"New Zealand has the most environmentally responsible mining industry in the world".
David Bellamy, 1991

Outline

New Zealand has great mineral potential by international standards

• A recent study by the Institute of Geological and Nuclear Sciences conservatively values New Zealand's metallic mineral resources alone at more than $85.5 billion, with additional growth potential for industrial minerals and coal.
• The potential exists to increase total annual output from $1 billion to $2 billion by 2010.
• New Zealand is producing mineral products with unique properties that command high prices internationally.
• Increased private sector investment in exploration and research is essential if this potential is to be realised

Yet New Zealand is not realising its potential prosperity from minerals

• The strong growth trend in the value of mineral production over the last 10 years is now being reversed
• Exploration investment is inadequate to maintain even the existing output
• Information and advice on minerals being provided to the public and the Government is inadequate
• The climate for international investment is increasingly competitive and New Zealand has chosen not to compete effectively

What has gone wrong?

• A lack of co-ordination combined with negative public perceptions underlie the recent decline in production and investment
• Central government indifference to the industry and preservationist public land management policies are symptoms of this malaise

What needs to change?

• The minerals industry - by developing a strategy for the future and a unified position on major issues that has the support of all sectors of the industry
• Public perceptions - by recognising the significance of minerals, their contribution to community wellbeing and the negligible long-term environmental effects of the industry's activities
• The government – by introducing changes in policy-making, administration, information services, and research and development priorities.

The reward

• An increase in GDP equivalent to more than the entire New Zealand fishing industry
• An increase in people employed in New Zealand by at least 12,000
• Strategic advantages including reduced dependence on imports, and benefiting other productive sectors
• Benefits in research, education, the export of technology and further long-term expansion of New Zealand's economic mineral resources.

In 1998 the mining sector in New Zealand pays the highest average minimum weekly wage rate ($520) of the 17 sectors monitored by the Dept of Labour. The communications services sector is paying the lowest average rate ($333).

Why are minerals essential?

Minerals are essential to New Zealand for two main reasons:

• they are used to produce and distribute almost everything we take for granted in our daily lives including energy, water supplies, food and housing
• they are contributing at least $400 million directly to New Zealand's export earnings each year.

In addition, minerals, both imported and produced in New Zealand, are a component of virtually every other export product, particularly those from manufacturing, farming and high value horticultural products.

What does the New Zealand minerals industry consist of?

A diverse industry The minerals produced in New Zealand can be divided into 4 main categories

• Metals - gold, silver, and ironsand for export and for domestic steelmaking in New Zealand
• Aggregates - for buildings and roads
• Industrial minerals - used by virtually every industry in New Zealand, particularly agriculture
• Coal - for export, steelmaking and as a fuel.

In addition, groundwater provides about 40 percent of New Zealand’s water consumption.

New Zealand exports minerals and mining technology, based on local research and expertise.

Aggregates are produced primarily for use domestically, while gold and silver are exported. Coal and industrial minerals are produced both for export and for use in New Zealand.

The minerals industry is judged by the standards of the past when industry generally paid little attention to its future effects. Today, this has changed and the industry is now a leader in environmental performance.

A valuable industry The value of mineral production in 1996 was about $800 million with coal adding a further $200 million making a total of $1 billion.

Capable of rapid growth The graph shows the value of minerals (excluding coal) produced in New Zealand since 1972 and private sector spending on exploration in constant current dollar values.

Between 1972 and 1990 the annual value of minerals produced was close to $400 million in 1997 dollars. A surge of exploration investment that began in 1980 and continued until 1987 led to expanded resources and new mine developments. In the five years from 1990, the value of minerals produced increased by nearly 100%.

Value now diminishing Recent growth follows high levels of investment in the 1980s, but the current level of investment in exploration is insufficient to maintain production, which has levelled out in the last 2 years and is predicted to decline.

