Tuesday, March 03, 2015

Another bailout for Solid Energy

Back in 2013, the government bailed out Solid Energy after Don Elder's empire-building basically destroyed the company. Just 18 months on, its softening us up to do it again:

Prime Minister John Key is refusing to rule out giving taxpayer cash to troubled mining company Solid Energy, which he says is in a "very delicate position".


Yesterday Key said injecting any more money into Solid was not the Government's preferred position, indicating its private debt was the banks' problem.

"They have a reasonable amount of private sector debt. We've made it quite clear to the company and to the bankers involved that debt is their responsibility," Key said.

"The banks have an exposure to the company and the question is how do they best believe they can get some of that money back."

We've seen how this goes over troops to Iraq: the "least preferred option" suddenly becomes government policy, with not even a Parliamentary vote. And Key is pretty obviously playing the same game here, planning to throw good money after bad.

He shouldn't. Solid Energy is a failed business with no future. We own it as a legacy, because it was important a hundred years ago. But now its just a dirty source of pollution which we need to shut down if we want to save the planet. Rather than bailing it out again, Key should let Solid Energy fail and instead spend the money on something useful.