There's no scandal in the PM's uranium shares, but there is an opportunity for John Key to mine the politics of the situation by providing an example to New Zealanders on ethical investing

As Fran O'Sullivan has written in today's New Zealand Herald, it's remarkable that Prime Minister John Key had a bunch of mining shares in his own name, rather than in his blind Aldgate trust.

Key was caught short on Q+A on Sunday morning as an investor in a company that mines uranium in Australia and Argentina. His shares were gone by lunchtime. (Sorry, cheeky I know, I just couldn't resist that). But within a couple of hours Key had decided to divest himself of his shares.

What are the facts? Simply that Key had declared in the Register of Pecuniary Interests that he held shares in his own name in a company called Jackson Mining. Last year, Jackson Minerals Ltd (we're assuming that's the same company) merged with Scimitar Resources Ltd to create Cauldron Energy Ltd.

As per its 2009 annual report:

"Cauldron is a leading Australian uranium exploration company which retains an experienced board of directors and management team, with proven success in the resources sector...

Cauldron controls over 17,000 sq km of uranium prospective tenements across three states in Australia and large projects with defined uranium mineralisation in Argentina This allows for diversification not only geologically but also with regard to differing political sentiment and policy within each region towards uranium exploration and mining.

Exploration of these 100% owned projects continued in the financial year with drilling completed in all three states. The Company is well placed to take advantage of renewed interest in the uranium sector by the change in Policy of the new Liberal government in Western Australia to allow uranium mining."

What was fascinating about Key's response to the questioning was that he obviously retained details of the company in his memory, as well as his personal portfolio. He thought he bought the shares in 2001, that its share price had fallen to just 13 cents and that it owned a small mine in South Australia. He obviously has a magpie's mind for detail.

The Cauldron share price is actually at 38 cents today, so he won't be as badly off as he thought when he sells in the next day or two. It's just raised $10m in China to expand its operations.

I'm left wondering whether Jackson was involved in uranium mining when Key bought the shares and whether he knew that. Despite the impression given that Jackson only came to uranium recently, it seems to have had uranium rights in Argentina before last year's merger. The annual report says:

"Cauldron through its wholly owned subsidiary, Jackson Global Limited, has the right to earn 92.5% of the Rio Colorado uranium-copper-silver Project in Catamarca, the main mining province of Argentina."

Perhaps it moved into uranium between 2001 and last year. It's not a question of any great import; Key bought the shares before he entered politics. I'm just curious.

Indeed, the entire question of Key's shares in a uranium mining company has nothing to do with substance. The companies have no interests in New Zealand that he could have aided and Australian uranium, as O'Sullivan points out, only goes to nuclear power stations. No-one was harmed in the making of this money.

What it's about is political perception and leadership. As leader of a nuclear-free country, he represents the nation and, to some extent, its values. To quote Bill English, it's "not a good look" to have your personal finances at odds with one of your nation's most dearly held foreign policy stances.

So, no scandal. And yet there's a question of judgment still about why Key kept that small parcel of shares in his own name. Mining has long been a contentious industry, and in the socially responsible/ethical investment sector is often snubbed. In 2008, environmental concerns prompted Norway's state-run pension fund to sell its Rio Tinto shares, for example.

Looking again at the interests register, I'm wondering why Key has anything held in his personal name. Even with the Jackson shares gone, it would seem he still owns shares in Bank of America and a property investment company called Little Nell, plus he has a controlling interest or directorship in a commercial property company, Earl of Auckland.

Why has he kept those out of the blind trust? Why not clear the decks in the interests of clean political management? The political risk is small, but why take it at all.

If Bank of America comes into disrepute once more in its dealing with the US taxpayer, does he want to have an interest in that? As he prepares to make major changes to property taxes and tries to tell New Zealanders to invest less in the property market, does he want interests in that sector?

That's all hypothetical. Of course he has the right to own property, and indeed his overlooked declaration on Q+A that he pays the top 39 cents tax rate on his trusts, rather than arranging his affairs so that he pays on 33 cents, is admirable. But politically he could make it a lot easier on himself if everything just went into that blind trust.

