Does mining meet Key’s tests?

Written By: - Date published: 9:20 am, March 30th, 2010 - 22 comments
Categories: Conservation, Economy, jobs, Mining - Tags: , , ,

In his post-Cabinet press conference, John Key gave three tests that mining on protected land would have to meet to satisfy him that it ought to be permitted.

Creates jobs and puts money into the local economy:
Mining does not have a big pay-off for the local communities. Waihi is mired in poverty. The mine digs up nearly quarter of a billion of gold and silver each year but just $40 million flows into the local economy and just 350 jobs are created by it. Most of the money goes overseas.

Economically viable/ profitable for New Zealand:
Of the $6.6 billion in revenue the mining industry raised in 2008, just $6.5 million went to royalties, half a billion on wages, and about the same in corporate tax. The mostly foreign-owned mining companies walked away with about $1.5 billion in net profits.

The NZIER says, with some brilliant multiplication, that if you double mining in New Zealand you’ll double it’s contribution to GDP from $2 billion to $4 billion. An extra $550 per person they say. Problem is we doesn’t actually get $550 more each. The lion’s share goes offshore in profits in return for some miserly royalties and a small number of jobs. (while it accounts for 1.1% of GDP currently, mining accounts for just 0.3% of employment and 0.6% of wages). The NZIER fails to count the lost value of the conversation land and ignores the fact that the minerals would quickly run out.

Some commentators, including the NZIER, have framed this as a debate of economically sound activity vs nature. That’s not the case.

National holds up Pike River Coal as an example of environmentally-sensitive mining that delivers economic rewards. But the truth is less rosy. Pike River has had huge cost over-runs, it is cash-strapped, and it has failed to get anywhere near its production promises.

Another question around economic viability is the cost-trade off. What will the cost to tourism be? Don’t pretend there would be none. National has released no information on this and either doesn’t know or isn’t telling. Neither is good news.

Then there’s the question of whether, even if we do accept mining in these areas, that mining should take place now. These minerals are like a trust fund that we inherited and get to spend once. Why should we blow it now? If these minerals are so desirable off-shore then, surely, the price is only heading one way of over the long-term. We have national savings in the form of Kiwisaver and the Cullen Fund, we should consider the minerals a n asset with a long-term hold recommendation. That applies not only to the minerals in Schedule 4 land, if we were to agree to dig them up, but the 90% of our minerals that are not in the areas in question.

Environmentally sensitive:
Despite Key’s promise that his mines will not be open-cast, there is no economic alternative. Don Elder from Solid Energy is talking about open-cast mining in Paparoa. Mining rare earths is inevitably open-cast because the elements are found in such low densities that the only economic way to mine it is dig a big pit, superheat the rock you dig up and then bath it in acid ponds. These massive tailing ponds remain after mining stops.

Even if gold and silver can be mined underground they will leave those huge tailings ponds like we see at Waihi.

The aggregate (gravel, basically) that National wants to mine in the two Thames region Ecological Areas is on in found in big outcrops on the surface. And the gold that the mining companies and National probably know is underneath. Open-cast and tailings will be the way there too.

Add to this the infrastructure that needs to be created for mining, especially on Great Barrier and you’ve got a massive environmental impact from any of the mining options National is considering.

Mining on Schedule 4 land fails to meet Key’s own tests but that’s not going to be enough to stop National. They’re determined to push on irregardless of the facts. Only determined pubic opposition will stop them.

22 comments on “Does mining meet Key’s tests?”

  1. Lanthanide 1

    Apparently the mine at Waihi provides 25% of the employment in the area. So just imagine what the area would be without it.

    Also I think this focussing on the royalties is a bit off the mark. Yes, they only paid out 0.1% of total value as royalties (using loopholes to avoid the full 1%), but you then turn around and say they paid $500,000,000 in tax to the government. Going on about how the royalties are so paltry and conveniently forgetting the actual direct revenue part of the operation is a bit disingenuous.

    I’d like to see the royalty loopholes closed.

    • Bright Red 1.1

      “Apparently the mine at Waihi provides 25% of the employment in the area. So just imagine what the area would be without it.”

      well, let’s just dig it all up under that logic, no matter how small a portion of the benefits flow to NZ.

      • Lanthanide 1.1.1

        I’m just pointing out, that as far as industries go, the mining should be considered a good thing for Waihi.

        • uke

          “…a good thing for Waihi…”

          Except for those houses that fell down the big hole…

    • Rich 1.2

      The tax is paid by every person and business for basic national community services.

      The royalties are what they are paying *us* for *our* gold, and the use and destruction of the land it sits under.

      A tenth of one percent. They’re getting gold for USD1.10 an ounce. A bit cheaper than cobalt, and a bit more than lead. I guess John Key is the reverse alchemist – he’s turning our gold into base metals.

  2. MikeG 2

    It looks as if TV3 are covering this topic tomorrow (Wed) in 60 Minutes – “What are the mining companies planning for our conservation lands? And how rich could they really make us? ”

    (Note: I have no association with TV3 and do not know anything more about the content of this programme)

  3. Good comment. The photo of the opencast mine and the talinings would be interesting if placed against an aerial photo of Great Barrier.

