Jubilant greenies go one up

VIEWPOINT

OPINION: Greenies are cock-a- hoop after an easy 1-nil win in the first match in the series in which the combined Government- mining team had sought to investigate the mining potential of parts of the conservation estate.

It is too early to judge who will win the rest of the series. Much of the action will be offshore and in these encounters the lobby that wants to lock up the country's mineral wealth will face more determined foes.

These are led by international mining and some local companies that regard New Zealand as a vast and largely untapped source of mineral and energy wealth, and are prepared to spend substantial sums of risk capital to extract it.

Much of their interest isn't onshore, but in our vast territorial waters. McDouall Stuart analyst John Kidd noted recently that 96 per cent of New Zealand's land mass is underwater and likely to contain valuable resources. The potential benefits could be enormous. The wealth lies in things the Greens don't approve of - ironsand, coal, oil and agricultural fertiliser. Unlike the rest of us, it appears the Greens live in a perfect world, where they don't drive cars, fly, use computers that contain rare metals, and only eat organic food. They don't mind when the children of people who do such sinful things need to go overseas for work and better paid jobs.

Miners keen to operate here include Rio Tinto, BHP, the United States group Denham Capital, Fortescue Metals, China's Sinosteel, Bathurst Resources, Serdicho Developments and Galilee. Local companies exploring ironsands and coal seam gas extraction include Trans Tasman Resources and L and M.

Further development of the ironsand deposits off the North Island West Coast could be worth between $600 million and $1 trillion, according to Crown Minerals. Ironsands have been a significant export product for many years, and as New Zealand Steel's raw material.

Trans Tasman Resources, now with the backing of 48 per cent shareholder, the powerful Denham Capital Fund, is considering building the country's second steel manufacturing plant. This would presumably be sited in Whanganui or Taranaki, near its newly discovered offshore site of 1.2 billion tonnes of ironsand.

The Main Report newsletter reported on Thursday that Trans Tasman had announced through the Economic Development Ministry that the new plant (which could also be built in Asia) would be the world's "largest and most competitive" of its type, and up to 10 times cheaper to run than globally competitive alternatives in the Pilbara region of West Australia. Production would be exported to Asia, especially China.

Australia's Fortescue Metals is also understood to have advanced plans to develop ironsand mining and is rumoured to have attracted some local private equity capital. BHP, the owner of New Zealand Steel, is also active here, among others.

While much of the ironsand now exported comes from privately owned land, this will not be the case for offshore developments. The imminent repeal of the existing foreshore and seabed legislation has created considerable uncertainty and will be another test of the fortitude of the Government on its stated desire to encourage mining for the country's economic benefit.

Ironsand is classified as a Crown-owned mineral, though this status could change next month when new legislation is introduced to Parliament. Maori could seek to acquire rights through customary title.

Environmentalists are also expected to object to offshore developments with the extraction process having an inevitable impact on the ocean floor.

Supporters are hoping that these developments will not attract the same level of hostility as say, mining on the Coromandel, as they will be largely out of sight.

Two significant coal-mining operations are also likely to be announced in the coming months. Both are likely to seek investment capital from small investors and be listed on the Stock Exchange.

Both are planned to be open- cast mines, meaning they will not face the immense cost over-runs that Pike River has had to cope with in building access tunnels and the like to meet strict conditions on conservation land. One, backed by Bathurst Resources, is likely to be in production by the end of next year, and expected to attract Asian capital. A similar one is planned by Galilee, which is active in the South Island and competes for business with Solid Energy. These mines will produce a mix of hard coking and lower grade coals, unlike Pike, which produces 100 per cent quality coking coal.

At an earlier stage of development is Widespread Portfolio's plan to extract rock phosphate from a large area of the Chatham Rise. The zone is said to contain up to 100 per cent of this key component of most New Zealand fertiliser.

Once in production the fertiliser would become a major import substitution industry at lower cost than phosphate imported from Morocco.

Further down the track is the prospect of extracting gas hydrates, though this awaits suitable technology. The hydrates contain high concentrations of methane, a valuable and abundant resource off the coast.

- © Fairfax NZ News