New Zealand: Mining in Schedule 4 Conflict

Introduction

In 2009, the National-led New Zealand Government announced that it would review Schedule Four of the Crown Minerals Act which prohibits mining on high conservation status land. In March 2010, the New Zealand Government began actively canvassing the idea of removing land from Schedule Four in order to carrying out prospecting for rich mineral deposits. While releasing a discussion paper proposing a number of measures to develop New Zealand's mineral potential the Minister of Energy and Resources, Gerry Brownlee, and the Minister of Conservation, Kate Wilkinson, said a preliminary stocktake of Schedule Four land showed :

• New Zealand is mineral rich and extraction could be undertaken in an environmentally friendly way
• the mineral wealth was often highly concentrated in high conservation areas
• Schedule Four lands could be mined with little direct impact
• there was inadequate information on the potential mineral deposits and the Government wanted to improve knowledge of the "mineral estate".

Gerry Brownlee, Minister of Energy and Resources

The reaction to the Government's proposal was swift and vociferous. Environmental and local community groups, celebrities and opposition political parties immediately lined up against the Government, the mining industry and big business interest groups to condemn any suggestion of encroaching upon land with the highest protected conservation status in the country.

Schedule Four - history

A large proportion of New Zealand's land is owned by the Crown (the State) - more than 80,000 km2 or approximately 30% of the country is public conservation land administered by the Department of Conservation[[1]]. These are areas generally closed to mining activities, which are governed by the Crown Minerals Act passed by parliament in 1991. The Act "sets the broad legislative policy for prospecting, exploration and mining of Crown-owned minerals in New Zealand".

In 1997, the Act was amended to create an absolute mining prohibition on protected land. The amendment included a Section 61 preventing the Minister of Conservation from approving access arrangements for any Crown-owned land in Schedule Four (also newly created by the amendment). The amendment was successfully guided through parliament by a National-led government with wide cross-party support. Approximately 750,000 hectares was added to Schedule Four in 2008 and was criticised by the mining industry for lacking consultation and bypassing any comprehensive analysis of the conservation values of the land or its mineral potential.

Arguments for

Gold production in New Zealand

The main parties in favour of prospecting for minerals on Schedule 4 land included the Government, the mining industry represented by Solid Energy and the Mining Industry Association, and Business New Zealand representing business interests in general. Their arguments were essentially economic and sought to play down any potentially adverse environmental impacts by referring to the limited scale of mining and the technology that could be used.

In supporting the idea of mining on Schedule 4 land, Energy Minister Gerry Brownlee talked about “the potential for utilising more of the country’s valuable natural resources for the greater good.” Brownlee proposed removing a total of 7,058 hectares of land from Schedule 4 of the Crown Minerals Act, including some areas in the Coromandel Peninsula and the Inangahua sector of Paparoa National Park, and which represented 0.2% of all Schedule 4 land (4.6m hectares in total). Of this, he suggested only 500 hectares might eventually be mined. “In fact, 500 hectares is smaller than what the Ministry of Agriculture and Forestry describes as an average New Zealand sheep and beef farm (550 ha),” Brownlee stated.

Noting that mining in New Zealand was already a NZ$2 billion industry which contributed to export receipts and government revenue, Brownlee emphasised the high productivity of the industry which created “an average of $360,000 of GDP per worker, nearly six times the national average”.

Citing earlier stocktakes undertaken for the Ministry of Economic Development, the Government estimated total mineral wealth throughout New Zealand to be worth NZ$194 billion. Of this, NZ$80 billion or 40% was estimated to be in Schedule 4 land.

Phil O’Reilly, Chief Executive of Business New Zealand, went even further than government estimates and referred to “thousands of billions of dollars” in in-ground natural resources whose development “could create a step change in New Zealanders’ prosperity. "In taking stock of resources below the conservation estate the Government is acting judiciously on behalf of all New Zealanders,” O’Reilly added.

