Labour on mining. Brownlee on bullshit.

Written By: - Date published: 8:00 am, March 26th, 2010 - 33 comments
Categories: Mining - Tags:

There has been considerable discussion about the message and targeting of Labours policy on mining around the conservation estate in OpenMike and some of the other blogs. This is obviously going to be a reasonable large policy platform in the upcoming election in about 18 months (how time flies). So Labour had a clear policy on it over the last decade pleases me greatly. It agrees broadly with my views of balancing the economics between exploitation of extraction and sustainable tourism.

I’m pretty much in agreement with Lew at Kiwipolitico who said

Labour’s campaign against mining Schedule 4 land looks strong, especially at the iconographic level.

The slogan and to an extent the photo frames the issue as a matter of identity, echoing Phil Goff’s ‘the many, not the few‘ and Phil Twyford’s ‘not yours to sell‘ (though the visual style has come a long way since that campaign, and there’s some subject-object confusion). The hard economic matters — the cost-benefit analysis between mining and tourism and so on — are there, as they should be, but backgrounded to the symbolic concerns.

Goff is clear that he’s not anti-mining, but wants to focus on the 60% of mineral resources outside the DOC estate. That’s the crucial point to make because it draws a bright line between acceptable and unacceptable which is still well north of Schedule 4 — to cross that line the government must first gain electoral consent to mine DOC land, and having done that must gain consent to mine the most precious areas of that estate. The point isn’t that mining is all bad; the point is that mining conservation land is worse than the alternatives.

As a political message, this is the case. However if there is a economic case to be made then it should be made looking at the value of alternate uses of the land, both during the lifetime of mining operations, and afterwards. Brownlees proposal has never bothered to do this, either because a case cannot be made, or because he is incapable of understanding it, or both.

Like Labour, I’m not anti-mining – my first degree was in earth sciences. But for me, there appears to have been no actual analysis of the costs and benefits for NZ in proposing to mine conservation estate. What we have are some ‘back of the envelope’ numbers by interested parties based on short-term pricing that is unlikely to survive the next few years. As Marty G pointed out yesterday the numbers that are being blithely thrown about by Brownlee that lack any realistic context. In fact most of them appear to be based more on a fantasy than reality because they look at potential rather than economic practicality. They would require prospecting to prove yields. However we can put a pretty good line under the costs of certain types of mining that Brownlee is proposing now.

There is the outright crap of ‘surgical mining’. For minerals like gold, silver, and rare earths that exist as grammes per tonne and require chemical extraction, there are no economically realistic ways to do these in any way other than open-cast mining. It has been noticeable that the MED and the mining industry representatives who have commented on Brownlees proposals haven’t suggested alternatives.

As sk pointed out back in feb, the political media needs to stop waffling about surgical mining and learn some  realities about mining technology

This nonsense over modern mining techiques keeps getting repeated and repeated. Anyone saying that should be frog-marched to Macraes mine in Otago, and made to look down the hole (maybe Jim and Jane could do the show next week from the bottom of the mine). Truly shocking .. . How can a huge hole, slag heaps and hundreds of truck movements a day be ‘unobstrusive’.

Mining for geothermal emplaced gold at Macraes Flat in Otago runs at 1.6 grams per tonne, and they are currently moving 5 million tonnes of ore per year and chemically treating it. The size of the mine can be seen in this google earth image on the right (click into it to see a larger version) that Draco T Bastard pulled. Draco has put a line along the largest axis, and that line is 7 kilometers long. I could look at the other mines around the country with similar mineral extraction techniques for gold or silver, but they are all pretty much the same. ‘Rare earths’ are also extracted in grams per tonne.

The figure that have been bandied about for Great Barrier Island indicate that they’re optimistically thinking that they can get about 3.6 grams per tonne there for gold, and 140 grams per tonne for silver. Even if those ratios prove out (which I’m deeply skeptical about), then that means to achieve Brownlees  possible values of 1-3 billion dollars extracted, they’re going to have to move and chemically process at least 10’s of millions of tonnes of ore. There is no economic way to do it that doesn’t involve vast areas of despoiled land and requiring hundreds of years of care about leaching from tailings.

So what we wind up with at the end of the mining is a landscape that requires long term control and expense.

The question is what benefit does NZ get from this despoilment of the conservation lands? Well not much. The royalties for the crown are typically about 1% of the value which brings the ‘billions’ of dollars of value to NZ down to mere millions.

