Mining report card: ‘Could do better’

Investment banker Tony Haworth provided delegates at last month’s AusIMM conference in Christchurch with what was in effect a report card on the New Zealand mining industry in 2006, and the message was loud and clear: Could do better.

The reality is that “decision-makers, the financial community and the public in this country” don’t really appreciate New Zealand’s exploration potential, Haworth said in presenting a paper jointly written with consultant geologist Richard Barker, as a scene-setter at the conference’s opening session.

And citing this year’s Fraser Institute survey of mining companies, Haworth, an Associate Director of Campbell MacPherson Limited, said New Zealand ranked just 35th out of 65 jurisdictions surveyed for an overall policy environment supportive of mining – coming in behind every Australian state and Canadian province.

Indeed, he laid down a challenge to those at the conference, questioning whether mining was really booming in New Zealand, or more the beneficiary a global surge in metal prices in recent years, which has seen the country’s mineral resources grow from an estimated $86 billion in 1998 to an estimated $166 billion today.

The lack of buy-in by New Zealand and New Zealanders is demonstrated by the fact that exploration funding in New Zealand is sourced mainly from overseas, with New Zealand accounting for less than 0.5 percent of worldwide minerals exploration spending.

“Many public companies exploring in New Zealand remain domiciled and/or raise the bulk of their capital offshore,” Haworth told delegates.

However, there are indications of growing interest locally.

“Anecdotal evidence is that domestic investor interest in the mining sector is growing again and opportunities to raise capital in the local market are expected to improve,” he said.

And going forward, this is going to be crucial to building resilience into the New Zealand mining sector.

There needs to be a “critical mass” of dual-listed mining companies on the New Zealand and overseas stock exchanges. coupled with “further locally-funded and locally-focused miners to ride out the long-terms highs and lows of the commodity cycle,” Haworth said.

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