Does mining fit the bill for fast-track consenting?
The case for speeding up roads, housing and renewables is one thing, but some argue mines don’t fit into the same basket,
When RMA Reform Minister Chris Bishop presented the Fast-Track Approvals Bill to Parliament in March, he introduced it as “setting up a process that will put nationally and regionally significant projects in the fast lane”.
Many problems in New Zealand could be solved by “more economic growth, more projects, more roads, more mines, more renewable energy, more building stuff that will actually improve the economy and get things going”, he told MPs.
“Any projects that will be regionally or nationally significant will be able to apply for the fast-track process,” he says.
“That could include roads, renewable energy plants, housing developments, aquaculture farms, or mines, to give a few examples.”
But is mining the odd one out?
The economic gains that could result from greater investment in renewable energy are time-sensitive, if only because the country risks having to buy billions of dollars worth of carbon credits from overseas if it misses its emissions reduction targets.
And the sooner a road, fish farm or housing development is built, the longer it can be in service.
But the iron sands sitting off the coast of Taranaki and the thin smatterings of gold still lying undisturbed in Central Otago are finite resources that aren’t going anywhere and the gold, at least, hasn’t been getting any less valuable over time.
So what’s the rush to decide whether to mine them? Would it matter, economically, if the Government took the time to allow those developments to go through the normal consenting process and the usual environmental checks and balances?
“Why mines? Provided the environmental impacts are managed appropriately, mines can be crucial job creators in communities that need them,” Bishop says.
“Mines are needed to provide technology for the transition to renewable energy – materials for batteries and wind turbines, among others – which will help meet our climate commitments.
“Above all, mines managed responsibly can give a vital boost to New Zealand’s economy, which will help us provide the first-class education and health systems we know Kiwis deserve.”
It might seem a stretch to argue we need to mine New Zealand minerals now because they are urgently needed to make batteries or wind turbines, although it is undeniable materials for those do need to come from somewhere.
Many of the mining companies that the Government has provided with advice on the fast-track regime are interested in extracting gold, most of which would be destined to sit in a vault or on someone’s ring finger.
So what about the case for economic urgency?
Economist Cameron Bagrie is sympathetic to Bishop’s stance.
The country’s current account deficit was sitting at just under 7% of GDP at the end of last year, he notes, so there clearly is a need to bring imports and exports back into balance.
“This economy at the moment is in pretty bad shot, for cyclical reasons and because the Reserve Bank has been engineering a recession to get rid of inflation,” Bagrie says.
“If we see an awful lot of job destruction, that creates long-term ‘social scarring’. So it’s really important we get this economy back on track.”
The counter-argument would be that if the Reserve Bank is trying to reduce demand in the economy, it might seem odd to stimulate demand by undertaking work that could just as well be put off to another day when the economy is less capacity-constrained.
Infometrics principal economist Brad Olsen believes the mining projects that the fast-track regime could accelerate would come online too late to have much of an effect on the trade deficit before it improves anyway over the next few years.
The Treasury is forecasting the deficit to more than halve to 3.2% of GDP by June 2028.
“The current account deficit isn’t good at the moment but everyone’s expectation is that it does improve and gets back to more normal levels over time,” Olsen says.
“Over the time-horizons that we’re talking about at the moment, I don’t necessarily think that a new mine would all of itself fix the current account balance in a faster period than we’re currently expecting.”
Even if a lot of fast-track projects got approval tomorrow, they would “not be contributing at levels that would make a material difference compared to where we’re expecting that recovery to come through over the next couple of years”, he says.
“So I don’t see that to be the overriding driver.”
Nor does Olsen appear convinced there is an urgent need for the jobs new mines would create, the majority of which would be in the trades, rather than roles that could easily by be filled by the thousands of public servants being let go by the Government, for example.
Mark Gillard, director of the New Zealand Careers Expo, who is in pole position to assess employers’ expected future demand for labour, says they are still saying they can’t find good people, “particularly in the trades and those sorts of specialist industries”.
That would appear to raise the risk that more mining developments now might to a large extent simply displace economic activity in other sectors.
The royalties that the Government could earn from mining might seem the greatest reason for haste.
That is given that Finance Minister Nicola Willis is forecasting the Government’s accounts won’t return to surplus until at least the year ending June 2029 and is tipped to announce an extra $15 billion of borrowing in the Budget.
But the likely contribution may need to be put in perspective.
The Government received just $16.5m from royalties on minerals in the year to June and another $7.5m from royalties from coal mining.
Gold miners must normally pay the Government a 2% share of their revenues or 10% of their profits – whichever is
higher – as a royalty, on top of any company tax.