Modern mining is an exercise in highly capital intensive equipment and procedures. Most of the capital equipment will have to be imported at the start of the project. Our capital markets will be insufficient to finance such ventures, so it is most probable that overseas firms will own and operate the mines. They will repatriate most of the profits offshore.

The jobs present in the mines would measure in a relatively few thousands, many of which will be offshore workers with experience, and nothing compared to the hundreds of thousands of people involved directly and indirectly in tourism.

So what are the long-term alternate uses of the land that we’d destroy buy mining them?

We have a 21 billion dollar per year tourism industry that relies in a large part on having the conservation estate available, accessible, and relatively untouched. This will be increasingly hard to achieve when some of the destinations of tourism operators will be involved in the large plumes of dust and leachate in rivers from mining.

The Brownlee policy has been attempting to frame the debate about it being a ‘stocktake’ of minerals. However the first step would be to have some reasonably accurate material available about the costs of extraction, techniques available, and the potential benefits. Brownlee and the MED have spectacularly failed to produce any of these things. They are expecting the public to make submissions with vastly inadequate information in 5 weeks. That is a ridiculous position to take, and screams of a political con-job.

Of course our political media are so technically gormless that they’ve swallowing Brownlees bullshit and regurgitating it almost verbatim. They clearly haven’t bothered to engage even their basic intelligence to investigate the realities of mining for gold, silver, and rare earths. I’d suggest that they have a close look at existing mines and the effect on the surrounding countryside. Then have a look at mining sites from over a century ago with unstable tailings and leachate problems downstream. They should also look at the lack of a framework for extracting more value for NZ in the MED proposals than the pathetic royalty systems, and the actual real returns to the economy. And for gods sake, you don’t exactly look anything apart from stupid by replaying the one guy in Great Barrier Island who thinks that mining would be a good idea, over and over again…

Labour is right to call Brownlee on his inadequate proposal. Brownlee has failed to provide the basis to have his vaunted ‘rational debate’, because he hasn’t provided the information that would allow it to take place. Under these circumstances with a obvious con-job underway from Brownlee and the MED, the only rational response from Labour is to increase the risks of prospecting or mining to investors. They have done this by stating

We Must Unite Against The Review of Schedule 4.

Labour stands firm against the review of Schedule 4. We’re against the idea of mining in our national parks and conservation areas. As proud New Zealanders, we consider it our responsibility to look after our country for future generations. We know there’s money in mining. But our biggest treasure is far more precious than gold.

That is the correct approach, and one that National was following in the 1990’s when they put schedule 4 into legislation. It was setup to preserve some of the areas that we require to maintain a strong tourism industry.

If Brownlee was ever interested in having a ‘rational debate’, then he has clearly failed to put in the groundwork for that to happen. Both he and the MED have been bullshitting throughout the whole of the debate so far.

There appears to be no cost-benefit analysis weighing the current value of the conservation estate that he wants to put at risk against the probable returns. That isn’t the way to have a debate, it is how you try to run a PR con-job. I suspect that the real debate will happen after Brownlee bulldozes his legislation undemocratically through parliament in his usual style. It will happen during the lead up to the next election as people realize the economic risk that opening up schedule 4 places on currently viable industries depending on our 100% pure marketing image.

If any prospecting licenses or even mining in conservation lands are granted under this sorry Brownlee policy then Labour should revoke the licenses without compensation when they next have the opportunity. Trevor Mallard said on it in Red Alert and if that isn’t Labour policy, then it damn well should be. It will be a hell of a message to run as part of a campaign next election.

In the meantime, mining companies should assess the risk and realize that the Brownlee policy is simply too dangerous to rely on. It has little political support and is likely to be reversed at an elections notice.

33 comments on “Labour on mining. Brownlee on bullshit. ”

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  1. madnessinc 1
    26 March 2010 at 8:27 am

    Your title may need rewording.

  2. toad 2
    26 March 2010 at 8:33 am

    The ironic thing about National attacking Labour’s mining record is that it is likely to push some voters concerned about mining towards the Greens. I’m rubbing my hands with glee, but I would have thought that would be the last thing the Nats want.

  3. lprent 3
    26 March 2010 at 8:42 am

    Toad: I suspect that if labours approach to mining upset anyone for the last 20 years. Then they’d already be voting greens. It is unlikely to make a difference.