Reiterating the estimate of thousands of billions of dollars in natural resources, Don Elder, the Chief Executive of Solid Energy, which is a major New Zealand resource company, stated that New Zealanders wanted “...good jobs and a high standard of living. Smart well-managed use of our natural resources, combined with a conservation fund to create long-term environmental gain will allow us to have both.”

Tony Kokshoorn, the Grey District mayor on the West Coast of the South Island where coal mining has been a traditional mainstay of the local economy, viewed mining as a “win-win” situation for the country because of the environmentally friendly technology that was available and the income that would accrue to the government coffers. Referring to current mining operations, Kokshoorn said “you don’t see any mining if you drive the length of the West Coast…there’s such a vast area of rain forest that you wouldn’t notice if mining was happening…New Zealand is in the cart financially; if we want to have good health systems, if we want to have good education, we’ve got to tap into our mineral wealth as well”.

Professor Dave Craw, a geologist and environmental scientist from the University of Otago who has researched the environmental effects of mining, stated in a Radio New Zealand interview that there will always be environmental affects related to mining, although he did not think they posed any great environmental threat in the long-term. Professor Craw referred to the gold mine in Reefton on the West Coast where technology provided for the arsenic-bearing ore to be transported elsewhere in New Zealand for processing to mitigate any serious impact on the Reefton environment. “I think you can minimise environmental impact using modern technology and using the science.”

As a trade-off for removing the 7058 hectares from Schedule 4, the Government said it planned to add 12,400 hectares to the protected category.

Arguments against

Lining up against the proposal were an array of politicians (both government and opposition), environmental NGOs, political commentators and independent scientists. Their arguments concentrated on the potential damage to the environment and New Zealand’s reputation and image in the rest of the world, the alleged distorted and poorly conceived economic argument used by the government, and bad politics.

Mining Protest-4

Damage to the environment

“New Zealand is blessed with magnificent landscapes, rich forests, and a unique biodiversity. We have a proud history of protecting these precious places and the species that rely on them for survival. Over many generations, New Zealanders have fought hard to protect our National Parks and other conservation areas… It is these wild and natural places, protected from development, that underpin our valuable 'clean green' image and our tourism industry's '100 % Pure' brand. To put this at risk is folly in the extreme.” This is what the Green Party of Aotearoa New Zealand web site said about New Zealand’s unique nature in opposition to the proposal to mine on Schedule 4 land.

Old gold workings, St. Bathans, Otago, New Zealand

Referring to historical efforts to protect the environment, Green Party co-leader and MP, Metiria Turei, told a crowed demonstrating against the Government’s proposal outside parliament buildings that “it was the people who created Schedule 4 and protected those places, and it will be the people who save Schedule 4 and those treasured places, and that’s you.” Another speaker at the same event stated that the mining proposal “touches our identity as a country. This is not a country that mines its most treasured places, it is not a country that mines its national parks. It’s who we are, it’s what we believe in, it’s why we’re proud to be clean and green….The economy is not based on mining, it is based on looking after the land”

The specific long-lasting environmental hazards of mining were focused on by Dennis Teag of the Coromandel Watchdog Group NGO. He said the mining industry liked to talk about the benefits of mining but rarely alluded to the drawbacks, including the very real environmental issue of tailings dams where millions of tons of toxic waste has to be stored in a containment facility forever. The cost of cleaning up if they go wrong was incredibly large, such as the $17.5m required to remediate the damage incurred at the Tui copper, lead and zinc mine on the western slopes of Mount Te Aroha in the Kaimai Range of New Zealand and considered to be the most contaminated site in the country. It was abandoned in the 1970s but Teag claimed the remedial work would probably not be effective anyway.

Coromandel Peninsula Panorama

Auckland Central MP Nikki Kaye, representing the ruling National Party in an electorate that traditionally votes Labour, spoke out against her own party's plan to remove Schedule 4 protected status from part of Great Barrier Island, which is part of her electorate, and open it to mining. "My personal view is that when environmental and economic factors are taken into account and given the island's status in the Hauraki Gulf Marine Park, mining on Great Barrier Island doesn't stack up," she said.

