Straterra-blog

Views of the New Zealand resource sector

Straterra-blog is prepared by the Straterra team. Comments to bernie.napp@straterra.co.nz

<Straterra's take on 'Say No To Fossil Fools' (Oct 2011)>

<China's plans for ETS schemes (May 2011)>

03 May 2012

Sanity prevails in court over coal miners and climate change

It’s official …. coal miners cannot be held responsible for CO2 emissions arising from subsequent combustion. That is self-evident, but it is good to have it from the Environment Court. In a declaratory judgment reported in the media yesterday, Acting-Principal Environment Judge Laurie Newhook decided that climate change cannot be used as a reason to appeal against coal mining under the RMA. Sanity and reason have prevailed.

Solid Energy and Bathurst Resources argued successfully that climate change issues are regulated elsewhere, and that the user of coal is the point of obligation, not the miner. To argue otherwise would be to say that the people who export oil to New Zealand should be held responsible for the emissions from our vehicles.

West Coast Environment Ltd, assisted by Forest and Bird, argued exactly that, namely, that the Court in deciding on the Escarpment mine proposal “consider the contribution that these subsequent discharges into air from the combustion of coal will have towards the effects of climate change”.

In the Judge’s words: “Sir Geoffroy [Palmer, acting for WCEL] provided an elaborate and learned discussion … about climate change being a profound environmental threat”. Well, no one disputes that, but what does that have to do with coal mining? Nothing is what the Judge rightly decided, in determining the RMA is confined to managing the environmental effects of an activity, not effects arising from downstream products of that activity. The Court is now clear to consider the appeal against the Escarpment mine resource consent, with WCEL and Forest and Bird as remaining appellants, following the negotiated withdrawal of the Fairdown Whareatea Residents’ Association.

27 April 2012

The Green Party 'mining our future' hui

On 17 April I attended a Hui organised by the Green Party to promote opposition to mining in NZ. The Hui was held in Wellington and was one of a series being held around the country. About 25 attended.

Gareth Hughes welcomed me to the meeting and he and Catherine Delahunty spoke at length about deep sea drilling, fraccing, UCG, lignite, gold, coal, iron sands, massive sulphides and phosphates on Chatham Rise. Their talks blended facts, misinformation, assumptions, interpretations that ranged from reasoned to wildly inaccurate. All comments were underpinned by a deep, and sometimes passionate mistrust of, and opposition to, mining (read business?).

There were some things we agreed on – the importance of water and water quality, food on the table, for example – and many we did not! As I went to leave I took the opportunity to make some comments about a couple of assertions that had been made by Gareth or Catherine. Those comments generated some lively questions and discussion – again underpinned by total mistrust, but useful nevertheless. A particular issue I challenged was Catherine’s assertion that mining and water pollution go together. I cited the quality of the river that Newmont Waihi Gold discharge into – the Ohinemuri – a river that was selected as the site of the World Trout Fly Fishing Comps in 2008. (Unfortunately, unseasonal low river flows meant the competition was relocated to the South Island!) In addition, I offered to provide further information on fraccing (chemicals in particular) and CCS and will also follow up on their understanding of the monitoring regime in place for the UCG trial.

18 April 2012

Royalty review

To clarify the royalty review issue, which has become confused in media reports over the last few days. For minerals owned by the Crown, the Crown has a right to receive royalties - no argument there.

At issue is the level at which royalties should be set. The Government has said it would review royalties in New Zealand against international benchmarks to ensure our regime is competitive. We say that’s fine, while noting that to benchmark accurately you need to consider other payments made by mining companies to government: taxes, rates, fees, and compensation for access to Crown land.

Royalties on minerals to the Crown are much less than those paid by the petroleum sector, because the sectors differ in size and nature.

If we get the royalty settings right, royalties received by the Crown will increase as investment and development in the minerals sector increases. Royalties are an outcome of success, not the goal.

15 March 2012

Case studies of green mining

Mining can be, and has to be green, if our sector is to be environmentally responsible, and live up to Straterra's membership policy.

The reality is that mining companies must manage discharge to air and water, issues of dust, noise and ground vibration, rehabilitate disturbed material, and carry oput or provide for additional mitigation, e.g. biodiversity conservation projects.

Straterra is working on a number of green mining case studies, and links to them are provided here:

Green mining case studies

The case for fossil fuels

Carbon capture and storage

19 October 2011

Straterra's take on 'Say No To Fossil Fools'

The Straterra team attended a public forum, entitled “Say No To Fossil Fools”, in Wellington, on 17 October. Around 60 people turned up, most of whom are believers in a world without oil, gas or coal. Our presence wasn’t entirely unwelcome, but the purpose of the gathering was very clearly to present the case against fossil fuels, and discuss how to socialise it more widely among the New Zealand public.

The evening kicked off with four presentations on: lignite, biodiversity on the Denniston Plateau, deep sea drilling, and fracking. The speakers were, respectively: Jeanette Fitzsimons (ex-Greens co-leader); wildlife photographer Rod Morris (also of Forest and Bird), Nathan Argent (Greenpeace NZ), and Robyn Harris-Iles (a “researcher”).

The gist was this: as resources become scarcer, industry has to go to greater lengths to find and extract them, hence deep sea drilling, fracking, mining conservation land, and unconventional coal, with elevated risks to the environment. Fossil fuels also pose risks to global climate. Therefore, we in New Zealand should cease extraction of new coal and oil, to do our bit for the planet, and care for our environment.

