The Leaderboard: Don Elder

Who is he?

Don Elder was the CEO of New Zealand’s Solid Energy for 12 years until his resignation on February 4. A state-owned enterprise (SOE), Solid Energy is the largest coal mining company in New Zealand.

Don Elder, left, with New Zealand Minister of Finance Bill English on the site of Solid Energy’s Mataura briquette demonstration plant. Source: NZNationalparty's flickr photostream, used under a creative commons license.

Why is he in the news?

Solid Energy posted a $40 million loss in 2012, resulting in 450 job cuts across New Zealand. Elder resigned as a result, and the public learned soon after that the company had accumulated debt of nearly $390 million.

The New Zealand Parliament’s Commerce Select Committee grilled Elder and former Solid Energy chairman John Palmer on March 14 about their knowledge of the company’s financial missteps. Elder apologized for the losses at Solid Energy, blaming the “perfect storm” of a high New Zealand dollar and falling coal prices.

The government, however, explained the company’s troubles as the result of an ill-fated multi-billion dollar expansion from coal into other energy sectors like lignite conversion, conventional oil and gas, iron sands mining, and methane hydrates. The opposition Labour Party, meanwhile, tried to portray Solid Energy’s plight as a failure not only of the company, but of the National Party government.

What can we expect?

For the time being, Garry Diack serves as the interim CEO of Solid Energy. But despite a turnover at the top, financial turmoil at one of New Zealand’s most important SOEs raises important questions about energy and governance.

Solid Energy’s impulse to expand beyond coal, and its difficulty doing so, underscores the tension New Zealand as a whole faces between pursuing a balanced energy portfolio while remaining committed to its short-term, non-renewable needs. This tension is evident in the New Zealand Energy Strategy 2011-2021. In recent weeks, the government has finalized preparations for the sale of up to half of its shares in another SOE, Mighty River Power. This “mixed-ownership model” might set the template for other energy companies to follow, perhaps including Solid Energy.

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