NZ needs to ease red tape over exploration and mining

New Zealand urgently needs to ease red tape over exploration and mining: Chris Baker, CEO, Straterra,

New Zealand is rich in minerals – gold and other metals, coal, aggregates - yet access to them relies on tortuous regulatory processes that are no one’s fault, and do no one credit.

We have a system about which the Ministry for the Environment says: “When … viewed as a ‘whole’, evolution [of the resource management system] has resulted in inconsistencies and misalignment between core legislative frameworks.”

Translating this advice to the incoming Minister: if you want to prospect, explore, or mine for minerals, you may, or will need consents from: the Ministry of Economic Development (New Zealand Petroleum & Minerals); landowners; iwi; councils; Department of Conservation (for concessions, access to land, and Wildlife Act permits); and the Historic Places Trust.

That is all fine, however, the applicant is often forced to do this in sequence, often more than once, entailing years of effort, and many millions of dollars in processing costs, before a cent is earned.

It is easy to lose sight of what our resource management “system” is supposed to achieve, when it comes to minerals.

Consider the steps: look for minerals over a large area (prospecting), find a promising ore deposit within a smaller area (exploration), assess economic viability of extraction at a site (with costs including environmental management), and then, all going well, develop a mine. Typically, costs met for this work prior to the decision to develop a mine will be in the order of tens of millions of dollars.

Only once the mine is built, if that stage is reached, does the income begin to flow. Only at the last stage are there significant effects at a site on the environment, and on communities, to be considered, and managed to acceptable standards.

Meantime investment capital must be raised, in progressively increasing amounts, against progressively increasing expectations of a return, to finance prospecting, exploration, and mining. This is challenging, at every stage.

The current regulatory system takes little account of the investment challenge, and, as a result, less prospecting and exploration occurs in New Zealand than could, and should, occur. The system must be reformed to reduce costs, and promote investment, to maximise benefits from minerals.

Yes, more mining should occur – subject to a debate on location and environmental conditions for specific proposals - because mining is an economic and social good.

In 2008 minerals and petroleum employed directly and indirectly 14,800 people, and contributed $2.15 billion to GDP, including in taxes and royalties, and foreign exchange earnings. As well, coal and gas are a key energy source for our dairy, wood and timber processing industries, horticulture, and other industries, e.g. making cement. Our coal and ironsands are used to make steel at Glenbrook (some of which is manufactured into wind turbines). Peak load electricity is still produced by Genesis at its coal-fired plant at Huntly. Most New Zealand mines are quarries, most of which produce aggregates for roading and construction.

Having dispensed with the benefits, the debate goes to the costs. While prospecting and exploration have negligible or little effect, mines do have effects, potential or actual, on biodiversity, landscapes, air and water quality, recreational opportunities, historic heritage, wahi tapu, land owners, communities, society.

These effects need to be assessed, along with proposals for managing them – no argument there. It is also accepted by industry there may be special places where some or all types of mining should not occur.

Our plea is twofold: let’s make a better distinction between the regulatory treatment of prospecting/exploration, and mining; and develop efficient, and integrated regulatory processes for both sets of activities. There are several things New Zealand could or should do.

Standardisation of treatment of activities under the RMA, e.g. via a national policy statement and national environmental standards, or via a guidance notice for planners, would be a great help, especially in situations where a proposed activity falls across council boundaries. For example, prospecting and exploration could be classified as permitted, or controlled activities, subject to rules in plans, or to non-notified resource consents, respectively.

To clarify the above: public consultation on a proposal to drill exploration holes is unnecessary because this activity has in almost all cases very low environmental impact. Currently it can take years, and millions of dollars in costs, for the applicant to get a resource consent to drill a dozen 10 centimetre-wide holes in a paddock, which is ridiculous.

Running processes in parallel to gain consent (with conditions) for access to Crown minerals, access to land (in particular, Crown land), resource consents, any Department of Conservation concessions and/or Historic Places Trust approvals, would greatly aid matters, for regulators, the company, iwi, communities, and other affected parties.

Mandatory time limits on regulatory processes are essential for efficiency and effectiveness, and not just for initial consents. Consider that companies often seek multiple approvals for changes to work programmes, or extension in duration of activities, as projects evolve over time.

Better co-ordination between decision-makers is essential. Too often we hear from a regulator – “go and get consent from them and come back to us”. That is simply not good enough in 21st Century New Zealand.

The UK has a Department for Environment, Food and Rural Affairs, which would be equivalent to MfE, DOC, the agriculture, forestry and fisheries ministry, Land Information New Zealand, and potentially MED merging into one. Not that New Zealand should do the same thing, necessarily, however, the UK system is surely worth investigating for solutions at home.

To their credit, these very agencies, including Te Puni Kokiri, have already thought on these weighty matters. The Natural Resource Sector, as these agencies are called, advised the incoming Government that New Zealand needs to “build enduring institutional arrangements that are

transparent and informed, and which inspire confidence and investment certainty this requires investment and new policy and practices in information, capability and capacity building, and in institutions.” Go for it, the sooner, the better.

ends

© Scoop Media