Natural Riches Lie Untapped Doug Gordon We are a rich nation, second only to Saudi Arabia in terms of natural capital per capita. Some of our minerals - gold, other metals and low-rank coals - are valued at more than $250 billion. That's around $60,000 for each New Zealand man, woman and child - without factoring in oil and gas. Indicators such as jobs, household welfare, exports and contribution to GDP in the minerals, coal, oil and gas sectors show the unrealised potentials are huge. If these resources are tapped in a responsible way, the standard of living would be much higher. The court of public opinion appears to be saying we cannot afford to use our natural resources because it will damage the planet. I say we cannot afford not to use them. And that we can do so in an environmentally responsible way that not only boosts our welfare and wellbeing, but also keeps a clean environment. It's the nations with the highest GDP per capita that can best afford to keep their environment clean. Yet New Zealand is still at the bottom of the OECD rankings at 23 out of 30 nations. We are clearly wealthy as a nation in terms of natural resource assets, but are denying ourselves at the cost of greater prosperity. We have bound ourselves to the Kyoto Protocol on high moral ground without doing the sums on what this might practically mean. We are seriously considering banning the use of coal and gas for energy generation in the knowledge that these resources have the ability to confer energy, fuel and fertiliser independence. Knowing the Chinese commission a coal-fired power station every two days, we are giving them access to our raw natural resources while constraining ourselves domestically under Kyoto that could have us dependent on China for steel, cement and other products. How does this make sense? With the review and placement of high country tenures into private and conservation hands, the conservation estate will balloon from 30 per cent to more than 40 per cent of the land mass. Under it lies more than 70 per cent of our known minerals. When you look at the Conservation Act 1987, the most cogent indicator of a nation's interest, its purpose is to conserve the natural resource and historic heritage; and the Department of Conservation is created for that purpose. But natural resources here are narrowly defined as biodiversity. The other natural resources such as the minerals are effectively discounted to zero in favour of biodiversity. Even our method of national accounting discounts these assets to zero until they are mobilised into commerce. So we pretend they don't exist. So much so that multinational forestry companies have been gifted the minerals under long-term Crown forestry leases. When Wyuna high country station was recently sold, $44 million worth of tungsten, a strategic mineral, was transferred to its new owners at no cost. No Crown entity is deliberately caveating minerals or coal to preserve and protect (conserve) access to develop these valuable resources. If you looked at the purpose of the Crown Minerals Act 1991 you would expect to find, for example: "an act to promote the conservation, management and wise use of New Zealand's natural resources (minerals, coal, oil, gas, etc); and for that purpose establish a Department of Energy and Natural Resources." But there is no such stated purpose. New Zealand has no declared interest in these resources. (The potential of minerals, coal, oil and gas for wealth creation are discussed along with the barriers to realising these values in The Natural Resource Potential of New Zealand (March 2008) We have the coal resources for energy security and self sufficiency. Part of this includes the coal equivalent of 20 Maui gas fields; some argue it is more like 40. That could mean petrol at less than $1 a litre at the pump rather than $2 or more. Gold can function as a means of balancing our payments. For example, Waihi's Martha mine, which has the thumbprint of a 60ha dairy farm that would normally support a family of five, accounts for about 16 per cent of the Hauraki district's GDP, pumps out about $100 million a year against the balance of payments, $40 million into the local economy, and employs 200-300 people. Without limestone we wouldn't have fertiliser, cement or glossy paper. The Glenbrook steel mill, which works on a fraction of our ironsand, is the largest employer in the Franklin district if not the country. Aggregate is essential for the built environment. Yet none of our 86 regional and district councils has an aggregate strategy. What do I mean? The price of aggregate, like petrol, is inelastic. When you increase the distance that roading or building metal is transported from 30km to 60km you double the price, a cost that falls on all ratepayers. Not one of these bodies is planning in this regard. Further, the cost of wear and tear on roads increases from unnecessary truck movements. So a logical strategy would be to plan to have aggregate of the quality appropriate to its use close to where it will be needed for the built environment. For responses to this article which first appeared at www.nbr.co.nz see www.nbr.co.nz/comment/doug-gordon/natural-riches-lie-untapped
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