Mount Hobson Great Barrier Island

Auckland mayor and former National Party MP and cabinet minister, John Banks, agreed with Kaye. He said Great Barrier Island was “the untouched jewel in the crown of the Hauraki Maritime Park" and that mining the island would be a “serious blow to the established economy that depends on the area’s untarnished image.” Banks stated that there were more jobs in ecotourism than in open cast mining and that the infrastructure required to mine Great Barrier Island would be devastating to the local environment.

Macraes Gold Mine - Frasers Pit: an example of open cast gold mining in New Zealand

Damage to reputation

The potential damage to New Zeland’s ‘clean, green’ was highlighted by The Economist. “In many ways, the dilemma New Zealand faces is no different to that of other rich countries—how to balance economic growth with the need to address environmental degradation. But it is particularly acute in a country so dependent on the export of commodities and landscape-driven tourism. The difference between New Zealand and other places is that New Zealand has actively sold itself as “100% Pure”. Now that New Zealanders themselves are acknowledging the gap between the claim and reality, and the risk to their reputation this poses, it is time for the country to find itself a more sustainable brand, and soon.”

Economic analysis showed that mining Schedule 4 land could have had an impact on the 100% pure image to the extent that it would lower GDP by 1%, as the rest of the economy like wine, horticulture, agriculture etc leverage off the 100% pure brand [2].

Bad numbers

The numbers touted by the Government in relation to expected income from mining were subjected to intense scrutiny by independent scientists, journalists and commentators. Wanaka-based consultant geologist Stephen Leary, who has worked in New Zealand, Australia, Europe, Canada and South America, said some of the figures proffered for individual conservation areas in the Government's geological reports were "misleading" because they were "wildly optimistic" and had not been backed by exploration. "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."

Gold mine and mill, Macraes Flat, 2007

Prominent political commentator and blogger, Russell Brown, criticised the Government for not undertaking a robust cost-benefit analysis and Minister of Energy Brownlee in particular for propagating estimates of mineral reserves with little scientific foundation. He referred to fellow blogger Keith Ng’s critique of gold prices – on the basis that gold was the most commonly cited mineral in the Government’s discussion paper – whose value fluctuates greatly depending on prevailing economic conditions, and Brownlee’s allusion to the overall productivity of the mining sector.

“Here’s what Gerry did. He took the total worth of the mining sector, then divided it by the number of people it employed. It does not mean that more mining = higher productivity. It just means that mining is very capital-intensive and employs relatively few people, which are fairly obvious facts.”

Brown remained realistic about the need to pay off public debt and reduce the Government’s fiscal deficits, as well as the hypocrisy of using mineral resources mined in other countries, “[b]ut if I’m to be asked to swallow a proposal whose implications stretch out for tens or hundreds of years, I expect far better than to be told by a minister that he is totting up that future on the back of a bloody envelope.”

Another prominent political commentator, Gordon Campbell, was also highly critical of the indicative figures used by Brownlee, arguing that it encourages mining companies to exaggerate estimates in order to get government backing for drilling in sensitive ecological areas to find out whether said estimates were correct or not. “Does that sound responsible – or does it sound more like the government is playing Russian roulette with the conservation estate?” asked Campbell.

Campbell also criticised the estimated value of the tiny area of Schedule 4 land (NZ$60 billion on 7,058 hectares) compared to the estimate of NZ$194 billion for New Zealand a whole. “It doesn’t make sense. Either these estimates are completely cockeyed – or else some very heavily intensive mining of these areas is being contemplated.”

The problem as Campbell saw it was that the Government relied exclusively on the work of a single mining industry consultant who had admitted that his figures represented a ‘back of the envelope exercise’. “Even then, this figure [$NZ194 billion] is for gross worth. It bears no relation to the figure that would actually accrue to New Zealand, once foreign-owned mining companies have extracted the mineral wealth, and taken the lion’s share of the profits offshore.”

