Hon Shane Jones, Minister for Regional Economic Development
The Provincial Growth Fund (PGF) will invest in two pioneering business proposals for New Zealand, Regional Economic Development Minister Shane Jones announced today in the Bay of Plenty.
Geo40 Limited will receive $15 million from the PGF, made up of a loan and convertible note, to build and operate a large scale extraction plant at the Ohaaki geothermal site near Taupo, while Eco Gas Limited Partnerships will receive a $7 million loan to build a demonstration biogas plant in Reporoa.
“The technology developed by New Zealand company Geo40 is a world first that enables silica to be extracted from fluids that have been used to generate geothermal electricity. Once the silica is extracted, the geothermal water is returned to the reservoir,” Shane Jones said.
“The extracted silica will be exported for use in products overseas, such as paint, concrete and paper making. There’s been a lot of overseas interest in both the technology and the product.
“Geo40 has already invested in research and development by constructing a small commercial demonstration silica removal plant in Ohaaki. The new plant will be seven times bigger, with PGF funding going towards the plant’s commissioning and construction. The extraction process could also be extended to other geothermal plants.
“The PGF is investing in this initiative because it has the potential to strengthen New Zealand’s position in the geothermal and mineral extraction industries worldwide. It will create permanent, high-skilled jobs locally, as well as bring in export earnings that will have a flow on effect in the local community. Up to seventy jobs will be created thirty jobs will be created in the region supporting the plant.”
Support for Eco Gas to build a full-scale demonstration biogas plant will see energy, carbon dioxide and nutrients recovered from some of the 327,000 tonnes of food waste that goes to landfills each year in New Zealand.
“Biogas plants are common overseas, particularly in Europe, but this will be the first waste-to-energy plant of this scale in New Zealand. The biogas produced can be used for fuel, and could help achieve our carbon emission targets.
“If it proves commercially successful, it has the potential to act as catalyst for others being set up in regions nationwide.”
The proposed Reporoa Organic Waste Recovery Facility will be built on two hectares of land owned by T&G Global (formerly Turners and Growers), adjacent to their tomato glasshouse operation. T&G Global will buy the renewable energy from EcoGas and also supply its own organic wastes.
“The facility will take more than 20,000 tonnes of organic food waste a year from major local food manufacturers such as dairy factories, commercial bakeries, cool stores, milk sheds and fruit grading facilities to convert into biogas.
“These initiatives are consistent with the Government’s plan to build our productivity, by embracing innovative projects which have significant potential to deliver both economic and environmental benefits. It’s great that the regions can be at the forefront of this,” Shane Jones said.
Funding from the Provincial Growth Fund is approved in principle and announced, after which contracts are negotiated. Some funding may depend on completion of business cases. Payments are made once agreed milestones are met. These are set as part of contract negotiations, and differ from project to project.
A convertible loan (or convertible note) is a loan which converts into equity upon meeting a certain condition, in this case an IPO (Initial Public Offering).