11 Aug 2016

Bankrupt company may not be able to pay for dross clean up

10:06 am on 11 August 2016

Details of how a bankrupt company has left a huge environmental legacy in Southland - and might not have enough money to clean it up - have been revealed in a new report filed with the Companies Office.

Tiwai Point aluminium smelter.

The failed companies worked with dross from the Tiwai Point aluminium smelter. Photo: Wikicommons

Bahrain-owned Taha Asia Pacific, was put into liquidation on 2 August.

Sister company Taha Fertiliser Industries went into liquidation yesterday.

The two companies took dross from the Tiwai Point aluminium smelter, extracted surplus aluminium from it and prepared the remainder for conversion into fertiliser.

At the time of liquidation, questions were raised about would happen to unprocessed dross scattered around Southland.

A report written by the liquidators and filed with the Companies Office has given new details about the scale of this problem.

"A major issue involving the Company is the storage of approximately 24,000 tonnes, mainly in one tonne bags, of dross residue at several sites in Southland," the report said.

"Dross residue is not easily transported and we understand requires resource consent and specific precautions to be safely stored."

At least two local authorities in the region have already complained about the problem.

One authority, Gore District Council, is owed a bond of $2.3 million for continued storage of the dross at nearby Mataura but that fee has not been paid.

The report to the Companies Office carried an inference that there might not be enough money in Taha's accounts to deal with all of the dross.

There is just $10,687.78 in the bank and a further $3000 in a trust account, according to the report.

By contrast, secured creditors are owed $1,479,122.79.

There were further unspecified debts and an unspecified value in plant and machinery.

The liquidators said they have been approached by some potential buyers of those assets, but were not saying how much they are worth for commercial reasons.

They added that New Zealand Aluminium Smelters were negotiating with a new company to process their dross and it was most likely that whoever won this contract would buy Taha's assets.

Meanwhile, it has been further revealed that Taha Asia Pacific went into liquidation a day after a five-year contract to process dross at Tiwai Point expired.

This was also contained in the liquidators report.

It said Taha Asia Pacific's access to the smelter was revoked at that time.

A short term extension to the contract was then offered by the smelter management but Taha management said the terms of the offer were uneconomic and turned it down.