Does mining meet Key’s tests?

Marty G
14 years ago
Categories: Conservation, Economy, jobs, Mining
Tags: great barrier, john key, paparoa, waihi mine

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.