    As far as I can tell the greens don’t want any mining? Labour wants the mining to be worthwhile and as clean as it can be. Brownlee wants mining to have few boundaries, and who knows what the national party wants.

    • toad 3.1
      26 March 2010 at 8:54 am

      The Green policy on mining is not that extreme Lynn:

      9. Mining

      Mining and extraction has adverse effects on landforms, oceans, waterways and ecosystems. It is currently prohibited in National Parks and various other types of reserve, under the Crown Minerals Act 1991 but occurs contentiously in other parts of the conservation estate. The Green Party will:

      1. Prohibit new exploration, prospecting and mining on conservation land and reserves.
      2. Ensure there is tight control over existing mining on conservation land and reserves, in partnership with tangata whenua, and through consultation with environmental groups, local communities and the public.
      3. Require mining activities be halted when rare and endemic species are found to present on the mining site.
      4. Reject the notion of trading conservation land for other land to facilitate extractive activities on, or facilitate activities that would dramatically alter the ecology of conservation holdings.
      5. Gazette as conservation land any land with a high conservation value that has been left out of the conservation estate due to mining value.

      • lprent 3.1.1
        26 March 2010 at 9:16 am

        Not that different from what Labour has been doing, or even the Nats prior to Brownlee.

        Probably the main difference is in point 5 and probably 3.

        Point 3 would make it damn near impossible to start any mining in NZ. Species distribution is really fragmented in NZ. From memory, I think that we have what 70 species of weta for instance and some are intensely localized. Multiply that by thousands of genetic family groups….

        In my opinion I could probably find a rare or endemic species anywhere if I looked hard enough. If I was really pushed (eg dairy farmland being mined), then I’d look at bacteria.

  4. Jim Nald 4
    26 March 2010 at 8:43 am

    Clicked into the Google Earth Map and nothing happened. Can you check please?

  5. Lew 5
    26 March 2010 at 8:46 am

    Hey Lynn, cracking post, and thanks for the link. At some point after you wrote this I edited in a sentence about how much it resembles Iwi/Kiwi, which I think is also pretty important to its effectiveness — it forms part of NZ’s campaign grammar, how people think about electoral issues.

    As to your last point — about tearing it all down when next in power. This is starting to become a theme of the Labour response: revoking the ACC retrenchments; reimplementing the old ETS, now this — it’s a bold and dangerous platform to run on, particularly with the government looking to erode the tax base over the mid-to-long term.

    L

    • lprent 5.1
      26 March 2010 at 8:57 am

      Agreed about the dangers. However this is largely what happened in the 90’s as well. Some things were let through and others rolled back. The Nats cut into the tax base then as well.

      In the case of ACC and this, both are effectively a warning to business about the risks. The insurance companies who geared up to take over the ACC business in the late 90’s know exactly what that means…

      However in this case the timescale of implementing mining means that few if any projects would be too far down the track by the time Labour returns to the treasury benches. It means that mining companies can reduce their risk by not mining conservation estate. I’d be surprised if many companies care to take the bet.

    • Neil 5.2
      26 March 2010 at 9:22 am

      Lew, are you having problems with comments not being posted over at Kiwipolitico?

      • Lew 5.2.1
        26 March 2010 at 10:39 am

        FFS, just checked the spamqueue and there’s plenty in there, all from well-known commenters in good standing. Sorry about that. Thought it’d been a bit quiet recently.

        L

  6. vto 6
    26 March 2010 at 8:54 am

    lprent I just posted this on another thread. You are not correct re open casting for gold.

    “And also, there is much comment above about the inappropriateness of tunnel mining for gold and silver. This is simply not correct.

    At the moment in Waihi Newmont has the open cast pit but you may not know that in fact undergound tunnel mining (surgical I suppose) goes from the base of this pit and has been for some time.

    Newmont also has the favona mine right beside its processing plant just outside Waihi, near the tailings mountain. This really is surgical. It is a small opening in a hillside in a paddock. The tunnel burrows down to below sea-level and has surgically removed this massive gold-bearing lode. It is like a small town down there with huge low trucks and diggers and drillers roaring around everywhere. I know I’ve been down there a couple of times.

    The golden cross mine also near Waihi and no longer operating also had some underground miing.