During question time we were kindly introduced to the meeting by Cath Wallace of ECO, providing the opportunity to suggest that fracking can be and is done properly in New Zealand, and that one of the solutions for emissions from coal and petroleum is carbon capture and storage (CCS).

It is to be imagined our message did not resonate within the walls of the Wellington Central Baptist Church, however, at least one person stood up and welcomed our presence.

The discussion was driven by emotion, with selected facts thrown in, sometimes but not always relevant. There was an undercurrent of opinion – unsubstantiated - that we are not to be believed regardless of what we say.

One speaker opined on the need to get better information to middle New Zealand – a point we can agree on, and it is a crucial point. To date the debate on resources in New Zealand has not been particularly well informed, and part of our role is to bring maturity to these discussions.

For the rest, various Climate Justice groups, the West Coast Environment Network, and the Coal Action Network Aotearoa were in attendance, as were a number of unaffiliated mainly young people.

5 July 2011

Wai 262 - RMA aspects

On 2 July the Waitangi Tribunal reported on the Treaty claim on indigenous flora and fauna and cultural intellectual property (Wai 262). The claim was lodged in 1991. Hearings were held from the late 1990s until 2007.

Of most interest to the resource sector will be Resource Management Act 1991 matters.

The Crown argued the current system for involving Maori is adequate, while the Maori claimants sought exclusive control over their taonga. In that context, the Tribunal opted for a middle road between the positions of the claimants.

Note that the Tribunal’s report is not legally binding on the Crown.

The Tribunal found that the appearance of Crown-Maori joint management arrangements in Treaty settlements, e.g. Waikato River, shows the system is not working. “It is disappointing that the RMA [s.36B] has almost completely failed to deliver partnership outcomes in the ordinary course of business.”

In respect of resource consent applications, “Maori are usually sidelined in the role of objectors”, the Tribunal found. An exception is where iwi management plans exist (s.61(2A) of the RMA), which provide for iwi to be “more proactive in resource management”.

Nor have Maori obtained delegations under the RMA to exercise control (s.33), or obtain heritage protection authority (s.188), over areas that are iconic to Maori.

The Tribunal recommended a few modifications of the RMA to provide better for Maori to exercise kaitiakitanga (guardianship or stewardship) of natural resources, in appropriate circumstances.

Iwi, in consultation with councils, would develop iwi resource management plans (IRMPs) that identify areas for control, management in partnership, and/or heritage protection of iconic areas. IRMPs would have the same status as plans or policy statements. In the event of disagreement between the iwi and the council: the IRMP could be regarded as non-binding though a relevant consideration; or differences resolved through mediation; or the matter referred to the Environment Court for a decision.

Secondly, sections 33, 36B and 188 need amendment to better enable control, partnership, and heritage protection, where appropriate.

Thirdly, central government should provide funding for training, provision of legal and other advice, for Maori to participate adequately in RMA policy development, planning and consent processes.

Fourthly, a national policy statement is needed to guide Maori participation in RMA processes.

The Government will now consider the Wai 262 report and provide a response. The Prime Minister has said the Government is in no rush. Earlier this year Environment Minister Nick Smith said the national policy statement on biodiversity would be finalised after the Government’s response on Wai 262.

20 June 2011

China tops world coal consumption – CCS essential

China is poised to add an additional 600,000 megawatts of new coal-fired power generation by 2035. This is a serious figure - it exceeds current coal-fired electricity generation in the US, European Union and Japan combined. It should inform any policy on climate change, pointing unequivocally to enabling carbon capture, transport and storage (CCS) technologies, in China and worldwide.

This information comes from the World Coal Association, drawing on work by the International Energy Agency.

This says that in 2010 China surpassed the US as the world's largest energy consumer. This is important because around 80% of China’s electricity is generated with coal. China’s rate of growth in coal consumption is such that it is now a net importer of coal, of around 170 Mt/yr, whereas it was a net exporter of 90 Mt in 2001.

China is also the world's largest steel producer, more than half of total output, and is continuing to expand apace. To do that, China needs coking coal. Only 10-28% of its coal reserves are suitable, therefore, China must import. In 2011 China is projected to import around 50 Mt of coking coal, up from 30 Mt in 2008.

It is also the case that China is a world leader in the development and deployment of green technologies, a fact promoted enthusiastically by the green movement. To place this in context.

By 2015 China intends to increase nuclear electricity generation four-fold to 40,000 MW, as well as add 63,000 MW of new hydro, and 48,000 MW of new wind power to more than double current wind capacity. Solar capacity is expected to reach 5,000 MW of electricity by 2015.

These are encouraging figures but all told come to 37% of the additional 260,000 MW of coal-fired electricity power generation also needed by 2015 to fuel economic growth in excess of 8% a year.

Nonetheless, some of the new coal-fired capacity will offset the closure of smaller, older and more emissions-intensive plants. Between 2006 and 2010 some 70,000 MW of generation capacity closed, and in 2011 a further 8,000 MW are due to close.

China is a leader in CCS development, and many of the new coal-fired plants are expected to be “CCS ready”, up to 100,000 MW worth of new generation by 2020.

