Two directors of Taharoa ironsand mine quit over governance concerns

Friday, 30 March 2018

The village of Taharoa south of Kawhia is home to iron sand miners and their families.

Two independent directors of an iwi-owned iron sand mining company have quit over concerns about the way it's being run by a Wellington businessman.

Directors Mike Simm and Nigel Foster confirmed they had resigned from the board of Taharoa Ironsands, which took over the lease of the iron ore mining operation south of Kāwhia Harbour from the Australian company Bluescope last year.

They stood down in November.

Local landowners took over ownership of the Taharoa iron sand mine last year after more than 40 years of Government and private ownership.

Simm, a professional director, said: 'I wasn't prepared to continue because of my disillusionment with some of the governance practices that were taking place.'

Meanwhile the Employment Relations Authority has ruled against the company in a case taken by the E Tū union – saying that it should continue paying workers an allowance it had arbitrarily halted last year.

* Jobs go as part of Taharoa iron sands mine is shut down**

Mike Simm has quit as a director of Taharoa Ironsands, citing concerns over governance.

And adding to the company's woes – the Waikato Regional Council has charged it with unlawful discharge of a contaminant after 4000 litres of diesel spilt from its plant into the Wainui Stream last August.

It is due to appear in the Te Kūiti District Court on May 16.

Taharoa Ironsands exports more than $150 million worth of sand each year, mostly for use in Asian factories.

The company is a subsidiary of Taharoa Mining Investments, which is 60 per cent owned by descendants of Ngāti Mahuta through their land-owning incorporation, Taharoa C Block.

The rest of the shares are held by Melrose Private Capital, owned by Wayne Coffey of Wellington, who is also C Block's chief executive.

When the mine changed hands, it was the first time in more than 40 years that locals had taken a stake in its ownership, but it was losing money and faced possible closure.

In an unusual deal, Bluescope paid $51m in cash for Taharoa Ironsands to take the operation off its hands. In return, the company took on $76m of liabilities.

Soon after the mine changed ownership at least 16 workers were laid off, hitting the tiny community hard.

Stuff revealed in February how locals were upset at the treatment of workers, mining in wāhi tapu (sacred) areas and lack of information from the C Block committee.

They have accused Coffey of staging a takeover – he is managing director of Taharoa Ironsands and makes most of the decisions, while the committee has no say in the management even though it's the majority owner.

Workers were furious when Coffey announced he would no longer pay them an integrated work allowance worth $4.60 an hour which they'd been collecting since 1985.

Coffey argued the allowance was no longer relevant and shouldn't have to be paid but the ERA said that 'defies common sense' and said it was payable.

Wayne Coffey, right, pictured in Wellington in 2004 with a hovercraft he planned to use for harbour tours.

The parties are in talks over how the money owed – which has been held in trust – will be paid back.

Simm said treatment of workers was one of the factors behind his decision to resign and he described Coffey as a 'polarising character'.

He confirmed Bluescope had paid $51m essentially to get rid of the business.

'The new company assumed the risks.

'When the price of iron ore is up it's very profitable, when the prices go down it can very quickly eat away at any reserves you've got – it's a high risk business.

'The price has gone up since the ownership changed hands and so it's probably been favourable to Wayne and the company.'

Simm said he had concerns over whether Taharoa C Block was being kept fully informed of what was going on.

'The story is more about how Taharoa C are being treated. Is the company being transparent enough to them and are they being looked after given they are 60 per cent shareholder?'

Stuff put detailed questions on a number of issues to Coffey and C Block chairman Hoturoa Barclay-Kerr, most of which went unanswered.

Coffey said in a statement the committee answered to its 1970 shareholders, not the media.

He said in the past five years the incorporation had produced 'record profits and dividends for its shareholders'.

He claimed the incorporation and the mining business had 'exceptionally strong cash reserves' and no external debt, but did not answer questions about the $76m of liabilities taken over from Bluescope.

The incorporation had never had any Government subsidies or settlement money, he said, and paid substantial tax while pumping more than $50m into the local community.

'It seems that in the eyes of some the only thing worse than Māori business failure is Māori business success.'

* This story has been amended to note that the two directors resigned in November, and to remove a statement that the consideration paid to buy the company was $1.