Energy magazine, May 2009

Posted in: Perspectives: Sunday, 31 May 2009

Energy magazine, May 2009

Richard Michael, Chief Executive, Straterra

A national myth has evolved that New Zealand is a poor relation to Australia in terms of natural resources. The truth is that New Zealand is richly endowed and in my new role with Straterra, the industry group representing New Zealand’s natural resources industries, I hope to help Kiwis recognise that we don’t need to look enviously across the Tasman.

However, in order to unlock the potential beneath our land and seabeds, with maximum benefits for the economy and the minimum environmental footprint, it is vital that all organisations work together, with full understanding and clear communication.

Straterra has been formed to bring together the interests of the entire natural resources sector and related bodies. Its vision is of prosperity through one partnership, including engaging with government, whose responsibility for setting legal frameworks and environmental standards is a vital part of the equation.

Several groups currently represent different parts of the natural resources industry and have done good work in the face of a less than friendly stance by previous government. However, there are many common sector-wide themes and these are the issues that Straterra will concentrate on, ensuring these are well articulated to government and the public.

About 4,650 people are employed in New Zealand mining and we currently produce minerals, coal and petroleum worth about $4,500 million per year, contributing $2,000 million to exports.

The metallic mineral potential of New Zealand has a gross in-situ value of more than $140 billion, with lignite adding an additional $100 billion. There’s good potential for the discovery of new oil and gas resources and geothermal has great potential and is increasing its economic contribution through medium scale electricity generation.

Where we differ from Australia is that their federal government has generally been supportive of the industry and state governments have fostered exploration and enhancement of natural resources. South Australia’s $30.9 million Plan for Accelerating Exploration (PACE) has significantly boosted mineral exploration activity.

While companies have benefited, so has South Australia as a whole through increased royalties and employment. In 2007-08 mining contributed $2.9 billion (4.4 per cent) to the state’s Gross Value Added. In the year to March 2009 there were $3.0 billion minerals and mineral manufactures exports. Nine thousand people are employed in mining and 15,500 in metals manufacturing.

Straterra’s short-term objectives include increasing co-operation between private and public sectors to generate maximum benefit for all New Zealanders. We’d like to see a whole of government response to issues related to the natural resources industry. The industry can have significant effects in the areas in which it operates, from employment to environment. Such factors require careful coordination and co-operation between industry and multiple government agencies so projects can deliver widespread benefits while enhancing these communities.

We will press for a national policy statement outlining long-term goals for the sector. Developing natural resources takes considerable resource and expertise and this could significantly contribute to attracting investors.

Access to sensitive lands including DoC estate will be a key issue and the right decisions need to be reached to achieve substantial benefits for the country without compromising the outstanding environmental values New Zealanders hold dear.

Yes, the modification process required for extraction is extreme during the process but, seen as a whole, the industry’s footprint is small. Mining currently uses 40 sq km, less than 0.1 per cent of New Zealand’s land area, and has an export value of $175,000 per hectare. Dairy, by comparison, uses 20,000 sq km of land with an export value of $3,500 per hectare.

Natural resources underpin all economic activity in the world from aggregates for building roads and concrete manufacture to coal for steel making and industrial processors and oil for transport – New Zealand’s massive untapped sources have the potential to provide a steep increase in this country’s economic growth.