Week in Review

Answers from the fossil miner

After a wall of silence the company at the centre of the scheme to turn scientifically important fossils into animal food spoke out. Despite high stakes and plenty of talking, answers - aside from a veiled threat - remained mostly elusive.

Plaman Resource’s eggs are all in one basket. Australian-based co-founder and chief executive Peter Plakidis confirmed there’s nothing else going on for the company other than mining interests in Otago.

“We’ve invested all our funds, they're in New Zealand, in the Otago region.”

The company owns 42 hectares in Middlemarch and a permit to mine diatomite there. It has an exploration permit for Hindon and prospecting permits for other areas in Otago. Plakidis said over $30 million has been invested in the Middlemarch project.

So far there’s been no mining.

Currently it’s attempting to purchase a property surrounding the land it owns. This would allow the mine to spread out its infrastructure. Plans shown in June 2018 show waste areas, a pit and truck loading areas sprawling into the larger property.

A June 2018 Plaman Resources project overview document showed mining infrastructure spread out beyond the currently owned land (white) and onto the block Plaman has applied to purchase (pink). Original Map Source: DCC CC BY 3.0

After Newsroom highlighted the scientific importance of the Middlemarch site there has been scientific and public outrage. The diatomite, which Plaman Resources has consent to mine, is rich in fossils from 23 million years ago. News these could be pulverised to make pig food shocked even former Prime Minister Helen Clark.

For the first time since Newsroom began reporting on the proposed Middlemarch mine, the company responded to a request for an interview. Multiple media outlets were offered a range of 15-minute slots with Plakidis to choose from. First in, first served.

Plakidis has a long history in banking, but none in mining.

Aside from Otago mining-related permits and 42 hectares in Middlemarch, Plaman Resources has a $28 million bridging loan from Goldman Sachs.

Plaman Resources has said once the proposed mine hits full production of 500,000 tonnes per year its annual revenue will be $1 billion. Newsroom columnist and business commentator Rod Oram raised an eyebrow at this, calculating this projected revenue would be 22 times higher per employee than New Zealand’s most profitable goldmine.

Oram described the business model as “eye-popping”. With a $28 million loan the company is planning on building a $36.8 million processing plant in Milton as well as buy out Iris Corporation, the reputationally-problematic Malaysian majority shareholder. Plaman Resources also needs to raise around $300 million in capital to build the first stage of the project. 

Is there evidence ground up fossils grow bigger animals?

Plakidis believes the product is a high-value commodity. He plans to turn it into fossil fuel for animals. He said it help animals grow bigger, however, he can't share evidence of this.

He says standing in his way is commercial sensitivity and the Overseas Investment Office application to buy a neighbouring block of land. This application has taken over twice the normal amount of time.

Black Pearl, the product Plaman Resources has trademarked, is ground up fossils of algae. It’s a chalk-like, silica powder.

In the case of the Middlemarch mine, there is a high amount of organic matter. Normally this decreases the value of diatomite. Plaman Group has turned the organic matter, or the fossils, in Middlemarch’s diatomite into a selling feature.

Plaman’s website talks of fulvic and humic acid. Scientists have snorted at any implication this could be a causation of improved animal nutrition. Their best guess is trace elements present in the diatomaceous earth might be beneficial to animals.

One suggested there are far cheaper ways of adding trace elements to animals’ diets and suggested industrial animal-rearing operations work out stock food costs to the part cent.

Among other claims, Plakidis said this fossil-filled sandy dirt could reduce antibiotic use.

“It's natural. From the responses they're seeing so far, we've seen some really encouraging signs and improvements in feed conversion, weight gain, etc. Mycotoxin binding. We've seen some meaningful improvements across a number of nodes and that may help some of them move away from antibiotics.”

Evidence for now is shrouded in commercial sensitivity.

“These are very commercially sensitive and for us to be able to set a pricing point for our product, we need to go through the trial process with actual customers because the customers determine the value of Black Pearl in their own operations.”

“If we don't get the land [the larger farm], the community doesn't need to be concerned about setting aside those five hectares because it would already be on the neighbouring property.”

