Mining and the NZ economy

In the same way that mining supports the way we live, it also underpins much of our economy.  

We are fortunate that New Zealand is rich with many minerals that are necessary to drive our economy, but we still need to import minerals from other countries. Our ability to extract necessary minerals from our own resources means we are less dependent on imported minerals, which is good for our economy.

Here’s how mining contributes to New Zealand’s economic wealth:

 

Jobs

There are around 4,290 people employed directly in the minerals sector (excluding quarries). These are high-paying jobs earning more than $105,000 on average which is almost twice the national average wage of $59,000. Each of these jobs supports a family and a household in regions and communities that often don’t have the job opportunities that manufacturing and infrastructure provides in cities throughout New Zealand.

 

Regional development

In areas such as the West Coast, Coromandel and Taranaki, mining plays a substantial role in underpinning regional economies. On the West Coast for example, a 2010 study by BERL calculated 40% of regional GDP is earned directly and indirectly from mining, mainly gold and coal. Because of the high incomes associated with the mining industry, regions which are able to exploit their natural resources have relatively high household incomes for a very small footprint – no other land-use earns nearly as much per hectare. The high household incomes on the West Coast come from a footprint of 14km2, compared to the total area of the region of 23,000km2.

At the Macraes mine in East Otago, for example, it is assessed that it would take 767 years to earn from farming the amount earned from mining, off the mine footprint. In addition, the opencast mining method used at Macraes means that as mining progresses, land is returned to productive grazing use. Indeed, the rehabilitated land at Macraes is more productive than pre-mining. This is a common outcome when land is mined and later returned to agricultural use.

 

Sector Statistics

A 2017 Infometrics report identified the significant economic contribution of the mining and exploration sector to the NZ economy:

GDP contribution $2.6 billion or 1% of NZ total GDP

Average wage: $105,000 a year

Labour productivity: $568,700 per FTE (cf. NZ average of $108,200)

These statistics demonstrate that mining is a high value sector producing very good incomes for New Zealand workers and their families, mostly in regions and communities that don’t have large manufacturing industries to provide jobs.

 

Most revenue stays in New Zealand

An independent report for OceanaGold New Zealand Ltd found, in 2016, $330 million, or 88% of the company’s expenditure on its domestic operations reached people and businesses in New Zealand through wages and procurement”. Here is the source: OceanaGold’s contribution to New Zealand: Report on the economic, social and environmental contributions of OceanaGold to New Zealand in 2016 (2017). KPMG.

 

Exports

Mining is a $2 billion industry and more than half of that - $1 billion – earns export dollars for New Zealand. A significant proportion of those export earnings are from coal. Coal also plays a very important part in fuelling our domestic industrial processes and to a lesser extent in electricity generation. If we did not mine coal in New Zealand, this would all have to be imported.

 

Investment

The exploration costs and investment required to develop mining operations mean that large international companies are sometimes needed to provide the infrastructure and investment capital to develop mining projects. The benefits this overseas investment provides to New Zealand directly goes to workers and their families, to local subcontractors and to central and local government through taxes, royalties and rates.

 

Updated Sept 2018