The dangerous substance that no one wants

Friday, 28 February 2020

The Mataura River in flood close to the former paper mill where ouvea premix is stored inside.

This is the story of thousands of tonnes of a hazardous substance that no-one wants that has been sitting in Mataura since 2014.

It may have sat there quietly under the country's radar for a lot longer, except mother nature intervened and once the Mataura River started to rage during recent floods in eastern Southland, full attention swung back to the ouvea premix stored in the town's old paper mill.

Mataura residents were evacuated during flooding in early February and they are demanding the premix is finally removed from their town.

During the floods, while a State of Emergency was in place, a 500m cordon was put around the mill to keep people away.

* Deal to remove hazardous substance from Mataura canned

* Ouvea premix will still be moved if the Tiwai smelter closes**

Prime Minister Jacinda Ardern says something must be done to help the residents as they battle with the potentially dangerous substance, that can produce ammonia gas if it gets wet.

But how did it get there? Who owns it?

Gore District Council chief executive Steve Parry fronts up at a public meeting in Mataura, after the February flooding, to discuss the ouvea premix left in an old paper mill.

In Bahrain, businessman Frank Pollmann was following news of the flooding and the renewed angst about the premix as it unfolded online.

He knows exactly how it ended up at Mataura.

He has all the answers, and some six years later, as corporate giant Rio Tinto is getting flayed by Environment Minister David Parker, he is offering New Zealand a potential solution.

But would anyone be interested in working with him?

You see, Pollmann was a director of Taha Asia Pacific, the company that stored 10,000 tonnes of the premix in the former paper mill, and another 10,000 in warehouses in Invercargill before it went into liquidation in 2016.

'People think we are environmental pirates who lined their pockets and ran away,' he said.

Speaking from Germany, Pollmann says he feels terrible about the situation the people of Mataura are now in.

'I feel very, very bad about what is happening there and I can't imagine how people are feeling,' he says.

The people of Mataura have made their feelings clear. It was standing room only at a heated public meeting in the town the week after the floods, where council bosses were heckled and a police presence was needed.

NZ First list MP Mark Patterson has launched a petition calling on the House of Representatives to urge the Government to take any means necessary to remove the substance from the Mataura paper mill and relocate it to Tiwai Point.

Images of the flooding in the Mataura township taken from a helicopter. The paper mill is the large building on the far left of the river.

Environment Southland chairman Nicol Horrell said his council was seeking legal advice on New Zealand Aluminum Smelter's responsibilities regarding the ouvea premix, and Environment Minister David Parker has also sought legal advice.

So how did the ouvea premix get to Mataura in the first place?

The Gore District Council, in a press release it issued on February 12, 2020, says it was dumped there under the cover of darkness in mid-2014.

Taha Asia Pacific had a contract with NZAS at Tiwai Point, near Bluff, to turn its dross, a by-product of the smelting process, into ouvea premix. It had plans to build a plant to turn the premix into fertiliser and sell it.

The contract was put up for tender and was not renewed with Taha Asia Pacific. The company then went into liquidation.

Liquidator EY formally disclaimed the premix in December 2017 after trying for over a year to find a buyer for it. A solution had been found that would have shifted offshore to be disposed of. Due to commercial sensitivity no further details were ever released about the potential deal.

It's understood a contractor had been found to remove it but all that was missing was the money to pay for it.

The liquidator said it inquired with the Taha parent company based in Bahrain in 2017 regarding providing some funding but had no response.

The liquidator also found that there was a potential case to answer by the directors - Pollmann, John Anthony Witter, also of Bahrain, and Maurice John Shaw of Invercargill in relation to their compliance with directors' duties under the Companies Act.

That was not pursued because the directors lived in Bahrain so it was unlikely to result in a return to creditors.

A sign on the door of the paper mill building at Mataura.

And, while there might be public calls and pressure from the Government for NZAS to take it back, it does not own the premix.

In 2018, Gore District Council chief executive Steve Parry brokered a $4m deal to have the premix moved over six years, with the stuff stored in the paper mill being moved first.

The old mill in Mataura is right beside the river, and there were clearly fears that floodwater could have breached the mill and created an ammonia gas reaction if the premix got wet.

About 1500 people live in Mataura and the mill is right in the middle of the town.

And that is why the Government has stepped in to try and fast-track its removal.

Tagging has recently appeared on the former Mataura paper mill buildings, where ouvea premix is stored inside.

Pollmann says he'd be willing to help.

Pollmann is the founder and chief executive of Taha International Corporation, that works in the international steel and aluminium industries, offering process solutions for aluminium dross and steel slag.

The solution, he says, is to turn the premix into a product that industries could use.

And, Taha's steel slag conditioner, called Alobriq is such a product, he says.

Taha could send a sample shipment of Alobriq to New Zealand Steel for evaluation.

If approved by New Zealand Steel, the way would be clear for the smelter to turn the premix into steel slag conditioner at its site and then supply New Zealand Steel with the product, Pollman says.

Frank Pollmann director of Taha International, and Ryan Cavanagh, then chief executive NZAS, in front of the new Taha Asia Pacific Ltd dross Processing building at Tiwai on opening day in 2011.

'Taha would assist in the set-up of the plant and give the recipe for making the product … this has the potential to allow for a speedy removal of all premix while either being cost neutral but most likely profitable for both NZAS and NZ Steel.'

