Response to ODT

Response to ODT

Posted on 29 April 2019

By Chris Baker*


Rosemary Penwarden, climate activist and member of Coal Action Network Aotearoa, has drawn attention to the New Zealand Minerals Forum to be held in Dunedin next month, Time for turning back on using coal.  

For the record, the Minerals Forum is about mining in New Zealand, globally and looking to the future - including coal.  I’m sure Ms Penwarden and others recognise the importance of minerals for modern society: aggregates for infrastructure, housing, concrete; coking coal for steel; gold, copper, cobalt, rare earth elements (REEs), lithium and vanadium for electronics, electric vehicles, solar panels, batteries - this list goes on. 

The world needs minerals and that means the world needs mining. This reliance on minerals is only going to increase.  A recent report by the World Bank, The Growing Role of Minerals and Metals for a Low Carbon Future, predicted greater demand for many minerals as we move to a lower carbon economy. 

The Dunedin Forum reflects the positive contribution the minerals sector makes to the New Zealand economy.  Those attending include CEOs and mine managers, exploration professionals, researchers, scientists, resource management specialists, government officials, ministers and members of parliament, iwi and NGOs.

Ms Penwarden is fortunate to live in a province that benefits so much from mining. Oceana Gold employs hundreds of people at Macraes, spends 78% of its revenue within New Zealand and we expect that mine to be operating for many years to come. 

Turning now to coal – which is Ms Penwarden’s main focus. 

Coal is more carbon intensive than the other fossil fuels – two times that of gas. When she talks about banning coal (and gas next year?), there are a few things to consider.  New Zealand produces two types of coal - coking and thermal.

Coking coal is a mineral input mainly used to make steel There are no commercially viable technologies to make steel, at scale, without coking coal. New technologies are being developed, both to make steel without coking coal and substitute materials, but the most optimistic assessment would see that transition occurring over decades, not years.  New Zealand is a very small exporter of coking coal, but those exports are significant in our economy – for jobs, taxes and export revenue. Also, our environmental and safety standards are world class, and better than many of the countries with which we compete. We could stop mining and exporting our coking coal, but that coal would simply be replaced from elsewhere and most likely with a negative impact on the planet.

Thermal coal is used as a source of energy and has two main roles in New Zealand. The international competitiveness of our agriculture sector, dairy in particular, relies on the cost-effective energy that coal provides. This is changing as the ETS price rises and other technologies become more competitive. But banning this coal as Ms Penwarden demands, would hurt our major export sector while providing no commensurate benefit to reducing global emissions.  Coal also plays an essential role in providing security for electricity generation in New Zealand as a back-up to our largely renewable generation mix. A lessor use of thermal coal is to heat schools and hospitals mostly in the South Island where no reticulated gas is available. 

Coal is used in this way because the cost of heat produced is substantially less than heat derived from other fuels – such as electricity or biomass.      

Of course, our industry understands the global challenge to reduce emissions, and our commitments under the Paris Accord. We also understand the need to transition in a way that doesn’t simply export the problem and/or, export our jobs. At this time, ending coal mining in New Zealand will not reduce global demand for coal, nor help achieve emission reductions internationally.

Coal use in New Zealand comprises around 5% of our greenhouse gas emissions. Coal might be the single biggest source of emissions internationally, but it is not here.   

Like many of the challenges faced in our society the issue of coal needs an open and balanced debate that is informed by science and evidence. We hope the New Zealand Minerals Forum will provide a useful contribution to that debate.

*Straterra is the industry association representing the New Zealand minerals and mining sector