‘Dig & hope’ – Nats’ great plan

Some facts about mining in New Zealand

Press Release by New Zealand Government at 4:08 pm, 24 Mar 2010

Minister of Energy and Resources Gerry Brownlee says much of the noise around the government’s modest proposals to open up a portion of Schedule Four land for possible mining is ignoring the facts about mining’s role in the economy.

“Green mining is not an oxymoron, and the government has made it clear that should Schedule Four lands be released, and should those lands show viable mining prospects, only modest and environmentally responsible mining would ever take place,” Mr Brownlee said.

“As for suggestions that modest and environmentally responsible mining on a small portion of the conservation estate would be ruinous to New Zealand’s international reputation, the facts to date suggest nothing could be further from the truth.”

Fact: There is already mining on conservation land

As at September 2009 there were 82 mines already operating on conservation land.[1] Many permits were issued by the last Labour-led government.

Yes, there are but none of them are on Schedule 4 land. Schedule 4 was established specifically to protect special areas from mining.

Between 2000 and 2008 international tourist numbers to the country increased 37 per cent from 1,789,078 in 2000 to 2,447,208 in 2008.[2]

Which doesn’t mean a thing because we weren’t mining National Parks then. We are in danger of losing our international tourism branding, recent articles in The Guardian and The Economist show the threat. And, anyway, our special conservation areas are mainly for us, the people of this country. They’re not just there to be tourism moneymakers.

Fact: Mining in New Zealand is a $2 billion industry

2008 was a record year of production for New Zealand mining. The industry has been growing strongly in recent years, driven by global demand for our resources.[3]

Actually, mining is $900 million a year. Oil and gas, which are excluded from this minerals policy, are $1.1 billion. Even combined, $2 billion is just over 1% of GDP. Even if the mineral mining industry somehow doubled in size to $2 billion a year (and it won’t do that on the back of the $18 billion in minerals in the areas National wants to delist) that would make an insignificant difference to the economy. Also, there’s the question of who profits from the GDP (foreign-owned companies).

Fact: Mining is an important export industry for New Zealand

In 2009, mining brought in $1.1 billion worth of export receipts for New Zealand.[4]

Notice Brownlee is talking just about minerals now, not counting oil and gas too. $1.1 billion is just 2.5% of NZ’s total exports. Again, doubling this would be insignificant and is impossible using just the land in question.

Fact: Mining employs thousands of New Zealanders in high-paying, highly productive jobs

The mining sector, including oil and gas, directly employs about 6,000 people in New Zealand and thousands more indirectly.[5]

Jobs in the mining sector are highly productive. In the 2000-2005 period the mining sector (including oil and gas) returned an average $360,000 of GDP per full time employee, nearly six times the national average.[6]

Workers in the mining sector average an income of $60,000 per employee – over double the national average.[7]

Mining, including oil and gas, employs just 6,000 people and brings less than half a billion in wages into the economy. The bulk of its $6.8 billion revenue goes to importing capital (mining equipment) and sending profits overseas. Yes, we do ultimately want capital intensive, highly-productive jobs but only if the wealth produced stays in New Zealand and not at the expense of our natural wealth. Mining sends the lion’s share of the money overseas. We get left with the scarred land.

Fact: Mining is far more productive than most other land-intensive applications

Mines in New Zealand use an extremely small amount of land (around 4,000 hectares), less than 0.015 per cent of our total land area.

The export value of that land is $175,000 per hectare. Dairy farming by comparison uses 2 million hectares of land with an export value of only $3,500 per hectare.[8]

Fact: Mining companies in New Zealand are New Zealand-owned as well as foreign owned

The largest mining company in New Zealand is Solid Energy, which as a state-owned enterprise is 100 per cent owned by the New Zealand taxpayer.

Between 2000 and 2009 Solid Energy made profits of $466 million and returned dividends to the Crown of $90 million.[9]

Yup. Solid Energy is New Zealand-owned. That doesn’t give it the right to tear up (and CEO on Elder is talking about open-cast mining) thousands of hectares of National Park. The rest of the major players are foreign-owned, mostly notably Newmont, which owns the Waihi mine.

In fact NZX listed resources stocks have on average 57% local ownership compared to 43% offshore ownership.[10]

And what about the miners that are not listed on the NZX because they’re wholly foreign-owned, like Newmont? They’re the big players. Also, the 57% is not a weighted average for the size of the companies, it counts the high local ownership of smaller companies the same as low local ownership of the bigger companies.*

“As I said at the release of the government’s discussion paper on the mineral potential of Schedule Four land, New Zealand is a mineral rich country and the minerals sector has an important role to play in growing our economy.

Most of the mineral wealth is not on Schedule 4 land. 60% is outside the conservation estate altogether and 90% is not in the areas that the Nats want to remove from Schedule 4 protection.

“Whether Schedule Four land plays any part delivering greater prosperity, security and opportunity for all New Zealanders by way of mining is up for discussion over the next six weeks,” Mr Brownlee said.

We know how this game plays out, Gerry. You play the bad guy. Key will can the Great Barrier Island idea. And you’ll add some areas safely out of site in Stewart Island.