    The more I think of it the proposal to mine the Barrier is so batty they cannot possibly be serious. There must be a political agenda at work involving probably John Banks and Nikki Kaye coming to the rescue in the near future and Great Barrier then being excluded.

  4. tc 4

    The issue of S4 land has a stench about it……minerals stocktake ? Do me a favour that’s just BS!

    The mining companies are after something in there, they know, the nat’s know and it’s all being staged toward whatever/wherever this orebody/mineral deposit is….time will tell but one things a dead certainty IMHO…’s on whether we like it or not unless the mining entities themselves decide it’s too uneconomical as they don’t give a toss about the political fallout as not their problem.

    It’s not uncommon for an orebody to be found/scoped and left alone for 20-30yrs till the timings right politically….Oz has plenty in nat parks/coastal that are waiting for the right moment.

  5. Armchair Critic 5

    Well done on getting one of Auckland’s biggest open cast mines (the Three Kings quarry) into the bottom left of the picture on the left. Looks like it is bigger than Eden Park, too.

    • ghostwhowalksnz 5.1

      Being digging at Three Kings since the 1920s, before the houses were there.

      The locals have been trying to stop it for a long time too.

      Whats the chance of a new open pit quarry out Kumeu way in keys electorate? Those lifestyle blocks seem to cover the landscape there.
      The test is would Key be happy to ‘mine’ in his electorate ?

    • Jim Nald 5.2

      Thanks for the picture which would be good for creating a supersize postcard to get Gerry to autograph and send to Key !

  6. grumpy 6

    Imagine, if these anti-mining sentiments held sway, deep in the “pristine” Paparuas all those years ago in Blackball – no Labour Party!!!

    • ghostwhowalksnz 6.1

      Labour has been happy to allow mining in Crown owned areas before. ( including last term)
      Just not in the listed S4 areas , which were created by National back in the nineties.
      When the Labour party was created there were vastly larger areas untouched. Not today , they are getting smaller
      You could have some facts grumpy to bolster your view

  7. Draco T Bastard 7

    Govt figures ‘misleading’ – geologist

    Wanaka-based consultant geologist Stephen Leary, who has worked in New Zealand, Australia, Europe, Canada and South America, said he had read two of the Government’s geological reports, which were “desktop” studies.

    The Stewart Island figure was “misleading” because it was “wildly optimistic” and had not been backed by exploration, he said. “The numbers they’re throwing around, the value of the mineral wealth in Stewart Island and Great Barrier Island it’s basically just made up,” Leary said.

    “People might go, `Well, maybe it’s worth mining Stewart Island because $7b is a lot of money’, whereas in fact there’s basically no way there’s $7b worth [of minerals] there. What it’s doing is misleading the public.”

    He said there was probably nothing of economic value on Stewart or Great Barrier islands. “There might be $7b of minerals there, but New Zealand might win the next soccer World Cup but we’re not going to. It’s just fantasy.”

    Leary said that without open-pit mining on Stewart Island it would be “physically impossible” to extract $7b of minerals.

    I’m pretty sure that making the figure up doesn’t pass Jonkey’s tests but that what National are doing anyway.

  8. vto 8

    Sensationalist photos there mr marty. Just as suspected at the start and as Rod Oram suggested – this is ending up as an out-and-out slanging match.

    Those photos do not add to the debate. Tabloid style is really taking off for the Standard eh?

    All the farms surrounding that Waihi photo are in fact more damaging to the environment and natural ecosystems than the mining. But reality is being pushed aside in the interests of political advancement.

    Also.. “Waihi is mired in poverty”. Ha ha, is that expected to be taken seriously? Because it aint. Or is that definition of “poverty” the same as all those types who think 1 in 5 children live in poverty across the whole of NZ?

    I keep having to remind myself that the Standard really does express just one far end of the political and social structure in NZ.

    • Bright Red 8.1

      waihi is rated 10 out 10 in terms of poverty – ie it is one of the poorest 10% of areas in the country.

      And with all that gold under their feet. It’s criminal

    • Armchair Critic 8.2

      “All the farms surrounding that Waihi photo are in fact more damaging to the environment and natural ecosystems than the mining.”
      Probably right, but that doesn’t make mining on s4 land a good idea. It does make improving the diffuse contamination discharges from farming activities a good idea, though.
      Historically, the Ohinemuri River was made a sludge channel by legislation, allowing untreated mine tailings to be discharged directly to it, from 1895 until the last processing plant closed in 1952. The few people I have spoken to who actually witnessed it have nothing nice to say about it, in fact the best thing I’ve heard is that it was totally dead.

  9. the sprout 9

    Key couldn’t lie straight in a bed.

  10. Anon 10

    Don’t think this does the NZIER article justice, perhaps readers should take a look for themselves:

  11. Daveski 11

    At the risk of being a dickhead, can I point out a bit of a cock-up in your post:

    “Only determined pubic opposition will stop them.”.

    Will the pubic opposition involve rich pricks??

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