Australian company Plaman Global is progressing with plans to resurrect diatomite quarrying operations in the South Island, with the potential to earn billions of export dollars over the next three decades. NEIL RITCHIE explains.
PLAMAN RESOURCES, A SUBSIDIARY of Plaman Global, a private company headquartered in Sydney, has successfully raised the initial tranche of funding necessary to reopen the disused Foulden Hills quarry near Middlemarch in Otago, and turn it into a profitable operation.
This initial seed capital of US$20 million (about $28 million) from Goldman Sachs New Zealand Holdings (the local unit of the New York Stock Exchange-listed investment bank) will be used primarily to build a workforce and undertake more animal feed trials before reopening an old black diatomite mine in Otago.
The Plaman management team has decades of experience between them – including founder and chief executive officer Peter Plakidis (agriculture, mining, and investment banking); co-founder and chief financial officer Geordie Manolas (agriculture, mining, investments and finance); and animal nutrition and health president Rob Aukerman (animal nutrition and health).
Rob Aukerman says further funding, ranging up to several hundred million dollars, depending on the eventual scale of the project, will be required to eventually mine up to 31 million tonnes of the rare organic mineral known as black diatomite in Otago over an estimated 27 years.
Subsidiary Plaman Resources was incorporated last February with its registered office in Parnell, Auckland. Its shareholders are listed as tech giant Iris Corporation of Malaysia (700 shares) and Burleigh nominees of the Isle of Man (674 shares) according to the NZ companies Office. It plans to mine and process the black South Island diatomite – to be branded Black Pearl – in a staged process over two to three years.
The mine was formerly owned by Australian company Featherstone Resources, which was unsuccessful in developing a diatomite-to-fertiliser project after starting the original diatomite field at Middlemarch in 1997 and pouring over $15 million into research and development. It also built a million-dollar processing plant near Mosgiel. Production was minimal and the company was ultimately placed in receivership during 2014 after protracted litigation in the Australian courts (it was registered as a foreign company here).
Plaman Global, known for purchasing distressed assets, bought the mining operation for A$5 million through a deed of company arrangement in March 2015.
Last November, the Overseas Investment Office granted consent for Plaman to buy 42 hectares for $615,000, while the existing mining permit was transferred from Featherston Resources to subsidiary company Plaman Resources earlier this year.
The mine permit presently covers 42 hectares, but there is an application before the Overseas Investment Office for Plaman Resources to acquire a further 400 hectares of adjacent land. The mining permit (which has been extended to the year 2033) covers probable reserves of some 50 million to 100 million tonnes of diatomite.
“…major animal health companies are trying to develop a ‘clean food movement,’ given antibiotics and pharmaceuticals have come in for a lot of scrutiny in past years.”
Rob Aukerman notes that there is no complicated regulatory pathway ahead for diatomite as an animal feed supplement, given its existing approval in many countries. Plaman plans to export the majority of the processed mineral to major markets across the globe (most likely from Bluff), though some will be used here in New Zealand.
The black diatomite will be marketed as a feed additive that reduces antibiotic usage, stimulates growth and improves feed quality, as well as improving animals’ gastrointestinal health.
It is understood that Plaman Resource’s initial production of the mineral will start at approximately 100,000 tonnes per year and could increase fivefold within four years.
The project could employ 20 to 40 staff and more than 90 at the associated processing plant.
Plaman Resources recently appointed Craig Pilcher (pictured) as its New Zealand general manager – a Kiwi with more than 30 years experience in our mining industry, all of which has been in the South Island where Plaman’s operations are located.
Before joining Plaman, Pilcher spent nearly six years with Bathurst Resources, where he was most recently the general manager of domestic marketing and business development.
Looking ahead, he says plans start in 2021 with preliminary infrastructure work regarding mining diatomite from the presently disused Foulden Hills Quarry near Middlemarch, with production starting a year later.
He says recent raising of initial funding of $20 million will be used mainly for future land purchases, increasing corporate staff and further diatomite trials with prospective customers.
“More private (fund) raising is in progress,” he adds.
Prospective clients include large companies across the United States, Brazil, Mexico and Argentina – already committed to undertaking their own finished-product trials. Ultimately, top export markets will be “fairly evenly split,” across North America, South America, Europe and the Asia-Pacific region, Pilcher believes.
Sales will be on the back of successful feed supplement trials on poultry and pigs, with cattle next, and later, aquaculture and the pet sector.
Plaman Global’s president of animal nutrition and health Rob Aukerman says major animal health companies are trying to develop a “clean food movement,” given antibiotics and pharmaceuticals have come in for a lot of scrutiny in past years. “It’s the right time for our product. It’s natural, it’s non-antibiotic and it has broad applications.”
Public consultation will be important in getting organisations, such as the Otago Regional Council, Dunedin City Council, the Strath Taieri Community Board and the general public “on board”.
“We expect people will have a lot of questions, so there will be a fair bit of engagement,” he says.
There will be many full-time staff directly employed by the start of production with up to 40 employed at Foulden Hills’ mine and another 90 at the processing plant near Bluff.
Involved is the University of Otago’s geology department, which considers the Foulden Hills site as one of the country’s pre-eminent fossil sites, and hopes a part of the site will be preserved in perpetuity.
The Foulden Hills site, up to 1000 metres in diameter and 180 metres deep, was a volcano about 23 million years ago that later became a lake and then over 130,000 years became layered and filled with decaying, silica-bearing microscopic plant life.