Investment essential Risk taking investment converts mineral potential to mineral resources and community wealth. Published data on international exploration and mining investment by Canadian companies between 1993 and 1996 illustrates how the investment environment in New Zealand is no longer attractive. Over that period, Canadian companies were active in 97 countries throughout the world. The only country with significant mineral potential to be excluded was new Zealand. Countries as diverse as Norway, France, Zimbabwe and Guatemala were more successful than New Zealand in attracting North American investment. Minerals produced for domestic use are also affected by the unfavourable investment climate, leading to less efficient production and reduced living standards for all New Zealanders.

The NZ Minerals Industry Association has always been successful in attracting mineral exploration companies as members but over the last ten years their numbers have declined from 17 to 3 as they withdraw from New Zealand. The Association has broadened its membership to include coal, industrial mineral and aggregate producers, accounting for the rise in their numbers.

Public investment in minerals and mining-related R & D remains at a very low level, contributing to the negative private sector perception of NZ as an attractive place to invest. The relationship between the public and private sectors has been poor.

The contribution of mining (excluding petroleum) to New Zealand's Gross Domestic Product is 34% larger than that of the fishing industry. This contribution is planned to double by 2010.

The potential for 2010: a $2 billion industry - what would it look like?

Realising NZ's mineral resource potential

A recent study by the Institute of Geological and Nuclear Sciences values New Zealand's potential metallic mineral resources at $85.5 billion, and identifies numerous opportunities for expansion.

It suggests a scenario whereby New Zealand's value of mineral production could increase from the current NZ$ 1 billion to more than NZ$ 2 billion annually in 2010 by:

1. an increase in production of most non-metallic minerals, aggregate and titanomagnetite ironsands to previous maximum annual levels,
2. development of new high value products and markets for bentonite, perlite (filtration), processed silica (pozzolan and ferrosilicon), sulphur (fertiliser) and zeolite (catalyst, ion exchanger, waste adsorption, stock feed etc),
3. development of the proposed titanium projects on the West Coast and separation of a titanium mineral concentrate from titanomagnetite ironsands at the currently operating mines in the North Island,
4. an increase in total coal exports with new developments on the West Coast (e.g. Mt Davy and Pike River),
5. groundwater for the overseas bottled water and mineral water markets,
6. expansion of gold and silver production with the discovery and development of two new deposits, and development of known resources in Reefton,
7. the discovery and development of a platinum deposit.

Mineral	1996 Production (million tonnes)	2010 Production Quantity (million tonnes)	2010 Production Value ($ million)
Aggregate and building stone	25	37	660
Industrial minerals	4.1	5.6	130
Coal	3.6	5.1	300
Ironsand	2.3	3.5	70
Precious metals	1.32 (million ounces)	2.75 (million oz)	750
Titanium, vanadium		0.11	70
Groundwater	800 (million cubic metres)	1000 (million cubic metres)	250
TOTAL			2230

Strategically significant Mining can increase its strategic contribution by substituting for imports. For example, New Zealand is the world's largest importer of fertiliser minerals per capita, particularly for sulphur, potassium and phosphate minerals.

The industry's recent history demonstrates its export potential, particularly for high value metals, high quality coal and specialised industrial minerals.

A smart industry focussing on specialised minerals with unique properties that are processed to meet the requirements of specialised international customers. For example:

• Research and development investment converted the clay deposits of Matauri Bay in Northland from mere curiosities into productive resources that have contributed at least $200 million to New Zealand's exports since the mid 1970s.
• Young volcanic activity has produced extensive areas in Northland and the Central North Island with potential to host additional unique deposits.
• Coal is selectively mined and blended to meet international specifications for specialised uses.

The mining industry in New Zealand has the potential to increase the numbers it employs by at least 12,000.

Increased contribution to GDP An increase in the value of the industry's output from $1 billion to $2 billion could increase New Zealand's Gross Domestic Product by more than the current contribution of the fishing industry. Direct and indirect employment would increase at least 2-fold from 12,000 to 24,000, with job creation concentrated in regions where employment is particularly valuable eg West Coast of the South Island, Otago, Waikato.

A New Zealand based industry where research and exploration investment must deliver benefits that are retained in NZ as the resources that are the focus of investment are located here.

