NZ stuck between rocky riches and hard truths

BY ROD ORAM
Last updated 05:00 28/03/2010

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We've known for 150 years or more that we have lots of minerals and that we could make money from them.

OPINION: But when we ask ourselves why we haven't, we immediately blame each other. Conservationists say it can't be done. Miners say you won't let us try.

Seeing the impasse, international mining companies take their capital and skills elsewhere.

Meanwhile, the world needs minerals. For example, coal will make electricity and steel for decades to come until cleaner technologies eventually displace it. Until then, we have to find ways to use coal as little as possible and make it as environmentally acceptable as possible.

More interestingly, the likes of rare earths are crucial for the very technologies such as electronics, solar power and electric cars which we hope will make modern societies much more sustainable.

Potentially, New Zealand has three responses:

We could tell the world we won't mine. Dig up your own country, sell us the products you make from your minerals and we'll make money from you holidaying in this "untouched" paradise. But this hypocrisy would make us deeply unpopular.

We could mine lots and badly. But this would damage our land, economy and reputation.

We could be leaders in environmentally responsible mining, the science around it and the high-value downstream products and services flowing from it. Then we could prove that the economy and environment, treated well, can enhance each other.

But in our usual fashion as a nation, we are once again failing to seek a robust, long-term solution. Rather than working to achieve the best but hardest solution – option three – we're bashing each other's brains out. Once again we'll end up with a fatally flawed stalemate on an issue vital to the wellbeing of the nation.

At great cost to its standing and public confidence, the government might eventually open up bits of conservation land to mining and streamline the regulatory system. But international mining companies won't suddenly come in droves. The opportunities will be too limited, the policy framework too subject to change by the next government, and the social consensus on why, how and what we mine absolutely lacking.

This is a very big problem of the government's own making. National was vague before the election about its mineral ambitions and evasive after. Gerry Brownlee, the relevant minister, has sought advice from only a few mining insiders and refused to meet, let alone learn from, people with valid knowledge and views to contribute to the formation of an economically and environmentally robust new strategy.

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As a result, the government has failed to do any analysis on the true value of the minerals; how that value could be maximised through careful targeting of, for example, high demand, high value, non-commodity minerals such as rare earths rather than commodity coal or boom/bust precious metals; how foreign investors could be encouraged to build downstream science and industry here; and how all this could be done in exemplary environmental fashion.

In other words, the government has failed utterly to be strategic. Instead it is trying to get by being simply tactical.

The figure of $194 billion it puts on the value of onshore, non-hydrocarbon minerals is based on patchy knowledge of the mineralisation around the country and assumptions of its worth at market prices.

This is far short of the detailed analysis needed to develop a strategy to deliver true economic value that would stick to the ribs of the New Zealand economy, weigh up the potential negatives to tourism and other brand-dependent sectors of the economy and put in place policies to prevent that. Likewise, its talk of "surgical" extraction lacks any concrete examples of the high environmental standards achievable in mining. Even the term is a turn off, given surgery's associations with risks, pain and rehabilitation. Precision mining would be better.

And Brownlee hopes his pick of bits of land equivalent to a "postcard on Eden Park" will lull us into forgetting about the bigger picture or principles.

So, all the government tells us is we'll make lots of money, the environment will only be hurt a bit in tiny, faraway places and tourism won't be harmed at all. Oh, and here's $10m a year from royalties to do some conservation somewhere. No wonder lots of people don't believe the prime and tourism minister, or his minerals minister.

Business doesn't help either, Phil O'Reilly, chief executive of Business New Zealand, welcoming the government's proposal on Monday to open up 7058ha of protected conservation land to mineral exploration, gushed about the "thousands of billions of dollars" mining could generate. And this had the potential "to transform our economy".

Yes. But if you ask him how, he is as vague as Brownlee.

None of this will work unless as a country we have a strategy and consensus beneficial to us and attractive to overseas investors. To achieve that we need to agree that we will:

Fulfil our role in meeting the world's mineral needs

Pick only minerals that offer us the best non-commodity, long-term returns

Use them to build downstream science, value and businesses

Choose very carefully where to mine and how to rehabilitate the land afterwards

Demand that all mining and processing is world-leading environmentally

Reinvest in the economy and environment the wealth we generate from minerals

Create and maintain robust mechanisms to enable this constructive national discussion

Stick to what we decide

None of this is easy. Could we ever decide, for example, that there was an acceptable economic and environmental case for mining the rare earths which are believed to be in Rakiura National Park on Stewart Island?

We won't ever know by shouting at each other. But we might if we tried to understand the complete picture.

Will we do that? No. Because John Key and Brownlee are determined to use old-style adversarial politics to bulldoze through their high-risk, low-value plans.

If, though, they stop to consider for a moment that the resulting messy compromise would still deter international investors then they might look for an alternative approach.

They need look no further than across the cabinet table to Nick Smith. The environment minister made a brave decision last year to try to reach agreement on water issues through a Scandinavian-style consensus building process.

Previous governments had failed completely through the old adversarial process to get all the parties scrapping over water to agree on how we might best manage our most precious resource.

Now Smith is trying to do so through the Land and Water Forum created last year. This is modelled on the Scandinavian approach to resolving thorny national issues.

All the players are given the resources to research the issues and a forum where they can work out how to build common ground. Once consensus is achieved, it's easy to draft and pass legislation to deliver what everybody has agreed to.

Participants have a big incentive to make constructive compromises to reach a practical consensus beneficial to all. If they do, they remain part of the policy-making process.

If they don't they are removed, thus losing influence over the outcomes.

- Sunday Star Times

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