The Prime Minister says the financially troubled state-owned miner Solid Energy tried to branch out into non-coal energy projects which the current Government does not think can be done.
The company's former chief executive Don Elder and chair John Palmer will appear before a parliamentary select committee this week.
The committee will ask how the company acquired a crippling debt of $389 million.
Mr Key says the former board and management brought part of this crisis on themselves.
He says the Government does not have the resources or have the belief that Solid Energy could become a diversified natural resources company.
The Government did an independent analysis and Mr Key says relations between the Government and the board and management became quite tense.
Mr Key says the Government can't be held responsible for Solid Energy's failed investments.
Solid Energy has to take responsibility for its failed investments in the likes of lignite and alternative energy projects, he says.