Taking Stock 30 April 2026

Chris Lee Writes:

Yet another potential project has popped up, signalling a pathway back to the first world status that our country pretends to possess.

An Australian company has released some detail of its plan to initiate a project that would create significant government revenue and jobs, while reducing New Zealand’s reliance on imports.

It is sobering to add that it would need a difficult and grown-up debate before the Australian plan could advance. It would certainly require NZ to accept that after nearly two decades of dreadful leadership the country’s ability to foster its people has slid at least two grades below the current first-world countries like Singapore, Japan, Switzerland and The Netherlands.

The debate will be on the extraction industry, a subject recently raised by Oceania Gold, Santana Minerals and a number of new miners, some based around the West Coast, particularly Reefton.

The Australian private company Victoria Hydrogen & Ammonia Industries Ltd (VHA) believes it has private farming agreement in Southland to access some of New Zealand’s billions of tonnes of high-value lignite coal.

The project has a potential value of tens of billions. VHA believes that with modern chemistry it can convert the lignite coal to fertiliser (urea), enabling NZ to be self-sufficient and from the process extract invaluable by-products for use in diesel, aviation fuel, petrol, synthetic natural gas, and ammonia, the latter the newest to attract the maritime industry.

With the help of Connor English (a former CEO of Federated Farmers and accepted as an agriculture expert) VHA last week released details of the proposal to the media.

Brother of former Minister of Finance (and, briefly, Prime Minister) Bill, Connor English is as influential as anyone in the sector and through a family trust he has 5000 milking cows, as well as other rural investments.

VHA has been smart in working with him, and smart in signing a memorandum of understanding with Ngāi Tahu.

It believes it can make use of the lignite coal in a carbon-neutral manner.

It has a plan to work with the landowners whose pasture sits above quite shallow veins of enough lignite to feed a 50-year project.

Its plan it says, simply involves rearranging the molecules of lignite which is present in Southland to an extent of billions of tonnes.

The process would also feed electricity to the grid, as a by-product.

The farmers would be amply compensated for the access to small parts of their land. As the mining venture moves from paddock to paddock, rehabilitation of the disturbed land would be undertaken.

If the rehabilitation is anything like the success of previous gold mining in places like Millers Flat and Waikaia the farmers would end up with a better paddock than had been the case before, and a pocketful of cash.

To achieve its goals, VHA is now preparing for a 12-month formal feasibility plan, to be followed by finalising land access, negotiating with Iwi, councils and government and sounding out potential partners. It will be raising money in New Zealand from investors and potential partners.

It has the certainty that a huge Chinese company will provide the technology for the coal conversion. That company is currently using its technology for a similar project in Zambia.

When I spoke with the CEO, Allan Blood, I pointed out the obstacles that would need to be overcome.

My reservation is that in NZ, even an obviously lucrative project involving extraction will be noisily opposed by those who believe NZ can afford the status quo, preferring to seek growth in the low-paying seasonal tourism sector and the loss-making Viticulture sector.

A project that is carbon-neutral and offers by-products to reduce carbon in other sectors (shipping industry - ammonia as an example) is likely to find that New Zealand’s leadership would be intimidated by sometimes shrill activists, threatening to glue their hands to the roads, probably supported by an anti-development media.

Lignite coal, like gold, exists under the ground to a nett value of tens of billions, easily sufficient to restore the balance sheet and the revenue accounts of NZ Inc. It can be mined in a low emission manner, with an aspiration to be carbon neutral.

To what extent does NZ have to watch its living standards and infrastructure fall before we allow a few paddocks to be disturbed?

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Of course VHA is not the first organisation to recognise the untapped value of Southland's multi-billion tonnes of lignite.

One of New Zealand’s smartest engineers, Dr Don Elder, will be remembered by many for his role in pursuing a lignite coal to synthetic gas project around 15 years ago.

Elder was CEO of Solid Energy, once the NZ Coal Department. Solid Energy owned coal mines on behalf of the government and at one stage produced profits of tens of millions per annum.

Elder foresaw the immense potential of lignite coal to reduce New Zealand’s dependency on oil.

With government encouragement he set about developing his project but was hijacked by some foreign exchange losses which provided an easy excuse for Key’s government to withdraw support, step away from providing essential capital, and isolate Solid Energy as a disposable asset.

Solid Energy closed mines, cancelled the lignite project, lost money, Elder resigned and assets were sold at fire sale prices to mostly Australian buyers.

Clever, eh!

Many would argue that Elder was scapegoated by self-focused (for re-election) politicians. 

The lignite has continued to grow in value as the various components of the energy sector have soared in price.

If our media wants to join the business sector’s plan to be aspirational and look for ways to change our low productivity, it could start by accessing skilled analysts with the communication skills to inform middle-ground New Zealand.

As far as I know there is no immutable law that requires New Zealand to slump into third world status.

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Considering Santana Mineral’s request for consent of its gold mining project at Bendigo (Cromwell), the Fast Track panel is now hearing verbal submissions from those who made written submissions.

