NZResources.com - October 21
Posted in: Perspectives: Wednesday, 21 October 2009
NZResources.com - 21 October 2009
By Richard Michael, Chief Executive of Straterra
News that Solid Energy and fertiliser supplier Ravensdown are proposing building a $1.5 billion lignite to urea plant in Southland highlights the new opportunities that beckon.
The government’s decision to order a stocktake of mineral resources on conservation land – with a report on the issue due soon -has given the industry confidence to take a concerted look at how we can make more use of what we have.
The government’s pragmatic approach is already beginning to pay off in terms of more opportunities being explored and advanced. While most of the projects being discussed are not new there is now a real possibility that we will see more come to fruition. Certainly the potential of lignite is vast and the possibility of further developing coal to diesel initiatives is very exciting.
The natural resources sector will also not be the only industry awaiting with interest the first report, due next month, of the ‘2025 task force’ chaired by Don Brash.
The task force is charged with investigating reasons for the recent decline in New Zealand’s productivity performance and with identifying the measures required to enable New Zealanders to achieve equal living standards with Australians by 2025.
Dr Brash’s first speech following his appointment recalled Michael Cullen’s oft-quoted statement that the wealth gap between New Zealand and its neighbour is due to Australia’s vast mineral wealth.
Certainly that was a myth that had passed into popular wisdom but publicity over the government’s recent decision has helped dispel that misconception.
As Dr Brash also pointed out we know we have substantial quantities of mineral wealth, even without extensive exploration – and I think most Kiwis are aware of that now.
Measured by GDP, Australian incomes are one-third higher than New Zealanders’, and New Zealand has slid in OECD rankings to the bottom third of developed countries.
Until the 1970’s our standards of living were in line with that of Australians – you don’t need too long a memory to recall that but it’s certainly long enough for Kiwis to have become heartily sick of being the poor relation and watching friends, relatives and many or our most skilled people take off across the Tasman.
Clearly one of the major differences between the two countries is that in Australia federal and state government has fostered exploration and enhancement of natural resources.
So, hopefully Dr Brash’s recommendations for how New Zealand can begin the process of drawing level with Australian in terms of economic performance will include further investigation of how to best enhance our underexploited mineral wealth.
The task force has been set an ambitious target to achieve in a relatively short space of time but the natural resources sector is highly productive and minerals can play a very large part in bringing our productivity up and bringing us level with Australia.
Simple changes could make dramatic differences and the government needs to take a good look at some of the basics that need to be put in place to enable the natural resources sector to flourish.
Boosting the capability of Crown Minerals would be a good first step. The organisation currently does an excellent job within the scope of the resources available to it. With further government investment it could provide a far more valuable contribution and carry out work in a more timely manner – with great benefit to the industry.
To quote Don Brash again with regard to whether we can ever really hope to catch up with Australia “There’s nothing inevitable about our relative decline: if it continues, it’ll be because New Zealanders choose policies which give us that result.”