Economy vs environment

New Zealand's resource sector has reported a mainly positive year of growth around New Zealand in 2009, and swelled Treasury coffers with a 470% increase in royalties to $519 million, but the Government's decision to review its overall mineral resources, at the potential cost of some conservation areas, signals a difficult year ahead.

There was an uproar among conservationists last August at the announcing, by Minister of Energy and Resources Gerry Brownlee, of a minerals sector review.

The outcry prompted headlines about mining such pristine areas as Mt Aspiring National Park.

The contentious review is due to go to public consultation next month and will be scrutinised and publicly fought over, as it should be.

After Labour's nine years of "hands-off" management of the resource sector, implementing National's initiatives will be a bloody transition.

Mr Brownlee is this weekend reading a draft of the minerals review and is keen to put it to the Cabinet before releasing it for public consultation by the end of February.

"After public consultation, we want to be in a position to make decisions by July," he said when interviewed this week.

"The [minerals] review is a significant aspect of Government work."

"Not only opening up access, but it is symbolic in that we want more exploration and mineral extraction," Mr Brownlee said. He cited the 470% rise in royalties as a reason.

On the question of threatened conservation areas, Mr Brownlee said all rock quarrying in the country amounted to 40sq km, of a total more than two million sq km.

Each hectare within the 40sq km had a value of $175,000, as opposed to dairying, which carried a value of $3500 per hectare.

The report would include not only the stocktake but also recommendations for change.

"We are taking this cautiously. I'm expecting public comment to be significant, before any final decisions are made," Mr Brownlee said.

This week, as an agent on a permit from the Government, Crown Minerals delivered an annual report on what the resource sector did around the country during the past year, not least of all bolstering Treasury income by more than $500 million, due mainly to petroleum-based royalties income.

Crown Minerals group manager Chris Kilby said New Zealand's mining sector had "largely bucked the trend" of the global economic downturn.

There had been near-record oil production, record gold and silver production, and "strong" exploration activity.

"The economic benefits of this high level of activity can be seen at both national and regional levels," Mr Kilby said.

The 21 million barrels of oil, predominantly from the offshore Tui field in Taranaki, which contributed 64% of the total oil exports, was valued overall at $2.8 billion, and became the country's third highest export earner after dairy and meat.

This made large inroads to decreasing the country's trading deficit.

Mr Kilby highlighted a recent report identifying more than $140 billion of still "in-ground value" metallic mineral resource, plus an additional $100 billion in low-grade lignite, which is largely scattered around Southland and Otago.

"The sector in New Zealand is poised for another active and positive year. Many explorers - petroleum, minerals and coal - have committed to extensive and exciting exploration programmes," he said.

Production in oil, gas, gold and coal was expected to be "strong" in 2010, boosted by the offshore Taranaki Maari oil field and long-awaited inaugural exports from hard-coking coal specialist Pike River Coal.

The listed Pike River has spent more than $288 million on development of its mine, which has an estimated life of 18 years.

Maari, estimated to have cost $1 billion to develop, produced its first oil last February, and has an estimated 50 million barrels to extract over 10-15 years.

For Mr Kilby, Crown Minerals had several highlights for the year, including a $25 million boost for more seismic survey spending by the agency to enlarge its data base, to entice oil and gas explorers to consider areas around New Zealand.

Mr Kilby confirmed this week that after OMV had finished its present seismic surveying in the Great South Basin, up to $3 million of the $25 million allocated to Crown Minerals would be used collecting more southern seismic data this year.