Mining’s potential on the West Coast
Op Ed - Published in The Greymouth Star 11 May 2018
Chris Baker, Chief Executive of Straterra – the voice of New Zealand’s minerals sector
These are uncertain times for the mining and oil and gas sectors. Government statements about no new mining on conservation land and the decision to ban offshore oil and gas exploration have hit the sector hard.
That said, the Minister of Energy and Resources, the Hon Megan Woods recently commented that her Government has no plans to end coal mining in New Zealand.
Any decisions that affect our ability to mine for coal, gold, aggregates, rutile, ironsands and other minerals, need to be made in the national interest in a way that balances environmental, social and economic considerations. This is nowhere more relevant than on the West Coast.
Exports of coking coal from the Coast provide jobs, much needed export revenue and, what is more, do not contribute to New Zealand’s carbon emissions account. Coking coal is an essential input in the manufacture of steel. And while an increasing amount of steel is being recycled, there is no current technology to make steel, at scale, without using coal.
Coking coal is a great story for New Zealand. It accounts for around a third of New Zealand’s coal production - all of it from the West Coast - and virtually all of the country’s coal exports.
New Zealand coking coal has certain special qualities and is in high demand internationally. If we don’t supply our coking coal, customers will simply purchase elsewhere, often from producers with lower environmental standards. That means the steel will still be manufactured, there would be no net gain for the global environment but West Coast jobs would be lost. To almost any Coaster that is a clear-cut reality but, sadly, reality is often the casualty when Wellington policymakers sharpen their pencils.
The reality is in many New Zealand regions - north and south, mining provides employment and economic benefit.
These are in the regions, because that’s where mining happens. Government figures show the minerals sector contributed $418 million in GDP, or 22% of the value generated by the West Coast in 2015, and supported 1,180 jobs or 7% of employment. The minerals sector also has very high productivity ($354,000 of GDP per filled job) and generates high incomes.
Contrary to popular belief, most revenue from mining in New Zealand doesn’t go to the overseas investors who fund exploration and infrastructure. For example, a report for OceanaGold found, in 2016, that 88% of OGC’s expenditure on its domestic operations reached people and businesses in New Zealand through wages and procurement.
So, minerals and regional development go hand in hand. Mining injects money into local economies, including the West Coast, Otago, Waihi, Waikato and Southland. Mining generates much needed export revenue directly (gold, coking coal) and indirectly through cost effective heat and mineral input for steel, dairy and infrastructure.
We should also note that coal transport provides the critical mass that ensures the viability of the rail link from the West Coast to Lyttleton – a crucial contributor to the West Coast economy.
We welcomed the West Coast leaders’ letter to the Prime Minister, as reported in the Greymouth Star recently, opposing the intention to ban new mining on conservation land. Straterra’s view is the policy is overly blunt, unnecessary, unwarranted, and will compromise significant economic opportunities, particularly in the regions.
The Resource Management Act has provided a strong and robust forum over many years in which environmental, social and economic impacts of a project are considered and appropriate conditions imposed – and those conditions reflect the standard that society demands.
The notion that there be no new mining on conservation land, if implemented, is a triumph of ideology over a process that at least strives to be fair and balanced.
We are closely watching the Te Kuha coking coal project which had resource consents granted in November last year and requires access through conservation land for development. This is a great opportunity to add investment and jobs on the West Coast and to add to New Zealand’s exports.
We note, and are encouraged by, the recent Department of Conservation decision allowing access to conservation land to quarry aggregate for the Franz Joseph walkway.
A common objection to mining generally is the loss of biodiversity as a result of the mining activity. Of course there are trade-offs in any resource based economic activity. For example, the loss of biodiversity in most urban development is 100%, never to be regained. Mines however typically have a relatively small footprint – the largest gold mine in New Zealand, Macraes in East Otago, has a footprint of around 1,400 hectares. There are larger farms than that. Mining also generates high value from the small footprint. It has been estimated it would take 767 years of dairy production to match the revenue Macraes earned in its first two decades of operation. And, as importantly, much of the mined land is rehabilitated and returned to its former use or state.
These are important issues and we believe that with good and open process, mining can and should result in a net benefit for the environment, for regions, for jobs and the New Zealand economy.