Quarrying & Mining Magazine

What’s killing our mining industry?

Jason Krupp New Zealand Initiative

Many of our regional areas are in semi-recession or heading towards it. This is puzzling when so many of these regions are so rich in minerals. By PETER OWENS.

Jason Krupp is a research fellow at the New Zealand Initiative – a market-oriented think-tank formed by the merger in 2011 of the NZ Round Table and the New Zealand Institute.

Before joining the New Zealand Initiative, Jason was a business reporter at the Dominion Post and previously worked for Fairfax’s Business Bureau where he was chiefly responsible for covering equity and currency markets for the group. Prior to that, he wrote for BusinessDesk. He has a degree in journalism from Rhodes University, and has previously lived in Hong Kong and South Africa.

Krupp has urged the government to change the provisions of the Resource Management Act to make it easier for mineral extraction in rural areas and, at the same time, provide financial incentives for local governments to this end. Many rural areas face ‘poverty’, he says, as their traditional rural industries such as meat production and forestry face strong overseas competition in our traditional markets.

“If you wanted to sum up the madness of mining regulation in New Zealand – the tongue-in-cheek phrase ‘what’s yours is mine and mine’s my own’ is a great fit.”

This is the situation playing out in Northland right now, he says, as Minewatch Northland, an anti-mining group, urges local residents to resist any attempt by Evolution Mining to carry out exploration work near Whangarei.

In short, he says, an anti-mining group can tell a property owner what to do with their property without actually owning the property. Nor is there much cost to any anti-mining group to take such action, since our courts rarely award costs on these kinds of appeals. If the court does award costs, as an asset-less incorporated society the group can simply dissolve when the bill falls due.

Another example is New Talisman Gold Mines, which recently staved off a similar environmental challenge from Project Karangahake Society Inc.

This miner was granted consents by the Hauraki District Council to begin bulk sampling in the Karangahake Gorge, an area that has already been mined out extensively in the 1900s; on condition the firm met strict environmental standards. Those consents were challenged by the anti-mining group, which skipped the Environment Court, and filed a judicial review at the High Court.

The group alleged the activity would damage a recreational area. These matters were considered in the original consent application, but Hauraki District Council hired two independent consultants to assess the process again. Further lobbying by Project Karangahake also prompted Environment Waikato to hire another consultant to assess whether sufficient consideration had been given to the potential for surface and underground water pollution. After months of delay and significant costs, all the consultants agreed that the consents had been correctly granted, and that the firm’s activities were unlikely to have a significant or lasting effect on the area of the environment.

In the face of this evidence, Project Karangahake withdrew its application for judicial review. But in his address to shareholders at the firm’s annual meeting, New Talisman chairman Murray McKee noted the group continues to protest the firm’s operations.

What happened in the New Talisman case is not so much a one-off, but a standard tactic used by anti-mining groups to stymie developments they object to.

The remedy is a robust property rights regime that prevents situations like this from occurring. Or at the very least, a user pays regime so that objectors face some of the costs they impose on firms and ratepayers.

If politicians are unwilling do so, as they have been up until now, they can expect our international standing as a destination for mining investment to deteriorate. Currently the country’s Policy Perception Index, a ranking of how mining companies rate regulatory regimes, fell 21 places to 35th according to the Fraser Institute’s 2014 Survey of Mining Companies.

Subscribe to Quarry and Mining Magazine >>

Related posts

A safer place to live please

Quarry & Mining Magazine

Future still bleak for Solid Energy

Quarry & Mining Magazine

Local councils want to share royalties

Quarry & Mining Magazine