    In addition many many of the mines from the olden days were tunnels. The shafts and drives can still easily be found in the Coro bush.

    Surgical mining for gold has been done in the past, is being done right now, and will without doubt be done again. In the coromandel. For better or worse.”

    • lprent 6.1
      26 March 2010 at 9:07 am

      Two points

      1. Where is the processing done? In the tunnel? I think not – mercury and cyanide in an enclosed space with churning rock – not a good safety mix… They haul the stuff outside and process with the rest of the stuff. Dump it into tailings. If you’re lucky they treat it and put it back eventually. My point was that low density mining like gold or silver takes land – and quite a lot of it.

      2. You can do a tunnels economically if you can follow a rich vein or find a pocket. But the damn things are always isolated and the tunnels are short (I’ve been in quite a few in the Coromandel). However it is the exception rather than the rule that you get that high a density, and usually only done as an adjunct to opencast. There are no really concentrated densities of gold, silver or rare earths sufficient to setup a ‘surgical’ mining’ operation – they were cleaned out in the 19th century in NZ, and in anycase were pretty damn small operations by todays standards.

      • vto 6.1.1
        26 March 2010 at 9:20 am

        Yes the processing is done outside and in the case of favona the tailings are put back inside to fill up the tunnel again. Of course once broken up though rock takes up more space so it can’t all fit back in. Hence tailings piles. Correcto.

        I have to disagree to an extent re your point 2 though. From my experience (actual gold exploration in the Coromandel and Taupo/Rotorua some too long ago) I expect and know there are many more surgical possibilities in the area.

        It’s just ‘what to do with the tailings?’… Make the foreign owners take it with them back to their foreign lands that’s what!

      • Armchair Critic 6.1.2
        26 March 2010 at 9:27 am

        “You can do a tunnels economically if you can follow a rich vein or find a pocket.”
        It is also a useful way of establishing whether open cast mining would be viable. And once it has been established that it would be viable, the precedent has been set by the underground mine, and the infrastructure to support an open cast mine is mostly in place.
        Underground mining is just the prelude to open cast.

        • sk 6.1.2.1
          26 March 2010 at 11:03 am

          vto, the point you are missing is the mining is a globally competitive industry, therefore lowest cost matters. China now dominates rare earths, not because no one else has them, but because of lack of environmental controls, their mines in Inner Mongolia are those most cost effective. The only way rare earths will be mined in the West is if government’s are prepared to subsidise local production for security reasons.

          In terms of coal, take Pike River. It may be high quality coking coal, but the cost of extraction relative to open cast mines in Australia, India or Mozambique means it is not cost competitive. Hence, the project is struggling economically.

          ‘Surgical’ is uneconomic. It is open cast or nothing in most cases (there is no way Pike River would go ahead in today’s global environment). For Key to say otherwise is to make things up on the hoof, but hey, what is new about that?

          • vto 6.1.2.1.1
            26 March 2010 at 12:14 pm

            sk. “‘Surgical’ is uneconomic.”. That is simply not right. I outlined some examples above of existing surgical mines which are in fact super-economic.

            All mining cannot be dealt with in broad sweeping generalisations such as seems to be the go with most posts. They all vary according to geology, topography, location, mineral, etc etc. I was referring above to the proven viability of ‘surgical’ mines in the Coromandel. They have existed in the past. They exist right now and are operating right this very minute.

            And I think you will find with Pike River that they hit unexpected problems in getting the tunnel in. They have not yet actualy exported anything – it is looming very shortly I think. Clearly, whether it is economic or not depends on the price of coal. It was economic during the commodity boom when it was floated. It may well struggle at the moment but if so that is for reasons not associated with the undergrounding and more to do with world markets for the product. It will rebound though, betcha.

            • sk 6.1.2.1.1.1
              26 March 2010 at 3:27 pm

              vto, the market cap of Pike River Coal is NZ$312m today against NZ$290bn for BHP or NZ$190bn for Rio Tinto. These NZ mining projects are just not of a size to have any economic significance.

              Key and Brownlee are in la la land on this one. Classic cargo cult . . .

  7. vto 7
    26 March 2010 at 12:21 pm

    sk. “‘Surgical’ is uneconomic.” That is simply not right. I outlined above some examples of existing surgical mines which are in fact super-economic.

