Coromandel mine claims rubbished

Written By: - Date published: 12:49 am, March 25th, 2010 - 16 comments
Categories: Conservation, Economy, Mining, poverty - Tags: ,

Denis Tegg is spokesperson for Coromandel Watchdog, the group that lead the fight against mining the last time it was the Right’s big new idea in the 1980s and early 1990s. It was Coromandel Watchdog’s efforts that principally led to the creation of Schedule 4 of the Conservation Act, which protects National Parks and some other DoC land from mining. He writes:

A mining lobbyist has produced grossly inflated back of the envelope figures for the “value” of New Zealand’s mineral resources. These have been used relentlessly by the Government and the media has quoted them almost unchallenged [this was written before TVOne got on to the job].

So I thought I would do some back of the envelope calculations myself.

Page 28 of the Government’s Discussion Paper Appendix 1 says that the value of potential resources mostly gold and silver on the Coromandel is $54 billion.

The next paragraph says mineral production from the open pit mine at Martha Hill Waihi is valued at $225 million per annum.

The average life of a modern mine is around 10 years so the value of total production per open pit mine would be $2.25 billion.

Let’s put aside for the moment that most of this “value” heads offshore.  Or that Newmont’s own Social Impact Report says mining town Waihi has high unemployment levels, double the rate of welfare dependency and lower wage levels than nearby towns of the same size.  Or that it score 10 out of 10 for “social deprivation” (10 is worst)

So how many open pit mines “worth” $2.25 billion do we need to have operating to achieve the potential $54 million of resources? The back of my envelope gives the answer.  24 open pit mines on the Coromandel!

Mr Brownlee won’t rule out open pit mining but under pressure in Parliament on 23 March John Key said he (note he not the Government) would rule out open cast mines on the Coromandel.

Let’s not be churlish about the total confusion and panic in the Government ranks. Let’s accept Key’s “on the hoof” assurances that there will not be any open pit mines.

Which means only underground mines are left to achieve the digging out of this incredible $54 billion potential.

The back of my envelope tells me that underground mines are about 1/20 of the size of an open pit mine. So we are going to need nearly 500 underground mines on the Coromandel, each operating for 10 years to achieve this stupendous $54 billion-dollar bonanza!

If you are looking for further evidence that the Government’s figures are wildly exaggerated its on page 23 of the discussion paper.

There it states that after 66 years of intense activity the Thames goldfield produced just $3.6 billion of gold at today’s prices.  Yet by some miracle, the Thames and another Coromandel gold prospects are going to lead us to economic nirvana in the next few years and we are going to achieve a $54 billion-dollar bonanza.

But wait there is more — Minerals Association lobbyist Doug Gordon says only one in 1000 prospects ever turn into a workable economic mine. So Gordon’s statements mean we have to divide the potential $54 billion by 1000 — giving a figure of only $54 million straight off the bat.

Denis Tegg

www.watchdog.org.nz

sign on for help with submissions at watchdog@pohtukawa.org.nz

16 comments on “Coromandel mine claims rubbished ”

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  1. Idiot/Savant 1
    25 March 2010 at 1:19 am

    The average life of a modern mine is around 10 years so the value of total production per open pit mine would be $2.25 billion

    Actually, the NPV of the income stream, which is about $1.7 billion at a nominal 5% (note: the government uses 10% for all its internal accounting decisions), or $2.8 billion if we double the life of th emine to 20 years.

  2. Cnr Joe 2
    25 March 2010 at 8:38 am

    Theres gold in them there priceless habitats! Some.

  3. TightyRighty 3
    25 March 2010 at 9:10 am

    curse those M and B buttons being so close together. with all due respect to your obvious expertise on the issue, your conclusion is just plain wrong. you can not simplistically divide $54 billion by 1000 to state what you believe is the actual output. there are not 1000 open cast mines in auckland city where mining has occured in the past. nor on the west coast or in the coromandel. this is all about exploration, no one is digging yet. if digging occurs it will be at the location with the highest possible return, and hopefully the lowest possible impact on the surrounds. come back when the hysteria in you has died down, and maybe the rhetoric too, and present a more valid argument.

    • Bright Red 3.1
      25 March 2010 at 10:03 am

      “are not 1000 open cast mines in auckland city where mining has occured in the past. nor on the west coast or in the coromandel.”

      that’s because it’s one in a 1,000 prospects that come off, not one in a thousand mines.

      Unless you know beter than the Minerals Association, of course.

