Why is the government's review of privatising South Island High Country so important to us all? Below, NZMIA CEO Doug Gordon backgrounds the issues and explains the consequences of 'locking up' mineral ownership. This is followed by the NZMIA submission on the proposal.

Why do we care? Valuable minerals are owned by all New Zealanders. They are part of our common property. Our Government – the Crown – is supposed to manage them on our behalf and for our collective benefit. The nature of minerals is that they may only be gleaned from where they physically exist. Minerals exploration is about finding and delineating potentially economically viable ore bodies. So you begin to see why preserving Crown ownership and access to minerals is so important. That’s what we are asking for.

I stress here minerals potentials. What we are talking about here is preserving access to the minerals by at least covenanting and caveating the high country titles in the few areas where we know the minerals exist. So the potential to glean them remains. Should we the people need or want them to ensure the continuing sustainability of our welfare and society as we have come to know it.

We in the minerals sector are also New Zealanders and we do not take kindly to seeing that potential opportunity removed, whether knowingly, by stealth or by ignorance of its own and our laws when it could easily be retained by Government.

We, under our democracy, are acutely mindful that should the potential for minerals development arise that it will be you the people who will give us, the minerals sector, that permission if you feel the need or should it be in our nation’s interest to do so.

Since the early 1990’s the long-term perpetual leases held by farmers over about ten percent of New Zealand’s land mass in the South Island have been under Government’s two pronged review: preserve perceived highly valued biodiversity in the high land on one hand by putting it into the Conservation Estate; and privatise the highly valued lower farm lands into the hands of the merino farmers.

During the years of this Government review, we have been saying: hey Government seventy percent of our known minerals already lie tied up beneath the Conservation Estate – which may become a convenient legislative way of locking them up and discounting their value to zero. By the way the tools are available to Government to weigh and manage the many amenity values of the high country in a multidisciplinary fashion. In fact, this is a duty of care Government has to all New Zealanders. The high country contains more than just biodiversity and merino sheep farming values!

Just because some of us may not like mining and quarrying, minerals make an essential contribution to sustaining life and society, as we know it. Including your own. To deny this is to deny your being as a human. We are eighty percent water, a mineral; the rest is other minerals, right! Wait a minute, aren’t the arterial systems of our society called roads, much of the energy we use, and where we live and work, and the sustainability of life as we know it, the biosphere, is based on minerals, the geosphere – isn’t it?

We have suggested it is not right to sterilize minerals asset values into the Conservation Estate without accountability or to privatise the capital value of them into present leaseholders hands for no cost – the cost of a couple of dollars per hectare – the deemed value of the land for merino farming. You may have noted it hasn’t escaped the attention of others that the inherent values contained in some of these recently privatised lands are fetching multimillions of dollars for and by new and different uses and users.

So before its too late we are asking for a fair shake in the rational disposition of minerals in the ‘Crown Minerals Estate’ from Government for all New Zealanders.


Doug Gordon
CEO
New Zealand Minerals Industry Association.

30 March 2007

To: High Country Valuations Review Submissions
c/- Land Information New Zealand
Private Box 5501
WELLINGTON 6145

HIGH COUNTRY TENURE REVIEW : PRELIMINARY GOVERNMENT RESPONSE
TO REPORT OF THE HIGH COUNTRY PASTORAL LEASES REVIEW 2006


SUBMISSION OF THE
NEW ZEALAND MINERALS INDUSTRY ASSOCIATION

15 FEBRUARY 2007

SUBMISSION

This is a response to the Crown’s consultation with lessees and stakeholders to consider the implications of the response for lessees and the achievement of the Government’s high country objectives. (Recommendations to the Cabinet 71 (j) (VI) Preliminary Government Response to the Report)

It is the submission of the New Zealand Minerals Industry Association (NZMIA) that:

• Minerals beneath South Island high country Crown assets constitute a natural amenity value as a component of those Crown assets.
• Minerals can only be extracted from where they physically exist.
• Explicitly preserving access to minerals is critical.
• Prior to freeholding high country leasehold land the Crown should grant itself access arrangements (under the Crown Minerals Act 1991) to preserve access to Crown owned minerals.
• Minerals have a very large value and the ability for the Crown to get a return on its mineral estate should not be compromised. In 2004 a minerals value model developed for Land Information New Zealand showed there is more than $50 billion gross in situ value for potential mineral resources within the High Country Tenure Review lease areas. Importantly one of the key findings in the study is that the resource value is concentrated in relatively few leases, demonstrating that this issue is manageable:
  “Mineral values greater than $1 million were determined for 26 of the 274 leases reviewed. An additional 17 leases have mineral values greater than $100,000.”
  
  The project also showed how new spatial modeling techniques can be applied to land management, to answer questions such as where do the mineral values lie, what minerals exist, what is the opportunity cost of not developing minerals, how to make most efficient use of resources, and how the country can best utilise its resources, including minerals potential in relation to other land uses.
  (High Country Land Tenure Review : Quantifying the value of minerals within Crown pastoral leases. October 2004. Dr Greg Partington, Kenex Knowledge Systems Limited. Click here)
• In reviewing the leases NZMIA requests that: the minerals in the land not only be retained in Crown ownership, but that access to them be explicitly reserved through the mechanisms of access arrangements or easements or like legal instruments; regardless of the use of the high country asset or its potential use and whether or not the lease is continued in pastoral use or another use, privatised or transferred into the Conservation estate.
  
  

Note on the sector’s experience with regards minerals access

We wish to convey at the outset our concern is not to exacerbate the rental issues between the Crown and high country lessees. Our primary concern is that the critical issue of retention of access to the Crown Minerals estate be addressed upfront as a matter of policy in the nation’s interest.

Our experience has shown the existing institutional arrangements for access do not produce certainty and where certainty can be achieved in the national interest (that is through the Crown retaining access to the minerals) it should be.

The landowner power of veto over access to minerals other than petroleum is well known. Although in theory there is a mechanism to achieve forced access, the reality is that these provisions have never been used and it would take extraordinary circumstances for them to be used.

When long-term forestry leases were renewed in the early 1990s, Treasury allowed existing institutional arrangements to prevail. Minerals and access to them were not explicitly dealt with in the new leases.

This has meant that in practice the capital value of minerals beneath these leases was passed on at no cost to mainly multinational forestry companies who in many cases, by refusing access, have effectively sterilized those minerals. This has occurred particularly in the highly prospective areas of the Coromandel.

We would be happy to discuss any of these matters further with you.



Douglas B Gordon
Chief Executive Officer

New Zealand Minerals Industry Association
PO Box 5039
Wellington

Telephone: 04-499 9871
Email: nzmia@xtra.co.nz

15 February 2007