This is good news because any rational strategy to reduce global emissions must include CCS as part of the technology portfolio. Progress in China will ease the path for CCS in other developing countries, such as India, and even developed countries, such as the US, EU and Australia. New Zealand is tapped into these developments, through our own CCS Partnership, and working on CCS as a member of Australia’s leading CCS research organisation, the CO2CRC.

31 May 2011

The Future of Coal

The Future of Coal symposium at Wellington Town Hall on 17 May 2011 was exasperating for many of those who attended.

For goodness sake, Greenies, we know what the problem is - the issue is what we are going to do about it.

The symposium might better have been entitled “Climate Change, the Challenge”. A major part of it focused on restating the problem, with the occasional foray into direct, explicit, emotive and very unhelpful criticism of specific companies’ actions. To the extent that any solutions were offered, these were largely unrealistic. Even in the panel question time at the end of the day attempts to run a pragmatic ruler through some issues were immediately interpreted as denying the problem.

Constructive discussion was consequently isolated and sporadic!

Dr James Hansen, the first scientist to draw popular attention to climate change, proposed a global carbon tax as the motor for change.

He opined that China and India should not and could not be forced to cap their emissions, so an ETS was not a possibility for them. There is some merit to this argument - an ETS will only work over time if, say, 60 plus % of global emissions are captured under that scheme. NZ would do well to note that.

The carbon tax argument was undermined somewhat when Dr Paul Graham of CSIRO explained that the economic models have Australia continuing to mine coal, even at very high carbon prices, because China and India and other countries will continue to demand coal. A particular issue here is that while there are a number of substitutes for fossil fuel power generation, there are none for steel making.

Straterra says the real issue is how the world manages the transition from coal, oil and gas to other sources of energy for, e.g. electricity, transport, and industrial processes. Clearly we have to explore a range of technology options, including carbon capture, and storage (CCS), energy efficiency, and renewable technologies including nuclear.

At issue is how we incentivise these options, in the absence of effective carbon markets worldwide – next to no discussion on that.

Rather than have NZ banning the mining of coal, a token and somewhat naive gesture at best, there are massive opportunities for our country, as Solid Energy CEO Don Elder pointed out. These arise in the following way.

The global GDP of $50 trillion is unequally distributed between 7 billion people. Five-sixths of that population has one-tenth or less of the standard of living of the average Kiwi, and they want what we have.

The implication is that global GDP will have to double, triple or even quadruple for the world’s disadvantaged to arrive anywhere near achieving these aspirations.

There will be consequences for global availability of land, freshwater, energy, commodities, food.

New Zealand is extremely well placed to contribute to the world’s growing needs, and herein lies a choice. We can either continue to fling polarised arguments at each other, or we can have a serious discussion on what our options are, and make a considered decision on the option we pursue.

31 May 2011

Berl/GNS reports on the West Coast

The West Coast has a bright future in mining, say two new reports launched at a symposium in Parliament on 17 May. Chaired by West Coast/Tasman MP Chris Auchinvole with Energy and Resources Minister Hekia Parata providing the keynote speech, the symposium in celebration of mining on the West Coast afforded an excellent opportunity to promote the potential for mining on the West Coast.

Environment Minister Nick Smith attended along with a number of other MPs and key figures in NZ mining circles. Even Prime Minister John Key made an appearance and stayed on for the informal discussion after the symposium.

Much of the credit for organising the symposium goes to Peter O’Sullivan, executive director, Minerals West Coast.

Mining, directly and indirectly, supports one-third of household income on the West Coast, total population 32,000, a report by Business and Economic Research Ltd (Berl) found. The coal and gold produced is worth more than $855 million a year. Tourism and dairying come a close second and third.

The figure could increase, given the potential of the West’s Coast’s rich endowment of resources, coal, gold, ironsands, surveyed by GNS Science. By 2025 the region could be producing $2.4 billion a year in minerals. This work includes detailed assessments of 41 different types of mineral deposit, including rare earth elements. A nod to Ian Graham and Tony Christie for leading this valuable work that will help attract investment into the West Coast.

All of this is good news for the West Coast, and the community has the opportunity to lever off the extra wealth brought into the region. Development West Coast CEO John Chang said 2.5 million people visit the West Coast every year and that number could grow, with more investment in tourism infrastructure made possible from the contribution mining can make to the local economy.

Gary Murphy, CEO of Buller District Council, drew attention to various challenges the region faces, if it is to attract more investment in mining: among them better access to health and education, and other services, for families moving to the region, and to incentivise them to move there.

All in all, this was a very positive event, and a good opportunity for MPs to become acquainted, if they are not already, with the potential of our sector to make a significant contribution to the local economy, and to the NZ economy.

23 May 2011

China's plans for ETS schemes

It is not often that a Chinese delegation on ETS matters visits New Zealand, so the Straterra team jumped at the opportunity to meet Prof Shang Zheng and Ms Jing Tang, deputy directors, Energy Research Institute, National Development and Reform Commission. This is China’s central government agency responsible for climate change policy.

We thank the Ministry for the Environment for the opportunity, also attended by BusNZ, Greenhouse Policy Coalition, Fonterra and others.

The gist is that the People’s Republic of China is in the early stages of considering setting up ETS schemes. Meantime China is keen to sell units earned under the UN’s Clean Development Mechanism.

Prof Shang led with China’s commitment, made in late 2009, to reduce intensity of GHG emissions by 40-45% by 2020 on 2005 levels. China also has a 2015 target of a 17% drop, on 2005 levels.

