surprise and seeking explanations over how this situation developed. I expect they might also call for notification of any future projects or ventures that they might like to compete for. And afterall, the Government and its Departments must act in the public interest for all New Zealanders.

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