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					Overview
The minerals, oil, gas and coal being produced in New Zealand have a value of about $4,500 million
per
year, and contribute more than $2,000 million to exports. Potential exists to maintain and expand the
range
and value of what we produce.
Demand for resources is being driven by economic growth in developing countries that is resource
intensive
while basic infrastructure –taken for granted in developed countries –is established. This increased
demand is likely to continue for the long term.
Australia’s mineral wealth is often used to explain its higher living standards relative to New Zealand.
Australia has worked hard to achieve this, and major government and industry initiatives are
continuing in
order to stay competitive. By comparison, New Zealand has done little over the last 25 years to make
the
most of its resource potential.
The impediments to making progress here can be divided into those things that can’t be changed, and
those
that can. Ironically New Zealand is well positioned for those things that can’t be changed –geological
resource potential, political history, human resources and government traditions.
The obstacles are mainly things that can be changed.
Summary
New Zealand is producing minerals, coal and petroleum with a total value of about $4,500 million per
year,
and these resources are contributing about $2,000 million to exports. The metallic mineral potential of
New
Zealand has a gross in-situ value of more than $140 billion with lignite alone at least an additional
$100
billion. In addition, New Zealand has good potential for the discovery of new oil and gas resources.
The investment environment for exploration in New Zealand is not attractive. For example a 2007-08
survey
carried out by the Fraser Institute, a Canadian independent educational and research organisation
ranks the
policy environment in New Zealand at No 44 out of the 68 jurisdictions assessed. NZ ranks behind all
of the
Australian states and Canadian provinces with which we compete for exploration investment and
expertise.
Energy exploration investment is now compromised by changing energy policies, particularly a
proposed
new law that would restrict coal and gas fired electricity generation.
The impediments to realising New Zealand’s resource potential can be overcome. They include:
   Fragmented government administration and management
   A complex, uncertain regime for mineral ownership
   Major deficiencies in the access regime that is created under the Crown Minerals Act
   Energy policies that create uncertainty and discriminate against coal and gas
   An uncompetitive environment for investment in comparison with other, similar countries.
The barriers to the realisation of New Zealand’s resource potential can be overcomeif its potential
value is
recognised, and its management given a higher priority.
Natural resource potential of New Zealand. March 2008
2
Contents
Background...............................................................................................................................................
.. 3
The NZ resource sector in 2008
................................................................................................................... 3
Minerals and coal....................................................................................................................................
3
Petroleum ...............................................................................................................................................
4
Natural gas .............................................................................................................................................
6
Resource potential
...................................................................................................................................... 6
Oil and gas..............................................................................................................................................
7
Metals.....................................................................................................................................................
7
Aggregate and industrial minerals...........................................................................................................
11
Coal ......................................................................................................................................................
12
Development
potential............................................................................................................................... 14
Oil and gas............................................................................................................................................
14
Coal ......................................................................................................................................................
14
Metals...................................................................................................................................................
14
Non-metallic minerals .............................................................................................................................
15
Changes needed to realise potential
.......................................................................................................... 16
Government administration and management.........................................................................................
16
Mineral ownership and access................................................................................................................
16
Oil and gas............................................................................................................................................
17
Coal ......................................................................................................................................................
18
High value minerals...............................................................................................................................
18
Aggregate .............................................................................................................................................
18
Exploration initiatives.............................................................................................................................
19
List of Figures
1 IMF Commodity Price Indices 3
2 IMF Metal Price Index deflated by US CPI 3
3 Value of NZ Mine output 1999 - 2006 4
4 NZ oil production 1970 - 2006 4
5 Sedimentary basins of New Zealand 5
6 Natural gas users 2006 6
7 NZ Natural gas production 1970 - 2006 6
8 NZ gas discovery forecast 7
9 Metallic minerals excluding gold 9
10 Gold mines, deposits and prospective areas 10
11 Industrial minerals 11
12 Coal exports 1998 - 2006 12
13 Coal fields and operating coal mines 13
14 Exploration spending NZ and global 14
15 NZ gold production and exploration spending 18
List of Tables
1 Export value of main primary industries 6
2 Potential value of metallic mineral resources 8
3 Summary of coal resources 12
Natural resource potential of New Zealand. March 2008
3
Background
Towards the end of the 20th century real prices for many commodities including petroleum and
minerals were
at historical lows, and for some metals (e.g. copper) probably at 20th century lows. The “new
economy” of
the 21st century was to be dominated by new technology, the internet and the communications sector.
Energy and minerals were seen in many developed countries (including New Zealand) as “old
economy”
sunset industries that were struggling to survive. In New Zealand the resources sector was sidelined
as a
government priority –for example new research funds were diverted away from the traditional
commodity
based fields into the “new economy”.