In March 2011 the National People’s Congress adopted a plan to trial carbon trading. ETS schemes are to be piloted in 4 cities and 2 provinces, ideally from 2013. Prof Zheng described that timeline as “quite optimistic”. At this stage, transport will be kept out of the schemes, and it appears that stationary energy will be in. No other decisions have been made on coverage. It is noted that all options are still on the table in China, including a carbon tax and having US EPA-style greenhouse gas regulations.

For now, carbon markets in China are focused on the CDM, and on “voluntary” internal markets.

China has 2400 CDM projects, mainly in clean energy (hydro, wind) and also in energy efficiency.

China would like to find buyers for emissions reduction units from unregistered projects, and to do that aims to provide more confidence for sellers and buyers. As part of doing that, China is going to certify its own CERs (certified emissions reductions).

Within the voluntary markets, units are exchanged at around US$5 a tonne. There are three centres of exchange, including Shanghai and Beijing. There are 5 provinces and 8 cities in China forming part of a “low-carbon demonstration programme”.

Prof Zheng was interested to find out more about how industries in New Zealand measure and report on emissions. Our answer was that the challenges vary greatly from industry to industry and that we are in the early stages of operating a carbon market.

This was an interesting session that confirmed that China was at least to some extent taking climate change response seriously at the policy level as well as the technology level. While China’s absolute emissions will continue to grow, the commitments to reduce intensity are a major step; it will be interesting to see if they can be achieved. We will monitor developments.

05 May 2011

Proposed NPS on indigenous biodiversity

Straterra has submitted on the proposed National Policy Statement on Indigenous Biodiversity. We believe the intent is fine but the NPS is unlikely to achieve “reasonable use of land” for the following key reasons.

The criteria in Policy 2 for identifying significant vegetation and species are unlikely to be accurate on the ground:

Forcing councils to set aside areas as significant in plans within five years of the NPS taking effect could lead to errors (Policy 4). That could cause unnecessary distress to land owners and businesses who may have to resort to court or other action to clarify the status of land at their expense;

Having biodiversity offsets as the only tool for mitigating the residual effects of development in significant areas is overly restrictive given there is no such scheme and a cost-effective one may never be developed for all circumstances (Policy 5). The opportunity to use alternative tools, e.g. negotiated agreements, compensation is has been missed;

Appropriate development could be unnecessarily prevented in significant areas, with less biodiversity conservation occurring than would otherwise occur.

We make a number of recommendations for improvement.

View Straterra's submissions.

11 April 2011

EDS policy paper “Governing our oceans”

On 5 April the Environmental Defence Society launched, with the able assistance of Environment Minister Dr Nick Smith, a very good policy paper on environmental reform for the EEZ, in Wellington, at Bell Gully. EDS have captured the problem, and proposed generally sensible solutions.

We understand the Minister remains interested in seeing an EEZ environmental effects Bill introduced into Parliament this year, so this paper would provide important background material for that.

While the paper would have benefited from a better understanding of mining, the EDS has recommended government seek broad input when developing the policy regime for the EEZ. We think this is the key aspect of a commission or other body set up for this – to get the people with the skills in government, business, NGOs, and community interests including iwi around the table. There has been a similar approach with the Land and Water Forum. Straterra will wish to be closely involved.

The EDS’ problem definition is in summary: the EEZ is a valuable resource for environment and the economy. But there are no proper systems for managing adequately or strategically the risk of oil spill, or adverse effects of mining, fishing or other activities on the environment. EDS assert that as a result “NZ risks losing many marine species before they are even discovered”.

In response to the EDS’ concern that sea bed mining of rock phosphate, ironsands and massive sulphides “is likely to involve disturbance of large areas of the sea bed”, we say that might be true, although not large in the context of the area of the EEZ, but in any event such activities would and should be approved subject to detailed environmental assessment..

EDS argue that NZ needs to do what other countries are doing: “marine spatial planning”. This entails identifying, on the basis of “robust information”: areas where use and development could be considered; areas where one type of activity would take priority over another; and areas where biodiversity protection is the sole focus, where development would be fully or partially excluded. The planning approach would avoid ad hoc decision-making, which can lead to cumulative adverse effects. As matters stand, NZ is in breach of our international obligations and is lagging behind in international best-practice for oceans governance and management.

This seems reasonable and there are of course situations where we define the use of specific areas – National Parks, for example. At issue, from the resource sector perspective however, is the difficulty of obtaining robust information on the economic values as well as the environmental values, and on how environmental effects of activities would be managed. We argue the EDS have glossed over this aspect.

The problem with the “precautionary approach” championed in the paper is that it is a blunt instrument. NZ could end up with areas off-limits to mining where frameworks could have been put in place to responsibly manage any environmental effects and risks. Nonetheless, the EDS have made excellent recommendations: improve the inspection regime for offshore oil & gas rigs; set up a commission for ocean governance reform; in the interim roll out a variant of the RMA into the EEZ; and strengthen management with a strengthened EPA, a standing board of inquiry of experts for resource consenting, and a board of scientific experts to advise government, the royal commission and the EPA.

31 March 2011

Proposed NPS on biodiversity

The proposed National Policy Statement on Indigenous Biodiversity raises important issues for the NZ resource sector to consider. They include: the identifying of areas containing significant vegetation and species, and protecting these areas in plans; and provision for biodiversity offsets as the only mitigation tool for managing the effects of development in significant areas.