He said information from the trials would be publicly available closer to the time the product launches, which would be at some point after 2022 after stage one of the project was built. 

He said so far product trials had been done with chicken, pigs and turkeys.

“In the future we're also going to be doing trials across aqua, animal companions, which is pets, such as dogs, beef, dairy and potentially human nutrition as well.”

What will happen if the OIO application is rejected?

Under question is what will happen if the OIO application is rejected. Will the company still go ahead and mine the 42 hectares it owns?

In that case Plakidis said the company would likely mine the 42 hectares in its entirety.

He said 80 percent of the diatomite at the site is on the 42 hectares owned by Plaman Resources. If the company gets to purchase the larger block land which would give it space for infrastructure and the remaining 20 percent of the diatomite, an offer of setting aside five hectares for scientists is on the table.

OIO rejection could mean the offer of saving anything is snatched away based on “revisiting the economic proposition”.

“If we don't get the land [the larger farm], the community doesn't need to be concerned about setting aside those five hectares because it would already be on the neighbouring property.”

Previous reporting based on a leaked Goldman Sachs report suggested without the additional land, full production could not be met. The project would be over-capitalised and not feasible.

Dr Nic Rawlence, the director of Otago University’s paleogenetics laboratory has been one of the scientists opposing the mine.

“It honestly sounds like a temper tantrum. ‘Well, if we don’t get our way, we’ll just mine it anyway’ - almost like in spite.”

Rawlence would like to see the entire diatomite deposit protected from mining.

How would he improve the 'not well written' bullet point?

Plakidis offered an apology for what he described as a “poorly-written” bullet point exposed in a leaked report meant for investors’ eyes only. In a section on key risks and mitigating factors the report is dismissive of local protest saying:

"Any appeal to the Environment Court is likely to come from a small number of local residents, who are not well-resourced and will not have comprehensive technical reports to the same extent as Plaman Global would have."

How should the key risks and mitigating factors bullet point have been written? For the first time in the interview, Plakidis pauses before responding.

“I think we should have been clear that we want to engage in detailed community consultation.”

Has Dunedin's Mayor been given a copy of the leaked Goldman Sachs report?

Dunedin’s Mayor Dave Cull wrote to Plaman Resources asking for a copy of the report.

Cull told Newsroom he has been given a quick look at the 112-page report but was not given a copy. He said the mining proposal will be discussed at a council meeting on Tuesday.

Plakidis confirmed the report had not been given to Cull. When asked how he thought the public could trust the company without transparency he said:

"The genuine desire for us is to run a very high standard of community consultation."

Who has Clayton Cosgrove been lobbying?

The leaked report also revealed Plaman Resources had engaged the lobbying skills of former Labour MP Clayton Cosgrove to “secure approval” for the mine. Cosgrove left the party in 2017, but is a regular at parliamentary functions.

The report says:

"Clayton has outstanding relationships with the ruling Labour Government and is doing everything possible to ensure a decision is made by the relevant ministers as soon as possible."

When asked what Cosgrove had done for Plaman Resources, Plakidis would not say who Cosgrove had talked to on behalf of the company.

“We have a long list of advisors. Clayton is one of them. I can't really go into much detail apart from he provides us with the counsel as does many of our other advisors.”

He said all meetings which had been held were focused on educating people of Plaman Resources plans.

What questions were answered?

While most questions were side-stepped, partly answered, or not answered due to commercial sensitivity, two clear answers was given.

The diatomite, when removed from the pit, will be 65 percent water. There's been conjecture the drying process will involve coal. Plakidis said it had been decided LPG will be used rather than coal or diesel. 

The other answer was in response to a query whether Plaman Resources has interests anywhere other than Otago.

“No.”

Read more:

Unjustifiable vandalism and grand promises

Fossil-dirt nutrition claims under doubt

Dunedin Mayor demands facts from fossil-mining company

Who is the fossil mining company?

Opposition grows to fossil mining project

Dunedin's 'Pompeii' to be mined to make pig food

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