Attracting new investment is essential for a renewed, productive industry. Only increased investment can reverse the decline in output, expand known resources and find solutions to technical challenges and the markets needed to expand the range and value of what we produce.

The challenge - what has gone wrong?

Lack of co-ordination The industry needs to implement a strategy to develop its potential and achieve its vision of increasing its economic and social contribution to New Zealand.

Public attitudes Lack of public appreciation about the nature of the industry, its effects and its benefits need to be countered with the effective dissemination of accurate information. Mining affects a tiny proportion of the land area of New Zealand and the land is rehabilitated to a productive, stable condition. The industry's achievements in rehabilitation need to be recognised.

Anti mining philosophy promoted by lobby groups opposed to mining has led to the industry being perceived as a low skill, low value activity that has a limited future. Regular surveys by the Department of Labour show that mining pays the highest average minimum weekly wage rates of any of the 17 industry sectors in New Zealand that they monitor.

Powerful lobby groups oppose mining Effective lobbying over many years has led to repeated changes in Government policy that have had an adverse effect on the operating and investment environment.

Land access is too restricted Mining is critically dependent on access to land to explore so the small area that would be affected by mining can be identified. Public land is particularly important as an estimated 70% of the mineral potential in New Zealand is within the 30% of New Zealand's total land area that is administered by the Department of Conservation. Fragmented, inconsistent resource management policies are a contributing factor also.

Equity Much of our mineral endowment belongs to all New Zealanders along with more than 30% of the land area. The public interest is not confined to environmental issues alone. The support of the industry by New Zealanders is required, underpinned by knowledge of facts enabling rational balance and compromise allowing minerals to play their fundamental role in a healthy economy.

Government indifference The lack of clear objectives in Government minerals management is contributing to the decline. In 1995 the Crown Minerals Group of the Ministry of Commerce issued its "Strategic plan to the year 2000". The table lists the goals and progress towards achieving them.

Crown Minerals Goal, 1995	Actual outcome, 1998
Non-petroleum exploration of $25 million per year by 30 June 1998	Data no longer compiled by the Ministry. Industry estimate is less than $10 million annually
Active prospecting and exploration over a minimum of 1,750,000 ha by 30 June 1997.	In July 1998 the area under exploration and prospecting permits was less than 1,400,000 hectares
Gold production of 400,000 ounces per year	Gold output declined from 390,000 oz in 1995 to 367,000 oz in 1997 and will decline further in 1998.
At least 20 exploration permits exploring for specific minerals other than gold, petroleum or coal by 30 June 1997.	Accurate data for permits for these other minerals is no longer accessible from the Ministry's database.
Effective administration of data lodgement, archival and retrieval.	Collection of comprehensive mineral production statistics ceased 1 July 1998; future uncertain.LINZ permit mapping service ceased 1 July 1998; alternatives still being investigated. Information is being lost because of inadequacies in the protection of confidentiality for current exploration data.

Not one of the goals of the strategic plan had been achieved by November 1998.

The solution - what needs to change

The industry

By implementing a strategic plan for becoming a smart industry.

The industry needs to demonstrate it takes responsibility for itself and has a plan for the future.
Possible goals are:

• Developing a coherent, unified position on major issues
• Developing a comprehensive strategy for the future that is supported by all sectors of the industry
• Promoting both private and public investment in the New Zealand minerals industry

Public perceptions

A long-term communications programme to promote a rational perception of mining that recognises:

• Its strategic significance
• Its effects relative to other land use activities
• The fact that all New Zealanders use minerals and depend on them to maintain their standard of living
• The benefits of adopting more rational policies - what is good for the minerals industry is good for NZ

Government policies

• A coherent, national policy towards minerals.
• A framework for access to Crown owned minerals on private and public land that compares favourably with regimes internationally.
• A public sector organisation that takes an active part in constructive policy and advocacy relating to minerals at the national, regional and district levels.
• Increase investment in research and accurate, up to date exploration investment and production information.

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