We have prepared a short issues paper on the proposed NPS, as a guide to writing submissions to the Ministry for the Environment. This work is based on discussions held at a seminar we convened on biodiversity offsets, with the Department of Conservation and Solid Energy, in Wellington on 16 March.

Submissions close on 2 May 2011.

11 March 2011

Straterra supports AQA submission on proposed Waikato Regional Policy Statement

The Aggregate and Quarry Association of New Zealand (AQA) submitted on the proposed Waikato Regional Policy Statement on 28 February 2011. We think this is a valuable contribution to the land-use planning debate and we sought permission to post it on the web site.

With the cost of aggregate doubling after 30km of transport, it is generally in New Zealand’s interests that aggregate is made optimally available, as demand for infrastructure continues to grow.

The AQA analysed the proposed RPS against three objectives: that mineral resources are recognised as regionally significant, that plans do not restrict future access to minerals, and that development does not lead unnecessarily to discontinuation of existing quarries or prevention of future ones (reverse sensitivity). To elaborate on the third item, a residential subdivision placed next to a quarry could lead to attempts to shut down a quarry that is operating lawfully.

The proposed RPS largely provides for these objectives. The AQA submission supported the enabling aspects, such as provision for off-site mitigation of environmental effects (e.g. biodiversity offsets), and suggested amendments: to provide for non-consumptive uses of water in allocation, activities that have minor effects on water bodies, recognition of mineral resources in the marine and coastal environments, and planning that avoids juxtaposition of incompatible land uses.

03 March 2011

Business response to the Christchurch earthquake: update

The Affiliated Industries Group of Business New Zealand met today in Wellington, with Straterra in attendance. Normal proceedings were suspended to discuss the Christchurch earthquake.

CEO Phil O’Reilly invited a round-table update on events. He presided over a full house and the discussion lasted two hours. The word “munted “was used several times to describe the state of various areas and parts of infrastructure and services, but the overall message from the various sectors was that many businesses are open and running, others are trying to reopen when and where they can, and overall the response from business and the community was . . . amazing!!

The following may be of interest to the NZ resource sector and others.

A senior official from MED, Paul Swallow, has been seconded into BusNZ to act as a point of contact between businesses and with government. Starting today John Wills will be the point of contact for businesses seeking information, or who are struggling with planning or compliance.

The Canterbury Development Corporation (Pete Townsend) aims to build a “bank” of business assistance, an avenue for businesses to contribute to others. For example, a large company may have in-house trauma counselling services, or dedicated payroll or accounts capacity that could be lent to smaller businesses as they rebuild. BusNZ has offered to act as a conduit for this assistance.

CDC is due shortly to launch a charity to help businesses, and will be seeking expressions of interest from businesses around New Zealand.

An earthquake support web site has been set up to help businesses, mainly by CDC, the Canterbury Employers Chamber of Commerce, Christchurch City Council and NZTE. It aims to support businesses in various ways, e.g. to facilitate businesses within the cordon accessing their servers. Christchurch Recovery Map provides community information, e.g. on which services are open, such as ATMs within the CBD.

Federated Farmers has organised volunteer workers – the Farmy Army - who assemble every morning at Canterbury Agricultural Park off Curletts Rd. The moving of silt in eastern Christchurch is a current focus. People can participate for the whole or part of a day. Safety briefings and equipment are provided.

A common theme was the need for more communication. Key messages include: the government response has been very good; businesses are showing resilience, they may be down but not out, and one way to help is to do business with them; and businesses are looking positively towards the future. In closing the meeting, Phil O’Reilly said: “the opportunity is not to rebuild Christchurch, it is to recreate it ”.

19 January 2011

Wai 796 - Crown petroleum regime

On 22 December 2010 the Waitangi Tribunal released a pre-publication version of “Report on the Management of the Petroleum Resource”. This report was prepared as input into the Government’s review of the Crown Minerals Act 1991, which is ongoing. It follows a Tribunal report on petroleum claims in 2003.

In the current inquiry, the Tribunal heard evidence from the Crown, affected iwi and hapu, and from Taranaki Regional Council and the South Taranaki District Council.

The Tribunal found that “tribal government” has not had “full and appropriate input” into decision-making because of systematic flaws in the management of the Crown petroleum regime. As a consequence, decision-makers tend to minimise Maori interests, in favour of other interests, a breach of Treaty principles.

“Maori cannot protect their lands, waters, and other taonga, nor exercise their kaitiakitanga, in the manner or to the degree that they are entitled under the Treaty, and that the law envisages.” – Judge Layne Harvey, Presiding Officer, Waitangi Tribunal.

The Tribunal recommended that the Crown:

1. Consider establishing regional iwi advisory committees that would have input to petroleum decision-making at the local level;

2. Consider setting up a central fund to help tribal bodies meet their RMA responsibilities;

3. Require applicants for permits to contribute to the resourcing of MÄï¿½ori participation in decision-making processes;

4. Develop national policy statements and national environmental standards under the RMA, to guide local authorities in the enhancement of and protection of taonga and wahi tapu;

5. Amend the Crown Minerals Act to require decision-makers to act consistently with Treaty principles;

6. Establish a ministerial advisory committee to enable MÄï¿½ori input into policy-making at the highest level, e.g. on the pace and extent of petroleum extraction, Treaty interests in petroleum; royalties; and providing for the exclusion of land or ocean from allocation;

7. Amend the CMA to enable Maori landowners to refuse access if they desire, overriding the arbitration provisions governing access to land;

8. Establish a Treaty of Waitangi commissioner position to monitor local authorities’ performance in respect of Treaty obligations;

9. Make more legal aid for appeals to the Environment Court available to hapu and tribal authorities.

In conclusion, Straterra thinks the Tribunal’s proposed scheme looks onerous. Surely there’s an easier or a better way of taking account of Maori interests. We will discuss this report with the petroleum sector and monitor developments.

