NZResources.com - August 2009

Posted in: Perspectives: Wednesday, 26 August 2009

NZResources.com - August 2009

Richard Michael, Chief Executive of Straterra

The AusIMM New Zealand branch conference in Queenstown this month will provide the ideal forum for the entire mining sector to get together and collectively send strong messages to government.

Conditions for change are the most favourable for many years. We have a new and supportive government, which is 30 points ahead in the opinion polls with over two years to go until the next election.

The economic downturn has focused attention on how, as a country, we must look at all areas for growth - and New Zealand has the world’s second highest natural resource capital per head of population after Saudi Arabia.

With a government that recognises the huge economic potential that our natural resources can offer, the sector finally has real opportunity to influence positive political outcomes.

The next year looks set to be a key one for the industry but there is much work to be done and one of the major issues the sector must address is raising public awareness.

We need to educate people about our tremendous natural resources and build public knowledge and support, developing recognition of the importance of the industry to the economy and in making young people aware of career opportunities in the sector.

In order to maximise public support the industry must constantly focus on its public licence to operate and continue to develop positive relationships with the communities in which it works.

We must practise excellent environmental management and strive for the highest standards of health and safety.

If we can fulfil all these aims and increase public support then our messages to government will be more influential – and those messages also need to be very specific.

Firstly, we need to elevate the status of Crown Minerals. As we now have a designated Minister of Natural Resources then setting up a separate agency might be the best course of action.

We also need more policy from Crown Minerals to direct public efforts in the sector over the next decade.

Growing the research agenda and continually funding geotechnical studies is absolutely vital and the current $20 million annual expenditure in this area needs to continue for at least the next three to four years. Such commitment is essential to create international awareness that New Zealand is an excellent option for exploration.

Central government must also give more direction to local authorities about how they respond to and deal with natural resources in their areas. Currently tremendous effort is expended at local level fighting constant battles against policies that make unlocking the potential of our national resources extremely difficult – and sometimes impossible.

Access arrangements under the Crown Minerals and Resource Management acts must also be reviewed. While current laws include some provisions, in practice, these are not strong enough to provide efficient access.

The extractive industries touch on a multitude of government functions and agencies and considerable productivity improvements could be made if this could be done in an official and coordinated way.

The Government needs to take a ‘whole of government’ approach to the natural resources sector – and it could do no better than to follow the example set by South Australia.

Providing financial incentives for the industry could also contribute very significantly to exploration investment.

Options include flow through shares, which have used successfully in Canada, and a public fund for exploration drilling that could be funded on a one to one basis with industry.

Finally, tough questions need to be asked. Should New Zealand be striving to lead the world on emissions trading policy? Straterra believes strongly that a far more effective and practical course would be to take our lead from the major economic players in this space.

To go forward we need to achieve these aims – but to achieve them we need a united voice. Currently our representation is divided and our policy messages incoherent.

The responsibility for progress lies squarely on the shoulders of the industry players. We must act together and this will require good will and compromise by all parties.

If this can be done then the pay off from more united approach can be immense for the sector, communities and the country as a whole.

Richard Michael is chief executive of Straterra, the industry group representing New Zealand’s natural resources industries.