This issue of the direct financial benefit to New Zealand was one pursued by Radio New Zealand host Kathryn Ryan. Asked what the expected government royalties would be from minerals extracted by a foreign-owned mining company, NZ Minerals Industry Association Chief Executive Doug Gordon said the direct return to the country would be a 5% accounting profit on gold and silver or a 1.5% gate profit – one or the other.

During a subsequent interview, Radio New Zealand business commentator, Rod Oram, said the thousands of billions of dollars talked about by Solid Energy and Business NZ was “completely over the top” Mining would be mostly undertaken by foreign companies and while export figures would be very impressive as a result, the question remained how much of that money “sticks to the ribs” of the NZ economy. It was hard to calculate, Oram said, how much of mining exports would accrue to NZ.

Oram was critical of the Government for not outlining a plan for dealing with a potentially substantial flow of money into the NZ economy. He noted that the United Kingdom had not been sensible enough to ring-fence income from its North Sea oil and gas deposits and use it as a fund to invest elsewhere in the economy. Norway, on the other hand, had invested its oil profits wisely. While Oram was generally in favour of mining because New Zealand could not morally accept the benefits of other countries mining when it did not mine its own land, he expressed incredulity that the Government wished to pick a fight over land that might produce NZ$18 billion of income (as a proportion of conservation land potentially earmarked by the Government, i.e. 500 hectares out of 7,058 hectares) when it could mine other land that did not have any of the pitfalls of Schedule 4.

While Oram was generally in favour of mining because New Zealand could not morally accept the benefits of other countries mining when it did not mine its own land, he expressed incredulity that the Government wished to pick a fight over land that might produce NZ$18 billion of income (as a proportion of conservation land potentially earmarked by the Government, i.e. 500 hectares out of 7,058 hectares) when it could mine other land that did not have any of the pitfalls of Schedule 4.

Public submissions process

The vigorous public debate over the rationale behind the Government’s proposal to undertake further investigation of New Zealand’s mineral wealth and its economic potential on Schedule 4 land mirrored the submissions made to the Government as part of the formal public feedback procedure.

The New Zealand Cabinet Papers and Cabinet Minutes chronologically listed the Schedule 4 stocktake discussion documents.

• In the release of the Discussion Paper, the following procedure can be tracked:

1. Stocktake = review of the areas under Schedule 4 was undertaken, inhibitors of mineral development identified
2. Government proposed to invest in gathering more information on the mineral estate
3. Information obtained was released publicly to encourage potential mining investors
4. This information was above all enable to identify areas to remove from Schedule 4
5. Crown land – concerning this category, legislative change was required (addition to Schedule 4)
6. Discussion paper by the Ministry of Economic Development was prepared – public feedback sought:
   1. proposed 7,058 ha for removal from Schedule 4
   2. proposed addition of 12,400 ha to Schedule 4
7. an eight week period of public consultation started
8. leaders of affected iwi (local Maori tribes) were notified prior to the public release
9. a new policy proposal was released for a new conservation fund (conservation to benefit NZ$2 – 10 million from the mining)
10. required report back on public consultation period
11. Schedule 4 areas and restrictive measures to protect them from mining were reviewed
12. press release was made publicly available when the discussion paper was launched
13. iwi groups expressed a number of concerns and should be contacted 24 hours before release of the paper

Transparency of information and discussion process

• Schedule 4 - Discussion paper stated that the Ministry of Economic Development and the Department of Conservation were “now seeking input from the community before making decisions about … policy initiatives set out in this paper. These actions aim to make the most of New Zealand’s mineral resources in an efficient and environmentally responsible way."

All of the discussion documents were published on the Ministry of Economic Development website Public feedback was received in the 6 week period beginning from the date of publication (March 2010) up until Wednesday 26 May 2010. The consultation process started by the Government sought feedback from the public on a number of areas proposed for removal from and addition to Schedule. The Government stated:

• "No decisions have yet been made. The results of the stocktake are presented in a discussion paper, on which public feedback is being sought. After receiving and considering submissions on the discussion paper, Cabinet will decide on any changes to Schedule 4 in the third quarter of 2010 ... The Government is also seeking feedback on proposals for a new contestable conservation fund, a proposal to further investigate New Zealand’s mineral potential, and changes to Crown land access arrangements."

