Just as the National-led Government begins readying
changes to the Resource Management Act to finally unlock oil,
gas and mineral exploration, it this month lost its
parliamentary majority to change the RMA. Senior business
reporter Simon Hartley looks at public interest in the
Oceana Gold's processing plant at Macraes in East Otago.
Photo by NZ Resources.
New Zealand's mining sector is haemorrhaging tens of millions
of dollars and hundreds of jobs, reflecting the billions of
dollars and thousands of jobs already lost in Australia.
With China's economic growth easing, but on target for 7.5%
growth this year, a pall has been cast over the resources
sector with iron ore, gold and industrial metals plunging.
The impact on the respective transtasman economies can be
gauged from the resource sectors' respective contribution to
gross domestic product (GDP), being 9.6% of Australia's and
just 0.9% of New Zealand's.
In the year ahead, the industry, environmentalists and public
will be hearing much about ''projects of national
significance'', proposed RMA changes and the small print of
''affected parties'' behind non-notification of consent
Last month's annual meeting of the New Zealand branch of the
Australasian Institute of Mining & Metallurgy (AusIMM) in
Nelson was held amid the worst economic climate experienced
by delegates in decades.
Most said it was worse than the global financial crisis, and
the sector remains on edge from the continued global
volatility of commodity prices.
While there was a surge in conference attendance, contractors
and suppliers looking for work were buoying up attendance
figures. A reflection of the dire times was AusIMM offering
members suffering hardship a 50% membership discount.
New Zealand's extraction companies have little tangible
assistance to look forward to in the year ahead, but Minister
for Energy and Resources Simon Bridges spoke at the
conference of further streamlining of the resource consent
process under the the Resource Management Act (RMA).
However, about a week later, the Maori Party and United
Future pledged not to support Minister for the Environment
Amy Adams' proposals for changes to RMA.
The extent of consenting issues is best reflected in West
Coast specialist coking coal miner Bathurst Resources having
spent two years grappling with multiple appeals by
environmentalists through the Environment Court, Supreme
Court and Court of Appeal against its granted consents.
The challenges have effectively delayed the start of its
Denniston Plateau project, on which about $300 million has
The proposed RMA changes include the Government considering a
nine-month time frame for the consenting process for projects
of national significance, all part of streamlining the
processes for oil and gas, and resource extraction.
It was Mr Bridges' co-announcement, days after the conference
ended and in conjunction with Economic Development Minister
Steven Joyce, which restated the Government's aims more
The ministers for the first time lumped in mining and oil and
gas exploration in a 158-page release of data, highlighting
the jobs, investment, exploration and production from gravel
to fertiliser, gold, gas and oil condensate.
Together, mining and oil and gas represent 2.5% of New
Zealand's GDP; a total $2.8 billion in export receipts last
year, or 6.2% of all exports.
If the public, unlike environmentalists, cannot understand
the significance of non-public notification of resource
consent applications, the extraction companies will be
confidently going to head offices with promising test
drilling results and a stronger argument for exploration and
Non-notification means neither the open-slather seabed
drilling, nor the overnight establishment of pit mining, but
it does represent cost and time savings resource for
But environmentalists and the public appear headed for having
less say during applications for these activities.
Non-notification for consents feeds directly into the
industry and the Government's preferences, which includes the
controversial onshore production practice of fracking, and
the more recently proposed non-notification of discharges and
dumping at sea by oil rigs.
Depending on public sentiment, the relatively new
Environmental Protection Agency, which will decide consenting
issues at sea, will have several masters to appease; a
conundrum noted by EPA chairwoman Kerry Prendergast during
her conference presentation.
Back onshore, between Newmont Waihi Gold and Oceana Gold, the
pair have already choked off, or deferred, $US350 million
($NZ447 million) in operational spending, with Oceana
planning to mothball its Reefton open pit operations and up
to 260 jobs by mid-2015.
Its 770 New Zealand employees are awaiting the outcome of its
company-wide review, with expectations of pay cuts or
redundancies. Anecdotally, indirect mine services companies
in Otago are already feeling the pinch.
With about 1200 junior exploration companies listed on the
mining-friendly Toronto stock exchange, which underpins many
New Zealand ventures, half of the 1200 are estimated to
disappear in the next year, prompting one senior delegate to
suggest half of the remaining 600 will be gone the following
Craigs Investment Partners broker Peter McIntyre said the the
gold sector was in a ''chaotic scene'' at present, as funding
dried up for junior explorers and major companies undertook
reviews and sweeping cutbacks.
''There's been a lot of funding out of Canada until now. But
that has largely gone,'' he said.
As when there is a trough in any sector, opportunities arise
and those with the largest war chest can prosper in dire
times; Newmont is forging ahead with its new underground
project in Waihi and Oceana has applied for consents to open
a new pit on its northern boundary, at Macraes in East Otago.
However, Mr McIntyre cautioned the present funding crisis
meant the usual expectations of mergers and acquisitions by
the major companies were ''likely to be the last thing on
''Even the large players are struggling themselves,'' he
Tellingly, gold explorer and boutique producer Glass Earth
Gold exited its South Island operations last month, paring
back its staff and operations to refocus on three hard-rock
prospects around Hauraki, in the central North Island.
In a sign of the toughened times, Glass Earth recently
proposed to consolidate its shares, exchanging 10 for one,
having seen them hugely diluted from numerous
capital-raisings during the past almost eight years. While
the gloom lingered for many at the conference, Glass Earth's
exit from Otago has opened the way for one, if not two,
private companies which purchased its alluvial (loose) gold
operations around the wider Maniototo for $1.75 million.
Still in the South Island, MOD Resources is progressing Sams
Creek gold aspirations, with diamond-drilling well under way
at the remote ridge line in Upper Takaka, containing an
estimated 1 million oz resource.
In Southland, private company Waikaia Gold Ltd's plans to
dredge the flood-plain alongside the Waikaia River completed
financing last year for its $12 million project, which is
targeting an estimated more than 100,000oz over about eight
While no environmentalists spoken to at the protest-free
conference sought mileage over the resource sector's dire
straits, much less the loss of jobs supporting families and
communities, its predicament prompted some wry ''We told you
so'' comments regarding the wider peak oil and climate change
In the latest twist, the Maori Party and United Future
pledged in Parliament not to support Ms Adams' RMA changes,
prompting Forest and Bird and Labour to call on the
Government to dump the planned changes.
The pledge means the Government has lost its parliamentary
majority to pass RMA reforms. Labour and the Green Party
further pledged to repeal any legislative changes if they win
the next election.
The same day, Sir Geoffrey Palmer QC waded into the
Government in a report to Fish and Game on the changes to the
RMA and freshwater management.
He said the changes had ''the potential to significantly
restrict the ability of ordinary New Zealanders to have their
say'' on the impact of commercial development on
environmental and recreational concerns.
''The Government's proposals will replace those provisions
with a single list of competing considerations, under which
principles protecting the natural environment and its
recreational enjoyment will be consistently weakened, and
principles promoting development will be consistently
strengthened,'' Sir Geoffrey said.
The changes could become one of the most polarising pieces of
environmental legislation since the RMA was put in place.