That and a 2013 Cabinet paper would suggest the Government might to expect to earn a couple of hundred millions dollars each, at best, in royalties from Santana’s mooted gold mine in Central Otago and Trans-Tasman Resources’ (TTR’s) proposed Taranaki irons sands project, for example.
To be clear, that is in total over their lifetimes – not annually.
Those are two of the largest mining projects it appears are being lined up for fast-track consent.
TTR estimated the royalties it would pay at $6.2m a year when it presented evidence to the Environmental Protection Agency in 2017, when approval for the project was granted before later being overturned.
The extra benefit of kicking off those revenues streams a few years earlier than otherwise isn’t going to move the needle on the deficit perceptibly.
But Bagrie makes the point that the fasttrack regime could be viewed as necessary not so much to speed up mining projects, but perhaps to enable them to happen at all.
“Getting consents can be a minefield, so there’s a question of ‘practicality’. Whether you support these sorts of things or not, they have been bogged down.”
Bishop also appears to present the new consenting regime in terms of “whether” and not so much “when” projects get the go-ahead.
“Mines managed responsibly can give a vital boost to New Zealand’s economy, which will help us provide the first-class education and health systems we know Kiwis deserve,” he says.
“We are making it clear to the world that we’re open for business and building a pipeline of significant projects around the country – because it’s only through a strong economy that we can afford the public services New Zealanders need.”
Those comments make most sense if the effect of the regime is expected to be to lower the bar on developments by reducing their consenting costs, rather than merely to ensure they could get the green light a few years earlier than otherwise.
So not so much a “fast-track” consenting regime, as a “cut-price” one, perhaps, in terms of the rationale – at least when it comes to mining.
Like Bishop, Bagrie appears to see the inclusion of mining in the consenting regime as bordering on the existential.
“We have been given a bit of a gift in regard to our natural resources, whether that be renewable resources, or certain select minerals,” he says.
“You have got to ask the simple question; are we prepared to cash that hand in? For some minerals, such as coal, I think the answer is ‘no’, but for others, you have got to ask ‘why not?’”
Olsen is more downbeat, arguing that roads and renewables have more “public spillovers” in terms of their benefits.
“Anyone can use the roads. Everyone will benefit from having more renewables added to the grid. A mine – that is going to be good for the mining company.
“Yes, there will be jobs that come through and you can see that in our own analysis of the West Coast economy where mining is a big contributor to economic activity and jobs.
“But it is much more a ‘private benefit’ that comes through here.”
Parliamentary Commissioner for the Environment Simon Upton made the same point in a submission to the environment select committee. suggesting fast-track consents should be limited to proposals that provided significant public benefits – such as roading, and electricity transmission and generation.
Miners advised on fast-track consents regime
Bathurst Resources: NZ coal mining company listed on the Australian Securities Exchange that operates mines in New Zealand and overseas and currently has exploration permits near Huntly and in Southland near some of its existing mines – the latter unsuccessfully contested by Forest & Bird last year. Chatham Rock Phosphate: NZ company that has been battling unsuccessfully for more than a decade to extract billions of dollars worth of phosphate deposits that could be used as fertiliser from the seabed halfway between Banks Peninsula and the Chatham Islands.
Oceana Gold: Australian miner and explorer that currently operates NZ’s largest gold mine, the Macraes Mine in Otago, and that hopes to gain consent for a new gold mine under conservation land near Waihi mine in the Coromandel.
Siren Gold: Australian miner that hopes to develop a large underground gold mine near Reefton in the South Island.
Santana Minerals: Australian mining company that hopes to develop what it believes could become NZ’s largest gold mine, an open-cast mine near Bendigo in the heart of Central Otago’s wine country.
Terra Firma Mining: NZ mining company that is the mine operator for New Talisman Gold Mines and which, in 2022, unsuccessfully applied to reopen a mothballed underground coal mine on the West Coast.
Tiga Minerals and Metals: Australian miner that has again been seeking consent to extract gold and rare earth minerals from mineral sands between Greymouth and Punakaiki on the West Coast of the South Island after getting knocked back in 2022.
Trans-Tasman Resources: Australianowned miner that has been involved in an epic battle with conservationists to extract huge volumes of iron sands from the seabed off Taranaki.
Westland Mineral Sands: NZ mining company that has been mining heavy minerals including ilmenite, gold, garnet and rare earth minerals from sands at Cape Foulwind near Westport and that now plans another mine south of Hokitika. The company apologised to residents of Westport in January after sand from its stockpiles blew through the town, covering properties and clogging gutters.
“Mines managed responsibly can give a vital boost to New Zealand’s economy, which will help us provide the first-class education and health systems we know Kiwis deserve. We are making it clear to the world that we’re open for business ... ”
RMA Reform Minister Chris Bishop