Submission questions for general public were clear, simple, and structured the answers so that they could be analysed quantitatively. All of the potential questions to any relevant problem, and answers formulated by the Ministry of Economic Development were available in a form and language that was understandable to everybody.

Final decision

Results of the public feedback process 20 July 2010

Final decision was based upon outcomes of the consultation process: reflected views of a huge number of organizations and also individuals (who were not listed in the appendix) – see the Summary of submissions.

This document represents a thorough analysis of public opinion and presents both quantitative and qualitative results. As a Government media release from 20 July 2010 stated: “Government was undertaking a genuine consultation process and had not made up its mind on any of the matters prior to the eight week discussion period which began on March 22. ... The government received 37,552 submissions … and the vast majority of submissions were focused on the proposal to remove 0.2 per cent of land from Schedule 4 to allow for wider mineral prospecting on those sites.

Most of those submissions said we should not remove any land from Schedule 4. We heard that message loud and clear.”

Outline of the final decision

In July 2010, the Government confirmed it no longer planned to remove any land from Schedule 4 of the Crown Minerals Act for the purposes of further mineral exploration or extraction. Instead, it will focus its efforts on exploiting New Zealand's mineral wealth in areas that fall outside conservation areas. The reason for this decision was that the Government received nearly 40,0000 submissions after launching a discussion document, resulting in public protest actions, including street demonstrations. The Government was “forced to drop the plans because of the public outcry” as “New Zealanders did not want to see their pristine conservation estates and their national parks dug up for mines”. New areas were to be added to Schedule 4 by October 2010 as originally planned.

However, the Government still saw a silver lining to the outcome, as Energy Minister Brownlee said: “I suspect few New Zealanders knew the country had such considerable mineral potential before we undertook this process and I get a sense that New Zealanders are now much more aware of that potential and how it might contribute to economic growth.”

Government management of the argument for mining on Schedule 4

Whatever the relevant merits of the arguments put by the opposing camps, observers from both sides of the political spectrum were united in their criticism of the Government’s mishandling of the issue. While there was general agreement that the state of New Zealand’s finances were dire and required innovative solutions, there was a general consensus that the Government had picked the wrong fight to advocate increasing mining of mineral reserves and had communicated its intent poorly. Left wing commentator Andrew Campbell said the Government had failed on its communications, its groundwork on the issue and its overall policy, which was opposed by the majority of New Zealanders, while right-wing commentator Matthew Hooton expressed frustration that by pushing for an increase in traditional mining production the National Party had not lived up to its election campaign promise to deliver innovative change to the economy.

Echoing Hooton’s comments, Keith Ng said the Government’s proposal was “a giant leap backwards.”

“We’ve spent so many years talking about the knowledge economy, moving up the value chain, selling ideas and knowhow rather than soil nutrients… and now the vision for a more productive New Zealand is digging shit up and cashing it in?

“We know exactly why we can’t rely on the primary sector in the long-term. The more you squeeze out of the land, the harder you need to squeeze to get the next dollar out. It means that growth becomes harder, and we’ve said for years that moving up the value chain – agriscience, biotech, etc. – was the way forward,” said Ng.

For Russell Brown, the Government’s approach to process was “feckless”, reflecting its proclivity not to think issues through thoroughly before promoting a policy publicly.