18 January 2011

Industry hub at Straterra's premises, 93 The Terrace

Early in 2010 Straterra took a lease over a large office space at 93 The Terrace in Central Wellington. Our vision at that time was to sublet to similar companies and associations to create a hub of resource and sector-based activity and expertise. We have now achieved that vision and are seeing the results. The increased interaction over a range of issues adds value to Straterra’s work in the areas of government policy, government relations, and advocacy for the NZ resource sector and, we think, adds value to the tenant organisations!

We are pleased to announce the following are co-located with Straterra Inc at 93 The Terrace:

Chatham Rise Rock Phosphate (exploration), Fortescue Metals Group Pacific Ltd (ironsands exploration), Glass Earth Ltd (gold and other minerals exploration), NZ Energy Corporation (oil & gas and minerals exploration), and two resource-based industry associations.

12 January 2011

Leaving coal in the ground is no answer to climate change challenge

Greenpeace’s view on lignite (Letters, The Dominion Post, 24 December 2010) reflects the environmental NGO’s philosophy of opposition to all fossil fuels including coal. That’s fine but the utopian vision of a world without coal as the only way to fix the climate ignores the facts.

More than 41 percent of the world’s electricity supply was based on coal in 2007, according to the International Energy Agency. This is because coal-fired electricity can be generated for 6 US cents a kilowatt-hour or even less and because the supply of thermal coal is not constrained, now or in the medium term. The situation will change, that is certain, but the driver for change will be the availability of new, cheaper technologies, not the imposition of mining bans in countries like New Zealand.

The only game in town right now is to address CO2 emissions emanating from the use of coal at point sources. CCS is the answer to this issue, and is part of the answer to the broader climate change problem (along with measures such as improvements in energy efficiency and development of alternative electricity technologies). To argue otherwise is to guarantee failure!!

The following excerpt from James Fallow’s column in The Atlantic Magazine of December 2010 illustrates the real scale of the issue:

“Coal simply is going to be with us for decades,” a technical adviser to China’s energy ministry told me [James Fallow] this summer [2010] in Beijing. “We hope someday to have 15 percent of our power from renewable sources. Even so, the percentage of power generated by coal will not drop by more than a few points, and the absolute amount will quickly grow.” Another government energy expert in Beijing said that the only serious limit on how fast Chinese power companies can increase their use of coal is the capacity of the country’s transportation system ... “Right now railroads are at capacity, you have entire highways being blocked with coal trucks, and the problems cascade.” Part of the reason China has committed some $US80 billion over the next decade to build light-rail networks across the country is to get human passengers off the main rail lines, opening up more capacity to move coal.”

By way of context, China mined around some 2700 million tonnes of coal in 2008. New Zealand produces around 5 million tonnes a year.

The challenge for the world - and for New Zealand is to work on the basis of what we know, not what we might want, and develop solutions that will actually make a difference!! CCS is one of those solutions, leaving coal in the ground is not!!

Letters, The Dominion Post, 14 December 2010

Investing in research

Parliamentary Commissioner for the Environment Dr Jan Wright argues New Zealand should not mine lignite (Dec 9). Yes, the use of lignite produces CO2 emissions. But stopping the development of our lignite resource will do nothing to change the world's climate.

Surely, it's better for us to produce diesel and fertilisre for ourselves than import the same products from elsewhere, as these resources increase in scarcity and in price?

Global solutions are required for tackling climate change because it is a global problem. They might include energy efficiency, planting forests, renewable energy, and carbon capture and storage (CCS) technologies. According to the International Energy Agency, up to $US36 billion has been invested in the past two years on research and in 80 large-scale CCS projects worldwide, including Australia with contribution from New Zealand.

This is a serious investment and shows the potential of CCS to reduce emissions is being taken seriously internationally.

Any developer of lignite would require a greenhouse-gas mitigation plan in line with legislation and society's expectations. That is appropriate, and in that context, it's difficult to see how New Zealand's environmental reputation could be tarnished.

16 November 2010

Troubling issues with the Marine And Coastal Area Bill

The team at Straterra is close to finalising its submission on the Marine And Coastal Area (Takutai Moana) Bill. As written, the Bill is messy and has produced much confusion in our minds, and in the minds of others.

We assume many of the difficulties are due to clerical errors, made during the rushed drafting of the Bill. If so, these can be easily cleaned up, to properly protect existing-use rights of businesses and to provide clear processes for businesses to follow. Following are some of the issues we have identified.

It is unclear whether access arrangements will be available. Businesses may be unable to access their operations. It is conceivable there could be charges for access in some places. The Minister of Conservation could close down lawfully-operating businesses. There is inconsistent and incomplete treatment of permits, leases, licences, and approvals, terms that have not been defined in the Bill.

