Mining permit just the start

Resource exploration around the Southern Ocean continues to gain impetus, with listed company Chatham Rock Phosphate gaining its long-awaited mining permit, a ''milestone'' towards extracting sea-floor phosphate from the Chatham Rise for fertiliser.

Chatham's 20-year permit, the first granted under the amended Crown Minerals Act which came into force on May 25, has some way to go as it now requires a separate marine consent permit from the Environmental Protection Authority, for which Chatham will apply early next year.

Earlier this month, Shell confirmed multimillion-dollar oil and gas exploration seismic surveys will go ahead in the Great South Basin, south of Dunedin, and Government permitting agency New Zealand Petroleum and Minerals (NZP and M) announced the successful bidders in its 2013 block offer.

They include newcomer Woodside Energy Holdings teaming up with New Zealand Oil and Gas with a permit in the Great South Basin and Canterbury Basin area, and New Zealand Oil and Gas gaining its own permit in the same area.

The five onshore and five offshore permits allocated by NZP and M represent a commitment to spend more than $60 million on initial exploration, largely on seaborne seismic testing.

Last Monday, Shell New Zealand said Malaysian-based partner PTTEP New Zealand Ltd had withdrawn its 18% share from the Great South Basin venture.

However, remaining joint venture parties Shell, OMV New Zealand Ltd and Mitsui E and P Australia Pty Ltd were continuing the venture and were ''working through various options for how the partnership will be structured into the future'', Shell's New Zealand chairman, Rob Jager said in a statement.

Shell must decide by January 10 on whether to ''drill or drop'' the permit for that area, which is north of the Great South Basin area it plans to explore with the separate seismic testing.

''We remain dedicated to the venture and optimistic about the natural gas prospects in the Great South Basin. The decision to drill an exploration well and the timing of that drilling programme is still being considered by the joint venture parties,'' he said.

Chatham managing director Chris Castle said the mining permit approval to extract rock phosphate from the seabed in the exclusive economic zone (EEZ) was ''a significant milestone for New Zealand as well as the company and the industry''.

''This is our most important milestone to date,'' Mr Castle said.

''It means we're halfway to being permitted, so the permit significantly de-risks the company.''

While Chatham had financed exploration, reports and permit applications to date, the actual suction-dredge mining of 1.5 million tonnes annually will be done by major 18.7% shareholder Boskalis and Chatham will become the shore-based phosphate marketing arm.

Chatham has spent more than $20 million to date, booking a $675,000 annual loss last month, while pushing out the mining start date to mid-2016, largely because of permitting delays.

Mr Castle said Chatham had applied to extract the phosphate under previous legislation last year, then application was transferred to the new regime, designed to operate in conjunction with EEZ legislation, which applied from June.

''Chatham Rock Phosphate has used the time while the ...application was [being] considered to significantly improve its marine consent application.''

Mr Castle said Chatham had also had sections of its Environmental Impact Assessment peer-reviewed by overseas experts, who suggested improvements, and he was confident of addressing concerns and could ''demonstrate the environmental impacts of our operations will be minor and localised''.

''We've also thought carefully about mitigation and monitoring and are continuing to talk to anyone with an interest in the project,'' he said.

NZP and M national manager of minerals Sefton Darby said granting the permit was the first stage of the regulatory process and Chatham needed a marine consent from the Environmental Protection Authority, which manages the environmental impact of activities in the EEZ and continental shelf.

• In mid-November, the Government opened its 2014 block tendering round, covering nine onshore and offshore areas, of which the Great South Basin and Canterbury Basin are the largest, covering 154,293sq km. Permits will be awarded in December 2014. A short consultation period was widely criticised by environmentalists.

-simon.hartley@odt.co.nz

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