Most will be offered twenty minutes to talk about their response. Ngāi Tahu has had a generous allocation of time.

Although the private land involved is not of direct relevance to local iwi ownership, some iwi told the panel they preferred the gold to remain buried.

This appears to be a change in position, having earlier been engaged in discussions regarding potential involvement in the venture.

Investors will be reassured to know that iwi has no right of veto.

In the case of some of the parties, the time will be best used if they focus on the most important evidence in their submission. The panel requires evidence rather than ideology or sentiment.

All the submissions have been published on the Fast Track panel’s website. Some are based on ideology or contain inaccuracies.

Santana had been given a week to respond to written submissions.

Its response largely referenced scientific and technical evidence, while addressing the more subjective allegations that it had not communicated and engaged fully with iwi, most specifically Kā Rūnaka, which represents four rūnanga in the area.

It could be argued that this allegation shifts the focus away from scientific matters and toward interpretation of communication records and expectations.

By raising this issue, iwi effectively invited a detailed response from Santana, including full disclosure of its engagement.

Santana responded accordingly with records of numerous meetings with iwi, on site and on marae, along with details of emails, video calls, and phone discussions. It also outlined the 100 plus community meetings it had advertised and held.

It detailed attendance at community meetings and the issues raised.

For example, some twenty meetings held in a nearby tiny hamlet, Tarras, were minuted showing whether none, 1, 2, 6, 10 or, once, 20 people arrived. It recorded that the main questions were on how to apply for jobs.

It also noted the absence of a small number of vocal objectors from these meetings, at least one of whom lives in Wellington, intent on monetising academic activism, as far as I can observe.

The Santana response was clinical, commercial and legalistic, with clear evidence of the level of communication undertaken.

The meeting notes also recorded iwi discussions regarding their expectations for involvement.

In my opinion, Iwi made an error in alleging a Treaty breach as that allegation had to lead to some cold, perhaps damaging, disclosure of Iwi expectations. 

It is also my opinion that Iwi made an error in choosing its advisors. One was a lawyer trained by Russell McVeagh, now running his own practice, with a special emphasis on consent procedures and the Treaty. 

Iwi also used PWC.

While fee structures are not disclosed, in some comparable cases adviser incentives have been aligned with achieving commercial outcomes, which can shape negotiation positions.

If the minutes of a very recent Santana/Iwi meeting are undisputed, as is so far the case, the "compensation" sought should the project proceed seems to be linked to the $180 million obtained by Iwi when Meridian and Contact Energy sought consent renewals for hydro schemes on the Waitaki River.

Given Meridian is 51% Crown-owned, and the river is a Crown asset, this $180m figure was probably reached with Iwi to cover Iwi obligations to maintain environmental issues around the river. The amount seemed extreme at the time and still does.

It is clearly not a benchmark for a project planned on private property. Nor is it even close to potential value-add.

The disclosure has inevitably raised heated debate in some media outlets, though not in the mainstream media (MSM), unless you, kindly, included the dreadful Dunedin paper on the definition of MSM. (It needs a new editor. Its editorial direction seems click-bait focussed).

The Fast Track panel will focus on the evidence presented. It will assess environmental considerations alongside the economic implications of the project.

At this stage, the key evidence indicates that Santana has undertaken extensive efforts to communicate with iwi and the wider community.

When the oral submissions conclude in the coming weeks, the panel will move to private deliberations.

It will weigh the scientific evidence relating to environmental impact and consider this alongside the economic benefits.

We expect that any differences between iwi and Santana can be resolved over time and that there remains the potential for a constructive and mutually beneficial relationship.

Such a value might be offset in many ways, but a figure anything like $180 million is as realistic as a promise by Santana to provide the winning Lotto numbers for the draws of Lotto over the next 500 weeks.

Santana could offer to fund a Guardian of the Clutha River board and invite Ka Runaka to provide a chairman.

It could invite Iwi to be an advisor on environmental improvements to the river. For example, judicious planting can improve a waterway, as can anti-erosion rock walls.

There are many wise experienced people who could contribute to a panel of river guardians.

Nationally, Iwi make up 40% of the highly-paid labour force, and management at mines.

Iwi has immense revenue from other gold mining ventures in the South Island.

I believe it is in the interests of Iwi to combine with Santana to expedite a best-of-class mining project, as Santana has prepared.

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The Infrastructure Minister, Chris Bishop, and his under-secretary, Simon Court, are addressing some of the issues that add cost but rarely add value to consent processes.

Court states that the era of expensive, subjective, cultural reports will end before this election.

May it be replaced by a request for simple good manners and respect for others, and an end to extravagant costs, impeding well-designed mines.

Travel

6 May - Christchurch - Johnny Lee

6 May – Wellington – Edward Lee

28 May - Kerikeri - David Colman

29 May - Whangarei - David Colman

8 June – Nelson – Chris Lee (3 appointments left)

9 June – Blenheim – Chris Lee (5 appointments left)

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