What's more, he could then instruct those who run the Aldgate trust to stay away from certain sectors, such as uranium mining. O'Sullivan says it's "bizarre" that the PM should have to consider New Zealand's laws and interests when it comes to his own investment portfolio. I'm not so sure.

There's precedent for such an approach in New Zealand public life: The New Zealand Superannuation Fund won't buy shares in companies that trade in cluster bombs or whale meat. And as noted, he's urging New Zealanders to get back into the stockmarket for the sake of our own economic growth.

Why shouldn't the PM lead the way with a socially responsible portfolio? Such investing has grown rapidly in recent years, with both ordinary investors and large funds withdrawing their money from tobacco companies, arms manufacturers, gambling companies and the like. Trillions of dollars worldwide are now invested along ethical lines.

A prime ministerial portfolio full of socially responsible funds? Now that would be making a real statement.

Comments (14)

by Andrew Geddis on February 16, 2010
Andrew Geddis


I think this is a complete non-issue, all due respect. Yes, we as a country oppose nuclear weapons anywhere in the world, and have decided against nuclear power here. But are we as a nation really opposed to anyone else, anywhere else using nuclear power for non-military purposes? Even France, which relies on it for 75% of its domestic power production? Without a supply of uranium, how exactly is France meant to produce the power it needs? Reliance on Russian natural gas? Giant coal power stations? 'Cause there's no way solar/wind power can make up that shortfall!

As for the "ethics" of uranium mining, isn't it way better than coal? Yet we collectively own the nation's largest producer of coal - Solid Energy. So perhaps we should be removing the beam from our collective eyes, before going after the mote in John Key's.

by Tim Watkin on February 16, 2010
Tim Watkin

You can make arguments for an against any number of companies, Andrew, including Solid Energy and uranium miners. Air NZ has a large carbon footprint, but on the other hand is trying to cut it, Boeing makes good planes, but also bombs... and on and on. But it's still a useful debate to get people thinking about how they use their own money and where they draw the line. I'm a fan of socially responsible investment, so wanted to point out that this is an opening for Key to spur that debate. He doesn't need to lecture or issue decrees, just do what's right for him and in doing so prompt others to do the same.

As for your first par... I can't speak on behalf of NZ as to whether we oppose other countries using nuclear power (or weapons) or any other issue, but the point is that the PM can. Your question about opposition to other countries use of nuclear power is irrelevant to my mind, and to the point I was making.

That's simply that we've chosen to pass law as a country that makes us effectively anti-(or at least non-)uranium. We've taken a stance at some cost (and gain) internationally. Elections have been fought on the issue. As our PM, perhaps Key should be mindful of that and his role as our representative-in-chief.

I bet that the Toyota CEO doesn't drive a Nissan; that Obama wouldn't own shares in Iranian nuclear companies (if such shares existed); Ghandi would't have had shares in the East India Co... these are off the top of my head, but you get my drift. Key presumably did, hence his decision to sell up.

I said more than once that there's no scandal here... the issue is about consistency and what he represents (and politics and leadership, as I wrote).

by Graeme Edgeler on February 16, 2010
Graeme Edgeler

That's simply that we've chosen to pass law as a country that makes us effectively anti-(or at least non-)uranium.

I don't believe we have. Among other things, the New Zealand Nuclear Free Zone, Disarmament, and Arms Control Act 1987 prohibits nuclear weapons, and nuclear-powered ships from New Zealand's territory (unless they're in distress), but it has nothing to say about nuclear power generation.

There is no law that prohibits anyone setting up a nuclear power plant in this country. They'd just need to get resource consent :-)

by Andrew Geddis on February 16, 2010
Andrew Geddis

Further to Graeme's comment, uranium does not appear on the list of prohibited imports into NZ. So if I wanted to buy a tonne of the stuff from Aussie to make a conversation piece in my garden, no legislation would stop me ('tho a local council might).

by Hans on February 16, 2010

It is ,in my view,not ok when a Prime Minister owns shares in uranium mining.In  Canada uranium mining left ca.200 million tons of radioactive dustsilt on the surface of large areas.80% of its radioactivity is left in the silt of crushed rock,and it will lie there for 80000 years.Future generations will have to deal with thatlong after the mining companies have gone-So what legacy is J.Key leaving behind?He could invest in Windfarms,but he is an old-fashioned investor who has little time for ethics.

