Hope glimmers for minerals industry

Posted in: In the News: Thursday, 01 October 2009

Hope glimmers for minerals industry

MG Business -- 1 October 2009

In a bold ploy sharply differentiating it from the former Labour-led governments anti-mining stance, the National-led coalition is setting out to milk the sacred cow of the countrys vast mineral resources, most of them locked up in the Department of Conservation (D0C) estate.

Gerry Brownlee. Minister of Energy and Resources, and number three in Prime Minister John Keys Cabinet, startled the country in August by announcing a review of schedule 4 of the Crown Minerals Act, which for years has specifically excluded 3Q0~ of the most prospective land in the country. including national parks. from mineral exploration and development.

The aim is to create "a solid platform for improving and increasing access to conservation land for responsible mineral exploration and mining activity." Brownlee told the annual conference in Queenstown of the New Zealand branch of the Australasian Institute of Mining and Metallurgy.

Thirty years ago such a statement would have been tantamount to political suicide, given New Zealanders perception then of mining as an abomination upon the face of the land.

And certainly there were the predictable shrieks of dismay from the likes of the Environmental Defence Society and the Royal Forest and Bird Protection Society. but otherwise the public response was notably muted.

The New Zealand Listener, usually a darling of the left, condemned the environmentalist outcry as absurdly hysterical and described Brownlees comments as relatively mild, while the New Zealand Herald editorialised that more than enough [land] would be left over if mining were to occupy a tiny portion," and that modern mining practice pays "due heed to the environment’.

In signalling a sea change in the Government’s attitude towards mining, Brownlee said that he and Conservation Minister Tim Groser were directing Crown Minerals and DoC, which respectively administer state-owned land below and above ground, to work together to quantify the mineral estate and, where appropriate, facilitate access to miners.

In a subsequent interview with MG Business, Brownlee made it clear that the Government regards mining as a vital ingredient in its recipe for making New Zealand as wealthy as Australia.

"New Zealand’s gross domestic product, or even our gross domestic income, has been tracking away from Australia for quite some time ~ in fact quite dramatically since 1975.

"It’s just continued on this slope with a few spikes in the 1980s, but by and large weve been on the decline for a very long time.

For us to get back to parity in the next 15 years is a huge task: it will require us to have growth rates at least 1.5% ahead of Australia consistently throughout that time," Brownlee said.

While this would require cranking up the economy right across the board, it was clear that there was especially great potential for growth and expansion in the mineral estate, he said.

It was also clear that while Australia called itself "the lucky country" because of the vastness and value of its mineral resources, New Zealand was even luckier in that regard.

Brownlee cited a World Bank report that years ago ranked New Zealand as second only to Saudi Arabia in natural wealth per capita.

Australia languished in 16th by that measure.

Brownlee also noted Auckland consulting geologist Richard Barker’s 2008 estimate of this countrys in-ground metallic mineral potential value as being more than $140 billion, with the Otago-Southland lignite coal resource being worth at least a further $100 billion.

And it’s not just gold and coal that New Zealand is rich in: the ironsands on the west coast of the North Island are a giant resource in their own right, while a 1999 GNS Science survey identified 16 minerals in 32 different types of deposit valued at $86 billion back then.

The significance of the DoC estate, which covers about a third of the country, is that 70% of mineral growth potential is contained within it, and nearly half of that is locked away under schedule 4.

Some schedule 4 areas host, among other metals, significant amounts of zinc, lead. copper. nickel, tin and tungsten. as well as the two resources which comprise most of the current $1.5 billion a year minerals industry coal and gold.

Brownlee has directed Crown Minerals to undertake a strategic review "to determine areas possessing significant mineral potential that with the removal of the access prohibition provided by schedule 4 could, through responsible mining techniques, contribute considerably to our prosperity".

The Government’s initiative has been welcomed by Straterra. the lobby group formed last year to advocate for the resource sector.

"We are entering a new era," Straterra chief executive Richard Michael told MG Business.

Stressing the need to quantify the country’s mineral resources, whether part of the DoC estate or not, Michael said there was no question of miners being given access to areas of high conservation value.

The tourist industry is a major driver of New Zealand development and nothing the mining industry’s going to do will impinge on that.

Once we’ve found out what’s there [under the schedule 4 designation], there may be no issues, but if there is stuff let’s have an open and transparent debate about the conservation values [and] about the mining values.

"It’s not an either/or situation: the two industries have got to work in together to do what’s best," Michael said.

Long before dairy, meat and wool made it a relatively rich country, New Zealand’s wealth was based on the minerals industry specifically gold.

More than a thousand tonnes of it worth $30 billion in todays values, has been produced, most of it in the 19th century.

Second to gold in volume and value has been coal at 270 million tonnes (mt), of which 2.7mt worth $300 million is currently exported annually, followed by titanomegnetite ironsands at 900mt.

This excludes the 3Omt a year of aggregates that are produced for the domestic market and used mostly for roading and concrete production This has been achieved using just 0.19’o of the country’s land area, according to Richard Barker. who estimates the country could double the value of its minerals output in 10 years while creating 25,000 new jobs. increasing household income by 1 .7% and overall exports by 4%.

Over the longer term he estimates GDP growth ot 29% is possible. along with overall export growth of 7%, household income growth of 23% and an employment potential of 35.000 jobs That this potential did not begin to be realised earlier is, according to Barker, because of the decline in the industry in the 20th century. and opposition to it arose from its association in New Zealand minds with the destructive and environmentally repulsive practices of the colonial era.

Mining practices have since changed radically, as witnessed by the minimal impact of the Pike River Coal mine - itself on DoC land and the rehabilitation of such old mines as the Martha Pit in Waihi.

"A combination of the industry lifting its game and the regulatory environment coming up to speed" have created kinder public perceptions of mining, Barker said.

And the National-led Government appears to have tuned in to that.