Environment Minister David Parker is leading negotiations between the Government and Rio Tinto, and when approached about Pollmann's proposal, he said neither he nor the Ministry had the technical expertise to judge the proposed solution.

He has asked officials to contact Pollmann and pass on to him contact details at NZAS and New Zealand Steel so that he could discuss his ideas with them directly.

Mataura resident Laurel Turnbull has been battling for six years to get the premix moved from the town as part of the Sort out the Dross group.

She was cynical about Pollmann's plan.

Whether the plan goes ahead remains to be seen, and some would ask why Pollmann hasn't offered to help before now.

He says he did everything he could to help the liquidator find a buyer for the premix after Taha Asia Pacific went into receivership.

'I worked closely with the liquidator to see if possibly an overseas party was able to take the material and called all contacts I had in India, which seemed a possibility at the time. Unfortunately none of this came to fruition, as I recall the shipping costs were too high from New Zealand to India.'

Pollmann said Taha Asia Pacific had its fair share of problems in New Zealand.

NZ First List MP Mark Patterson launched a petition in Mataura for the ouvea premix, which is housed in the unused Mataura papermill buildings, to be removed and taken back to it's origin at the Tiwai Point Aluminium Smelter.

'We have a terrible reputation in New Zealand and I think that portrayal is highly unfair.

It was a subsidiary company they set up to create fertiliser that had been developed in collaboration with the University of Bonn, Germany, and was certified for sale in the European Union, Pollmann says.

He's the first to admit that the five years was far from plain sailing, but the company had no choice but to go into liquidation after smelter management decided not to renew its contract.

He alleges Rio Tinto was slow to put the contract renewal out for tender, taking over a year.

'We kept asking for information. Eventually, they said they wanted a 20 per cent reduction in our costs.

'We were in no position to subsidise their profits. It was a very difficult decision to make but it feels like we've just left burning houses all over the place.'

He also claims Rio Tinto offered to buy the company's plant at the book price, but would not pay a technical fee to continue to operate it using Taha's processes, the intellectual property it owns.

'I don't want to be seen as slagging off Rio Tinto because we had a very good relationship with them for four and a half years. But we lost $10 million given the investment that we put in and the cost of building the plant.'

Mataura School pupil Soul Ramage, 11, principal Susan Dennison and teacher Laura Heenan talk about how flooding in the town affected them.

'The loss of our contract in New Zealand had a very detrimental effect on our company, both financially as well as reputational. Taha was portrayed in the media as this ruthless corporation that went to New Zealand, filled their pockets and left a mess behind.'

Among the company's creditors were 21 employees and 43 unsecured creditors, most of them Southland businesses.

'I am aware that all our employees were left out of pocket for their last salary, my son being one of them. I am not aware that there were any other unsecured creditors unpaid.'

He says Taha Asia Pacific and Taha Fertilisers biggest creditor was the parent company. The book value of the assets of TAP alone was more than $4 million.

'…keep in mind that until a week before we were given the boot, we had all reasons to assume that our contract would be renewed. Do you think we would have invested huge amounts of money in the New Zealand companies in the first half of 2016 if we were not given clear signals by the smelter that we would continue our work there?'

Stuff put Pollmann's claims to Rio Tinto, and a spokesperson replied: 'NZAS doesn't disclose confidential information between it and suppliers, however, we were and remain very disappointed at the performance of Taha, and the subsequent events that have occurred.'

Taha Asia Pacific had been hitting the headlines for all the wrong reasons in Southland.

There were issues with emissions at the company's trial site in Invercargill in 2012 when he says the plant was operated without air purification equipment.

'Some genius couldn't wait for three weeks for that to arrive and went ahead, and so the neighbours complained.'

Environment Southland investigated and the trial site was shut down.

Taha Asia Pacific, its manager Mark Egginton and Crawford Enterprises were sentenced in the Environment Court after ouvea premix was found at Crawford Enterprises Coalpit Rd site near Edendale in 2014.

Two staff members needed medical treatment after coming into contact with the substance.

Pollmann says 70 tonnes of premix, which had a particle size that was too big to be used in fertiliser production, was going to be blended into the concrete used for the foundation of its plant it planned to build.

It also turned out the company didn't have a resource consent to store the premix at the Edendale site.

'The event at Edendale was a disaster for us and it was very costly - there was a $1 million clean-up involved. It came from bad decision making and it was very detrimental to our reputation.'

Pollmann also blames poor decision making for the reason the premix ended up at Mataura, while the company was waiting to set up a permanent plant.

The Gore District Council issued the company a retrospective consent to store the premix at Mataura in 2016.

It also ordered Taha Asia Pacific to pay a $2.3 million bond for any clean-up if the company folded.

Pollmann said they appealed that decision to the Environment Court.

But a hearing never went ahead as the company went into liquidation.

'We simply were not able to put up the money and build a factory at the same time.

'We believed that the money was better used to create the facility that would enable us to empty the warehouses, rather than parking the money. We were not in a position to do both.'

For now, under the 2018 deal, a truck and trailer load a week of the premix is being moved to Tiwai Point, where it is being processed by Inalco, and it is likely to be gone between two or three years.

But that is not fast enough for Mataura residents, who say the risk of another flood hitting the region is too high to wait any longer for it to be gone.