      • TightyRighty 3.1.1
        25 March 2010 at 12:23 pm

        no, i don’t know better. my point was that one in a thousand prospects that come off does not automatically mean there is only 1/1000 of the estimated mineral wealth in any one spot. it’s simplistic conclusions like that that lend nothing of any value to the debate. if mineral wealth was spread that evenly i could have a hole in my backyard and be mortgage free. and ground floor apartments would be worth more than penthouses because you’d be able to build a pool and pay for it with the earth you pulled out.

        • Pascal's bookie 3.1.1.1
          25 March 2010 at 12:37 pm

          A mining lobbyist has produced grossly inflated back of the envelope figures for the “value’ of New Zealand’s mineral resources. These have been used relentlessly by the Government and the media has quoted them almost unchallenged [this was written before TVOne got on to the job].

          So I thought I would do some back of the envelope calculations myself.

          The whole point of the post being that, you know, the numbers Brownlee has been throwing around are shit.

  4. Armchair Critic 4
    25 March 2010 at 9:24 am

    “present a more valid argument.”
    Something more like s4 lands are priceless, so arguing the economics of mining and therefore implying that mining could be acceptable at some price, is pointless.

  5. freedom 5
    25 March 2010 at 10:09 am

    the standard is being censored

    [lprent: No it isn’t. You’re just too impatient about a comment that went into the spam queue.

    Remember this site is run on a voluntary basis by people giving it time when they have some. One of my tasks is to rescue or approve items caught in the spam queue. Yesterday I went to work without my iPhone, which meant that I couldn’t tether to the internet, which meant that my abilities to admin the site were quite restricted.

    However I’m now starting to get interested in banning you because you’re getting irritating and wasting too much of my precious time. ]

    • freedom 5.1
      25 March 2010 at 10:32 am

      turns out the link i was trying to post is on the site’s spam filter’s list.
      Why is an internationally recognised academic site on a spam list?
      the link is now spaced so at least it can be seen
      a e 9 1 1 t r u t h . o r g
      the post is
      “no-one said it was going to be easy

      all we can do is point people to information, such as the fact that one of the most academic and heavily regulated information sites on 9/11 Truth last week presented a new legal challenge to the Official story and was signed by 1,000 members.

      A site that to be a member of, you must be a qualified Architect or an Engineer.
      read that again and let it soak in

      1,000 qualified Architects and Engineers challenging an Official declaration from their Government. A challenge based on questions of the physical events, nothing else. No Politics. No accusations, just the facts people, nothing but the facts. Why would they do that if the Truth was not in question?

  6. Stacktwo 6
    25 March 2010 at 10:20 am

    A few days before Brownlee and Key admitted the so-called hysterical claims of Forest & Bird et al were in fact accurate, the Herald reported ( http://www.nzherald.co.nz/environment/news/article.cfm?c_id=39&objectid=10632712)

    “Linda Willoughby of Newmont mining corporation, which operates in Waihi, said the company had no interest in Otahu or Parakawai at the moment.

    Nor did it have any plans to mine areas near Thames township that are at risk from flooding and storm damage. “They are totally off the radar,” she said.

    Peter Atkinson of mining company Heritage – the last mining company that was interested in mining in protected areas of the Coromandel before they were placed off limits in the 1990s – was not interested in anything north of the Kopu-Hikuai Rd, the so-called “green line” marking the beginning of protected Schedule 4 land.

    “I don’t know of anyone who is even looking at it,” he said. “As for national parks, dream on,” he said.”

    I wonder how much of the tottering edifice the government is erecting is founded on the speculation of the starry-eyed Richard Baker and the desperation of our clueless leaders?

  7. Lanthanide 7
    25 March 2010 at 10:29 am

    Yes, this “lets take the number and divide it by 1000” is quite frankly, stupid and shows ignorance of the situation.

    You realise that when they say “lets go mine in the Corromandal because there’s lots of gold there”, they have effectively already cut out 990 of the bad prospects?

    • Bright Red 7.1
      25 March 2010 at 11:55 am

      Lanthanide. The 1 in 1000 comes from the Minerals Association.

      • TightyRighty 7.1.1
        25 March 2010 at 12:24 pm

        so, didn’t you read my bit about mining where it will have the most value and least impact. you know, one of those cost/benefit thingymabobies?

      • TightyRighty 7.1.2
        25 March 2010 at 5:14 pm

        Lanthanide – if the figure was one prospect in 50 billion, they could be mining for you

  8. Jim Nald 8
    25 March 2010 at 11:48 am

    Will this be like a Saruman cometh to Fangorn Forest?
    Can someone tell Sauron to stop it please!

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