There are more serious issues to consider.

The situation of applicants for permits, and of permit holders who obtain subsequent permits, is ambiguous. In some areas, a company that is awarded a mining permit may face a veto on their resource consent application to exercise the mining permit. It is unclear whether provisions for recognising wahi tapu (sacred sites) and for writing planning documents could override existing-use rights, or affect new investments. In situations where engagement with iwi will be advisable or necessary, there is poor provision for identifying who to deal with.

Taken together, the Bill is likely to lead to reduced certainty for businesses, and increased sovereign risk for doing business. All of this will make it more difficult to raise, manage and retain investment capital. The resource sector is a global industry and this Bill, as written, will definitely detract from New Zealand as a destination for resource investment.

Finally, there is an issue of political and democratic process to consider.

Clause 82 of the MACA Bill provides for iwi groups holding “customary marine title” to own non-statutory minerals. This is a fundamental departure from the Crown minerals regime, cf. section 11 (1) of the Crown Minerals Act 1991 which provides for the Crown to retain ownership of all minerals on land alienated from the Crown. As such, this is an issue that deserves serious consideration. An opportunity for this might have been provided.

The Crown minerals regime is under review. A discussion document was released for public consultation on 27 August 2010. However, the issue of Crown ownership of minerals was declared by the Crown to be out of scope. That is fine but how does this position square with the changes to the Crown minerals regime proposed in the MACA Bill?

Straterra, therefore, believes it is inappropriate for fundamental changes to the Crown minerals regime to be made under a piece of legislation other than the Crown Minerals Act. For this reason, we believe the Crown should reconsider the treatment of minerals ownership in the MACA Bill.

The deadline for submissions is this Friday 19 November.

09 November 2010

Forest & Bird’s considered reply to Straterra's rebuttal (see below) of Forest and Bird's article (Now's the time to protect conservation not undermine it, The Dominion Post, 22 October 2010)

The cash from Newmont’s operations was collected offshore in overseas currency from their gold and silver sales, and retained by the company which means their overseas shareholders (retained earnings belong to the shareholders just as dividends do).

That cash represented the return on capital invested by the company (shareholders) in the past.

The company claims - without any guarantee - that it has decided to make a new investment. However, regardless of whether such an investment will be financed from retained earnings or from new funds, it will still require returns to be taken in future periods.

Newmont is engaging in a typically confusing mishmash of accrual and cash accounting concepts.

Forest & Bird’s approach is to stick with cash as far as possible, because that is what actually matters for the New Zealand economy year by year.

Gross profits that were not spent during the financial year - but were notionally ear-tagged for "future investments in New Zealand" - are not spending in New Zealand during the reporting period.

They are also not cash retained in New Zealand - except to the extent that the company's treasury opts to hold NZ Dollar securities rather than overseas currency securities during the period before actually committing any new investments.

The figure we used for investment was the actual reported increase in fixed assets during the relevant year. This is comparing like with like.

Our analysis of the how much of Newmont’s earnings are retained in New Zealand in 2009 relate to actual flows in the 2009 financial year, not to hypothetical future flows.

Forest & Bird therefore is happy to stand by our analysis, which we consider provides a much more robust and defensible interpretation of how much of Newmont’s earnings were actually retained in New Zealand last financial year.

04 November 2010

Straterra corrects errors made by Forest and Bird and calls for rational debate on mining in NZ

Last week Forest and Bird expressed some criticism of Straterra, in response to our opinion piece published in The Dominion Post on 19 October 2010.

The effect of the article (Now’s the time to better protect conservation, not undermine it, The Dominion Post, 22 October 2010) is to portray the resource sector as overstating the benefits of our sector for New Zealand, and of our commitment to carrying out our activities in an environmentally-responsible manner.

Straterra provides the following response to Forest and Bird’s allegations.

F&B: Straterra delivers “propaganda”

Straterra: We all have a right to advocacy, and we base our communications and advocacy on the facts. That’s the basis for any well-informed and rational debate on mining issues.

F&B: Mining costs a lot and has limited benefits

Straterra: Economic costs are only part of the picture and investment will occur where justified by the returns. This is an issue for businesses to assess and manage. Should we ban finance companies because they cost a lot and have limited benefits? Is the Australian experience in no way applicable to New Zealand? Nobody wants our country to want to be a mini-Australia, but we cannot deny the massive contribution the resource sector makes to the Australian economy.

F&B: Benefits of mining are limited

Straterra: People living on the West Coast, in Waihi, and in other communities where mining is an important part of local economic activity, would disagree. NZIER disagrees, and has stated that mining companies are in the top 1% of firms in New Zealand in terms of their contribution to GDP. To say the benefits of mining are limited is to argue against all economic activity. New Zealand has exciting resource potential, with significant potential benefits for the economy. Of course, these resources must be developed in an environmentally-responsible way, meeting the standards and conditions that we in New Zealand require.

F&B: Our views on Forest and Bird’s approach show a “familiar disdain for serious conservation policy”

Straterra: Straterra and Forest and Bird may not always agree on how to approach conservation issues but any observation of the activities of companies such as Solid Energy, OceanaGold, Pike River, Newmont provides compelling evidence as to the seriousness with which the industry deals with conservation and our impact on the environment. There is a great deal of work underway in this area by mining companies, often in partnership with the Department of Conservation and often over and above the strict consent requirements.

