Solid Energy lost more than $60m in biofuels

Solid Energy's five-year foray into biofuels cost it more than $60 million, although it is unclear how much was clawed back from selling the business in parts.

Details of the failed venture were released under the Official Information Act.

The state-owned coalminer bought Biodiesel New Zealand (then called Canterbury Biodiesel) from founder Paul Quinn in 2007.

It initially paid $2.3m for 80 per cent of Biodiesel NZ and raised its stake to 90 per cent a year later. It bought Quinn's remaining shareholding in 2010 for $1.

During the half-decade in command of the company, Solid Energy spent $5m improving the existing Addington biofuel refinery which transformed used cooking oil into biodiesel.

It also built a $17m canola oil pressing plant at Rolleston, near Christchurch, in 2009/10 which was part of an agricultural contracting arm of the business that Solid Energy built from scratch to supply canola oil. The businesses clocked up $38m in operational losses from 2007.

They were sold as two separate businesses after Solid Energy decided it wanted out of the loss-maker last year.

On Tuesday Solid Energy strategy manager Bill Luff told Campbell Live that Biodiesel NZ was the worst mistake the company made in trying to diversify.

"I think Biodiesel sticks out a mile: It's probably a business - the old adage - you don't go into businesses that are based on government subsidies."

Alarm bells over the cost of carbon and fuel that were ringing when Biodiesel NZ was bought never amounted to real changes in the market and the business always struggled, he said.

In five to 10 years the company "may make a lot of money for somebody", he said, but Solid Energy had got in much too early.

Luff would not talk yesterday.

Solid Energy pumped a total of $62.3m into the biofuels business.

Both parts of Biodiesel NZ were bought for undisclosed sums by the managers of the failed subsidiary with help from outside partners after Solid Energy's massive restructuring late last year.

Last month the Addington biofuels division was bought by fuel business manager Martin Johnson and former production manager Karl Hatton along with long-time customer Stark Bros and another silent partner. It has since been renamed Green Fuels.

In November the Rolleston oil pressing plant and oilseed contracting business was sold to agribusiness manager Nick Murney, South Canterbury vegetable exporter Southern Packers and Midlands Seed.