The future of mining in New Zealand

Not everything has been resolved despite the government decision. For example, Coromandel conservation land is still threatened by mining. The Newmont Waihi Gold company “...is actively drilling for gold in high-conservation value Conservation Park land in southern Coromandel, near Whangamata.” The affected area is regarded as “a special place – the only land with this status in southern Coromandel” because of its high conservation, biodiversity, recreational and landscape values. According to Energy Minister Brownlee, the advantage of the discussion process was that it identified where the mining industry could and could not go. “As many people have pointed, around 85 of the country is not protected by Schedule 4 and a great deal of that land has mineral potential.” "New Zealanders have given the miners sector [sic] a clear mandate to go and explore that land and, where appropriate, within the constraints of the resource consent process, utilise its mineral resources for everyone's benefit," Brownlee said. The Government would conduct a significant aeromagnetic survey of non-Schedule 4 land in Northland and on the West Coast of the South Island to learn more about which areas have the highest concentrations of valuable minerals.

Issues from a global perspective

This New Zealand case study provides an example of issues that are writ large on a global scale: how to sustainably benefit economically from the exploitation of non-renewable natural resources, at what cost to the natural environment should mineral extraction take place, and how to engage civil society and all relevant stakeholders in a discussion over the efficacy of mining.

• What were “success” factors that led to the rejection of the purely economically justified political strategy under specific New Zealand conditions? These factors were following:
  • Accountability: the importance of a precise assessment of the country’s economic potential (from a mineral resource point of view) , called “stocktake” on the one hand, and a thorough examination of public views on the other.
  • Transparency: the importance of a democratic consultation process – “hard data” from the stocktake (mostly relating to the economic value of minerals) were supplemented by “soft data” on the value of culture, the environment (conservation), tourism, recreation – which finally appeared to be more beneficial to communities from their point of view (see Summary of Submissions).
  • Openness: the importance of having a dialogue with wide range of civic associations and NGOs in the country, which resulted in a diversity of viewpoints on the issue. The communication process is of particular interest in this case study and could be analysed further from the perspective of applying it to less or newly democratic societies.
• Was the final result based on radical ideology? Were there any general benefits of the consultation process?
  • In this case, rather than generating an insoluble conflict, a more detailed “map” of the country’s economic potential was produced: including the value of environmental “services” (sometimes subjectively perceived).
  • General awareness of the mineral potential of the country was raised – areas inside and outside protected zones (Schedule 4) were more carefully examined (with respect to the constraints).
  • Along with enhancing the data (mapping both the mineral and environmental potential of regions), decision-making procedures were also made wholly transparent, particularly for outside observers.
  • Considerations on the improvement of technical mining procedures were started.
• Was the philosophical debate over the efficacy of mining for minerals in general resolved?
  • Mining the conservation estate in New Zealand was emphatically rejected on both environmental and economic grounds, i.e. the damage to New Zealand’s image would have serious ramifications for one of its main income earners – tourism
  • The economic argument for mining more non-conservation areas became more readily accepted
  • There was growing awareness of the moral gap between rejection of mining in New Zealand and acceptance of products derived from mining in other countries
  • The stirrings of a debate over how to best use future potential income from mineral resource exploitation began

Positive outcomes to be learned from

The whole process might be considered as positive – it delivered:

• more information transparently available
• more trust on both sides, although not necessarily by every party
• the potential for the economic development - that respects democratic dialogue – was raised

Questions and proposed methods for further research

• The communication process could be investigated in more detail: what are the links between the most important factors of economic development ("economic development" should not be considered mining itself, but rather technological progress in the mining industry, the process of collation and utilisation of geological data, and the interlinking of the mining industry with other sectors, e.g. recreation), and the number, diversity, and value orientation of the responses in the Summary of Submissions?
• What are the subjective values of the environment? How could they be used as a counter-weight to the economic values?
• What are the economic counter-factuals to the primary economic argument for mining? What is the opportunity cost?
• Institutional procedures and official decision-making processes (going on in the ministries and other institutions concerned) versus the democratic process (on the part of civic society) - what were the differences? Were there any correlations?
• Etc. - many others.

References

Other resources

Schedule 4 Review. New Zealand Mineral Exploration Association. Available from http://www.minerals.co.nz/html/main_topics/whats_new_sched4.html

Natural Riches Lie Untapped. New Zealand Mineral Exploration Association. Available from http://www.minerals.co.nz/html/main_topics/whats_new_untapped.html