F&B: Inference that the mining industry wishes to mine in high-value areas

Straterra: In several paragraphs devoted to ecological areas, national reserves, marine mammal sanctuaries and world heritage areas, Forest and Bird argued that because we don’t allow mining in a kakapo sanctuary, we shouldn’t allow mining in a sanctuary for Maui’s dolphin. With all due respect, this is missing Straterra’s point.

If national reserves and other such areas are of very high value for conservation, then there would be no mining of these areas, if effects on the values could not be managed adequately. There ought to be in all cases informed, cool-headed and rational debate.

F&B: Inference that “mining unfairly has privileged access to public land under current law”

Straterra: We did welcome Parliamentary Commissioner for the Environment Dr Jan Wright’s report on mining on the conservation estate – as a valuable contribution to the debate on mining. It is fair to say we do not agree with everything in that report, but that we support many of the recommendations Dr Wright made.

Straterra’s press release of 21 September 2010 in response to the report included the following important point: “As matters stand, more than 90 percent of applications for access to conservation land for mining are approved, with appropriate conditions. As a result pest control and other conservation activities are carried out over a much greater area in New Zealand than would otherwise occur, benefiting native species and the NZ brand. This is as it should be.”

We stand by the above comment. There are strict conditions on mining in New Zealand to ensure effects on the environment including biodiversity are appropriately managed. We already make a real contribution to make to biodiversity conservation in New Zealand. Projects involving the conservation of blue ducks, kiwi, kaka, New Zealand dotterels, and native giant landsnails are just some of the projects underway around the country to conserve native species and ecosystems. The fact is, different regimes apply to different activities. Mining activities are subject to access agreements, and, if exploration progresses to project proposals, rigorous examination is provided for via the RMA process. There is no evidence to show that this leads to overall suboptimal outcomes in the case of mining activities.

F&B: Newmont Waihi Gold’s 2009 accounts were misrepresented by Straterra

Straterra: We provide the following statement from Newmont Waihi Gold:

“Forest and Bird made incorrect assumptions about how Newmont Waihi Gold used its profits and on where depreciation cash offsets were spent. It is correct that Newmont Waihi Gold generated $195 million of gold and silver revenue in 2009. Nine percent of this revenue was paid to overseas goods and services providers, for supplies unable to be sourced in New Zealand. Newmont Waihi Gold paid no dividend to its US parent in 2009. All profits were retained for future investments in New Zealand.”

“As is generally well known, mining is very capital intensive and cashflows can swing up and down greatly from year to year. It is not unusual for a mining company to retain profits for future capital investment programmes.”

Straterra thereby stands by the statement that 91 percent of Newmont Waihi Gold’s revenue remained in New Zealand in 2009.

01 November 2010

Straterra calls for rational debate on gold exploration in the Coromandel

People’s right to protest is important but a debate on exploration and mining in the Coromandel should be based on informed and rational debate.

Yesterday Green Party MP Catherine Delahunty led a protest against Newmont Waihi Gold's proposal to carry out exploration for gold on Crown-owned land outside of public conservation land, near Opoutere, Coromandel.

We have always argued that mining is a local issue, so we recognise the right for people to make their views known about any proposal for minerals activities.

But Newmont Waihi Gold also has the right to conduct their business. They do this in an environmentally-responsible way, and their investment could lead to economic as well as environmental benefits. Economic development is an important priority for New Zealand – we have to pay for the things society demand.

It is appropriate to hold an informed and rational debate on any significant proposal for exploration or mining, and this already occurs under the Resource Management Act. If this exploration is successful then we can have that debate on the basis of a specific development proposal, informed by thorough, and challengeable, assessment of benefits and impacts. That is an appropriate framework, not speculation and idealism.

28 October 2010

Mining on conservation land - update

The issue of mining on conservation land was considered in Wellington today by the Local Government and Environment Select Committee. Members were briefed by Parliamentary Commissioner for the Environment Dr Jan Wright on her recent report on the subject. There was general agreement with many of Dr Wright’s recommendations, including the potential for mining to be done in such a way as to have a net positive impact on the environment. Dr Wright made one comment the Straterra team is keen to share: that pests – not mining – are by far the biggest threat to biodiversity in New Zealand.

The LGE Select Committee is due to hear a petition from Forest and Bird on 25 November 2010 to have ecological areas, national reserves, marine mammal sanctuaries and World Heritage areas added to Schedule 4. Straterra is writing to the Select Committee arguing for a rational approach to the mining debate, along the lines of the Chris Baker opinion piece published last week in The Dominion Post.

13 September 2010

Congratulations to Wellington's new mayor, Celia Wade-Brown

Straterra congratulates Ms Wade-Brown's successful bid to become the capital's new mayor. Ms Wade-Brown beat Ms Prendergast by a slim margin of 176 votes.

Our thanks to the outgoing mayor Ms Prendergast for her nine years of hard work and dedication to the capital. Straterra wishes her the best for the future. Ms Prendegast stated she is looking forward to being able to spend more time with her family.

13 September 2010

AustmineNZ to be established

Staterra has been working with the Coal Association, Austrade (the Australian trade promotion agency), NZTE and Austmine to form a New Zealand branch of Austmine.

The initiative recognises the contribution - current and potential - of the resource sector in New Zealand and the importance of technology and services in the success of resource-based businesses.

Austmin