    I was referring to the particular issue of surgical mining in the Coromandel. It has existed in the long past and recent past. It exists right now too. They are operating today, this very minute. They are profitable.

    Broad sweeping generalisations about mining are not much use as each and every mine depends on geology, topography, location, mineral, market, etc etc. Comparing Pike River with India is not much of a point. Pike River is economic, depending on markets of course. They encountered some problems putting the access tunnel in however it was economic at the start and if it is struggling now it will be because of market movement for the end product, not reasons associated with going underground. It will bounce back big-time, betcha.

    Surgical mining has been, is now, and will be again, profitable and economic in the Coromandel (which, geologically, includes Gt Barrier)

    • lprent 7.1
      26 March 2010 at 12:54 pm

      I really don’t think so. However even that is irrelevant.

      The point of the post was that Brownlee hasn’t shown that surgical mining of gold (for instance) is economic. There are no case studies, no cost analysis, and above all no actual comparisons of the benefits against the losses from alternate uses. That is why I label his campaign as being bullshit.

      • vto 7.1.1
        26 March 2010 at 1:03 pm

        lprent, whether existing and past surgical mines in the Coromandel are economic is not a matter of opinion, it is a matter of fact. They have been and are today profitable.

        Anyway, that aside, I agree completely with your point about Brownlee. He has put no case together in support of this proposal. He doesn’t even know the subject – not even in a small way. And here he is lording it over the decision-making process. It is complete bullshit I agree. It is also terribly terribly wrong for someone so obviously out of his depth to be in such a position through this process.

        Very very very poor …

        As much as I tend towards National type policies generally, I think this lot are close to being a short run in office

        • Draco T Bastard 7.1.1.1
          26 March 2010 at 2:02 pm

          He doesn’t even know the subject not even in a small way.

          That’s true of NACT in general though. Just look @ Tolley, Bennett, Key, Blinglish etc, none of them know their stuff and are operating from pure idiotology. Everything they propose has been proven wrong and they will just not accept that.

  8. The Voice of Reason 8
    26 March 2010 at 2:02 pm

    Gerry ‘I’m not a geologist’ Brownlee won’t find the article in his local paper this morning too comforting. An actual geologist calls him on his bullshit regarding Stewart Island in the Press:

    ‘The Government will spend $4 million investigating mineral-rich areas in other protected areas of the conservation estate, including an estimated $7 billion of “rare earth elements”, gold, nickel and platinum in part of Stewart Island’s Rakiura National Park.

    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.”

  9. Bomber 9
    26 March 2010 at 5:55 pm

    Did Labour after countering that they never allowed any mining on schedule 4 land in fact allow 168.5 hectares of land at Hart Creek, inside Paparoa National Park? Was this schedule 4 land and if it was what was the rational please?

    • Lew 9.1
      26 March 2010 at 5:58 pm

      If I’ve understood correctly, according to Goff on The Panel just now that land was not in S4 at the time the green light was given, but was added later.

      L

    • lprent 9.2
      26 March 2010 at 6:03 pm

      http://www.parliament.nz/en-NZ/PB/Business/QOA/5/b/9/49HansQ_20100325_00000005-5-Mining-in-Conservation-Areas-Potential.htm

      Hon Dr NICK SMITH: The mine in the Paparoa National Park I drew members’ attention to, which Chris Carter approved in May 2006, is in an area that at that time was not included in schedule 4. That is why it is true that if an area is in schedule 4, it cannot be mined. But the point being made by Labour members—that they never approved mining in national parks—is false.

      It wasn’t schedule 4 land. I’d have to google a bit further (probably into the gazette) to find out why it had a ‘mining permit’ (covers a wide range of activities) approved. But I suspect that it :-

      a. Was a prospecting permit rather than a mining permit.
      b. It is pretty routine to do a geological survey before changing the state of land.
      c. The last geological surveys in Paparoa (from memory) were relatively sketchy ones done in the 60’s by Geological Survey. Could be wrong on that…
      d. I notice the Nick Smith etc weren’t saying who had the permit. Even DOC requires one..
      e. Feels like National trying to do diversion spin…
      f. I’m heading home after a hard day over a hot compiler. This national bullshit is just there to avoid actually answering some real questions. Pretty pathetic.. ProgBlog had the best post on it….

  10. Bomber 10
    26 March 2010 at 6:18 pm

    Cheers – thanks for that

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