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According to Peter Morrison, who owns farms in Canterbury and on the West Coast, the venture had the potential to create 12 well-paid jobs.
He has invested about $2 million over the past year, looking for gold - and finding it - on a 500ha block he owns near Inangahua Junction.
Morrison was working under an exploration permit, employing three skilled operators and local contractors on the 1ha site to evaluate the potential for a full-scale alluvial mine.
"We applied a year ago for a mining permit but we're still waiting ... in the meantime we've been doing the feasibility work ... trying to work out if it would be economic to go all in."
But after being told by MBIE he was breaching the exploration permit and threatened with massive fines, Morrison has been forced to pull the plug.
"This has been going on for months … I've had my lawyer look at it and he can't see what this alleged breach is - all they say is that the hole's too big," Morrison said.
Buller District Council and West Coast Regional Council said there were no issues with the land use and resource consents they issued for the site, and Morrison had paid the required surety bond.
But after more pressure from officials two weeks ago, Morrison reluctantly laid off his three staff.
"I'm sorry to lose them, they were a very skilled team. I doubt I'll get them back. And those were $100,000-a-year jobs."
Four MBIE officials had turned up twice in one week and been "very aggressive", he said.
"They walked around looking grim and grilling my staff and saying it was pretty big for an exploration. But it's just a tiny fraction of the 500ha permit," Morrison said.
"You have to excavate a decent area to work out what's going on with new alluvial sites, and see if mining is feasible."
His crew of three, plus contractors, had excavated a deep pit to explore the structure of the site, assess the volumes that would need to be stripped and had been testing different types of equipment.
"We've kept all the records, we've complied with all our resource consents - and we've been harassed out of business," Morrison said.
"They just keep saying it's too big ... the biggest exploration site ever seen in New Zealand. But the exploration permit doesn't set any size or volume limit. And if they want me to have a mining permit, well they've had a year to process the application and so far - nothing."
An MBIE spokesperson said Morrison's application for a mining permit was being evaluated but there was a backlog of applications.
"There was a sizeable increase in the number of applications for all permit types last year, especially in the wake of the lifting of Covid-19 lockdown restrictions. Applications for gold-related permits really took off, largely driven by a high gold price."
The permit queue had grown rapidly in the last few months of 2020, and officials were trying to deal with it as quickly as possible, the spokesperson said.
The ministry did not explain precisely how Morrison had broken the rules, but said exploration permits allowed data gathering over small, specific areas to test if the resource was commercially viable.
"Exploration activities can include aerial or seismic surveys, intensive surface-sampling and drilling core samples, trenching, bulk sampling and economic and mining feasibility studies could be undertaken."
Inangahua Community Board chairperson John Bougen was calling on the ministry to explain exactly why it shut down the venture.
It was deeply disappointing to have a potentially productive private enterprise closed by officials from afar, in a community that badly needed industry and employment, the Reefton businessman said.
"These were high-paying jobs for skilled workers, and MBIE has just pulled about half a million dollars in wages a year out of our community, when you count the contractors as well," Bougen said.
"Pete Morrison was investing in our community and we need to encourage new industry, not strangle it with red tape."
Buller Mayor Jamie Cleine said he would be concerned if Morrison's operation had been shut down unnecessarily.
"You would assume the ministry had good reason; that there had been a breach of the permit or whatever."
A ministry spokesperson confirmed the permit Morrison was working under did not limit the size of the operation, but he believed officials were concerned that mining was taking place rather than exploration.
National Party list MP Maureen Pugh said the shutdown was the worst possible news for the community and was avoidable.
"It's a disgraceful outcome and I'm truly sorry for Mr Morrison, that he's been treated this way - plus we have lost jobs, not something we can afford to have happen on the West Coast."
The permit process had been a challenge for many miners for years, Pugh said.
"It is becoming more and more obvious that the government and its ministries are not performing well and as I see it, there are no consequences for poor performance, so standards slip."
MBIE said permit applications had soared from about 30 to 90 in a matter of months and it was doing its best to deal with the backlog.
"Applications that have been with us the longest will be prioritised for processing as will those permits that are time-sensitive," the ministry said.
- Lois Williams
Local Democracy Reporter