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New Zealand Tungsten Mining Ltd is appealing provisions in stage 1 of the Queenstown Lakes District Council's proposed district plan relating to mining activity in the area.
The company wants changes to provisions which, in their current form, allow only small-scale mining to be considered, and protect the area's old mining sites and other features.
At a special meeting on March 21, the association unanimously resolved that large-scale mining was a "complete mismatch" with the strategic vision for the township set out in its community plan in 2016.
Association chairman John Glover told the Otago Daily Times that if the company got its way, the district would "basically become an uber-friendly place for mining".
"Nobody is anti the sort of low-key fossicking in the workings up in the hills above Glenorchy, whether it's someone going out with a gold dredge or hobby mining."
But the company's appeal was aimed at "pushing the boundaries quite significantly", Mr Glover said.
"We want to protect our recreational access and we want to protect our water. There are businesses with concessions ... up in that area.
"That could all effectively be blighted for a generation."
The company's shareholder and director, Gary Gray, could not be reached for comment.
Mr Gray told the ODT in February he was hopeful the council would adopt a more permissive approach to commercial mining throughout the district.
He wanted to reopen the old scheelite mines near the township and carry out small-scale underground mining using modern methods that would minimise environmental effects.
The company already has permission to carry out exploratory drilling for tungsten and gold in a 10-hectare area known as the Judah Lode.
It lies within both the Whakaari Conservation Area and a council-designated protective zone called the Glenorchy heritage overlay area.
Mr Glover said members were resigned to the exploratory drilling going ahead, and were instead focusing their attention on the company's appeal.
The next step was the council's mediation process with the company to prevent court action, but because members had been "completely unaware" of the company's proposed district plan submissions and subsequent appeal until two months ago, it faced legal and financial barriers to joining the mediation process as an interested party.
They were hoping the council would "stick to their guns" and defend the proposed district plan commissioners' decisions on mining provisions, he said.