by Graeme Edgeler on February 16, 2010
Graeme Edgeler

uranium does not appear on the list of prohibited imports into NZ ... if I wanted to buy a tonne of the stuff from Aussie to make a conversation piece in my garden, no legislation would stop me

You've ignored the Radiation Protection Act 1965 (specifically s 12). So did I, of course: although it doesn't prohibit it nuclear power generation, just mandates ministerial approval of the use of radioactive substances in it.

by Tim Watkin on February 17, 2010
Tim Watkin

Graeme and Andrew, you guys are too clever by half! But for once I think I've got a comeback... You've also both missed the Crown Minerals Act, which gives the government ownership of all the uranium in NZ and bans prospecting and mining of the stuff.

And what about the Atomic Energy Act 1945, seen here. It prohibits the import of uranium in section seven. Does it not still apply?

by Andrew Geddis on February 17, 2010
Andrew Geddis


Teach me to rely on a bloody Ministry of Customs website.

And there goes my giant uranium conversation piece. Guess I'll just have to get a water feature, like everyone else.

by Graeme Edgeler on February 17, 2010
Graeme Edgeler

This one?

Yes it does apply, but not to the extent of prohibiting the import, only to the extent of requiring ministerial approval for the import of more than 5 pounds of the stuff (it was amended in 1957). Of course, I suspect the Radiation Protection Act would apply to anyone importing less than 5 pounds of the stuff.

I also think that it remains true that there is no statutory prohibition on nuclear power. The Crown Minerals Act makes coal the property of the Government too, I believe, yet we have coal-fired electricity.

by Tim Watkin on February 17, 2010
Tim Watkin

Bugger, if the Radiation Protection Act didn't deal to sub-5 pound amounts we could have all chipped in and got Andrew that new garden feature. Alas, he'll never get to enter his 'yellowcake garden' in the Ellerslie Flower Show.

by David Beatson on February 17, 2010
David Beatson

“The Cauldron share price is actually at 38 cents today, so he won't be as badly off as he thought when he sells in the next day or two. It's just raised $10m in China to expand its operations.”

Sorry to be so crass as to keep following the money ... since shareholders had to swap 7.5 Jackson Minerals share to get 1 Cauldron share when the companies merged, I don’t think that JK is going to get a lot of his money back.

by Tim Watkin on February 18, 2010
Tim Watkin

Good point David. I hadn't realised the exact numbers (and I as simply saying that 38c is better than the 13c he'd mentioned on Q+A), but by luck my line stands. If the Jackson shares were just three cents as JK said in the House, then 7.5 of them would be worth around 24 cents. He's still doing better than expected at 38 cents, then!

by David Beatson on February 18, 2010
David Beatson

The "key" point that's missing is the answer to the question: what did he pay for them in the first place? Find that out, and we'll know what he made or lost on the deal.  

by Simon on February 20, 2010

I agree that Key's shareholding is not a scandal or an issue of substance. I am concerned that it is a distraction from asking; do Key's assertions in favour of increased mining of conservation areas stack up or are they intentional or erroneous misrepresentation of an industry as having environmental benefits?

Take the assertion "Mining in New Zealand uses just 40 square kilometres of land, less than 0.015 percent of our total land area."  This implies that there is not much land affected by mining, so a little more would be fine".

Gerry Brownlee has also said 'mining  - only 40 km', in Parliament  on  15 September 2009.

Maybe Brownlee got 40km from the New Zealand Mineral Industry Association. Their website says; "Current mining activities area disturbing an area of less than 30 square kilometres and mine sites are being rehabilitated progressively."

Jan Wright the PCE says there are 111 mining licences WITHOUT resource consents which cover a total licence area of 20,784 ha (207.84 km2), of which 3,019 ha are within conservation land. (30.19 km2)

The Ministry of Economic Development Crown Minerals annual report (page 16) says there are 508 mining permits/licences in NZ.
If 111 licences involve 207 km2, then 508 must cover a whole lot more area than 40km.

So, is this misrepresentation accidental or intentional?

Either way, Key's factual error will further "undermine" his quite overstated value judgment that more mining can be done in conservation areas not only without adverse environmental effects but which will also "improve the natural environment".



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