Since 2001 this situation has been reversed with commodities (minerals and energy particularly)
being
among the most profitable industry sectors (Figure 1). In 2000 the market value of Cisco Systems, the
world’s leading internet company, was greater than that of the world’s 12 largest mining companies
combined. In 2008 Cisco is still a large and successful company, but its value is significantly less than
that
of BHP Billiton, the largest mining company.
Although commodity prices have risen strongly since 2001, real metal prices are not exceptionally
high by
historical standards (Figure 2). Rising living standards in developing countries are creating demand
for
energy and building materials that shows no signs of abating.
A rare opportunity now exists to make more of New Zealand’s resource potential.
The NZ resource sector in 2008
The value of the minerals produced by mining operations in New Zealand has increased by 93%
since 1999
to $1,500 million in 2006, the latest year for which complete statistics are available (Figure 3). The
increase
is due mainly to increases in the volume and value of coal and aggregate which is used for building
and road
making. Further increases are likely to be reported for 2007. New Zealand’s petroleum production is
now
increasing rapidly after a decade of decline, and the value of oil produced in 2008 is predicted to
increase
three-fold from that of 2006.
Minerals and coal
The NZ mineral industry produces more than 50 million tonnes of minerals (including coal) each year,
with
aggregate for building, construction and road-making accounting for close to 70% of this total.
IMF Commodity Price Indices
0
50
100
150
200
250
Agriculture M etals Energy
Energy index includes oil, gas and coal.
Agriculture index includes timber and wool, but not dairy
products. Jan 1992 –Jan 2008 (2005 = 100)
Source: IMF
Figure 1
IMF Metal Price Index deflated by US CPI
0
20
40
60
80
100
120
1957
1961
1965
1969
1973
1977
1981
1985
1989
1993
1997
2001
2005
Metals Price Index, includes copper, aluminium, iron ore, tin,
nickel, zinc, lead, and uranium price indices. (1957 = 100)
Source: IMF
Figure 2
Natural resource potential of New Zealand. March 2008
4
The greatest value of the minerals sector to NZ is through its vital,
supportive function for other industry sectors, and its contribution
to export income. Growth sectors such as the dairy industry
depend heavily on fertilisers and road transport for which industrial
minerals and aggregates are essential. Mineral production is
concentrated in regional NZ, supporting growth away from the
main cities.
Coal, gold, ironsand and industrial minerals (notably high quality
china clay) are the main exports, earning New Zealand more than
$700 million per year. Within New Zealand, aggregates with a
value of more than $500 million are used to build and maintain
roads, and are the main ingredient in concrete. Industrial
minerals are used for building (e.g. cement making –more than a
million tonnes is made each year at two plants) and by a range of
other industries. These include paper making, manufacturing,
steelmaking, gold ore processing, water treatment and farming.
More than 2 million tonnes of lime and
15,000 tonnes of dolomite were
produced for the farming sector in 2006.
Petroleum
The current era of NZ’s petroleum
production began in the late 1960s and
grew strongly until 1988 reaching a peak
of more than 20 million barrels. It
declined between 1998 and 2006, due
mainly to reducing output from the Maui
field. The value of oil being produced in
New Zealand is expected to reach about
$2 billion in 2008, a new high due to
increasing output from newly developed
fields –Tui, Pohokura and Maari.
NZ Oi l Production 1970-2006
0
5
10
15
20
25
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Production (millionbarrels)
Source: Ministry of Economic Development. Includes crude oil, naphtha and
condensate. 2008 data is estimated
Figure 4
Changing public opinion
When investigations into reopening the
Martha mine at Waihi began in the 1970s
there was a high level of concern about its
effects.
Subsequent soundings of public opinion
have shown increasing support for the mine.
The most recent survey, commissioned by
the Hauraki District Council in 2004, found
that 92% believed that gold mining provided
economic benefits to Waihi, while 7%
thought there were no benefits.
While 17% felt they were adversely affected
(e.g. by vibration and noise), 82% thought
they were not adversely being affected by
mining.
Value of NZ mine output 1999 - 2006
0
200
400
600
800
1000
1200
1400
1600
1999 2000 2001 2002 2003 2004 2005 2006
$million
Metals Non metals Coal
Source: Crown Minerals
Figure 3
Natural resource potential of New Zealand. March 2008
5
Sedimentary basins of New Zealand
Figure 5
In 2006 New Zealand’s self-sufficiency in oil was 17%, the lowest it has been since 1980. It is now
expected
to reach 50% during 2008, and may increase further with the development of the new fields. Ongoing
exploration is essential just to maintain this level of self sufficiency in the future.
Natural resource potential of New Zealand. March 2008
6
Natural gas
Since its first development in 1970, gas production increased to more than 200 Bcf in 2000. Gas was
produced from 12 fields in 2006, all of them within the Taranaki Basin. The main use of gas is for
generating
electricity, with industrial uses and methanol production significant users also. The total value of gas
production is about $1,000 million per year. It accounts for more than 20% of New Zealand’s total
primary
energy supply. Royalties on oil and gas of more than $110 million were paid to the government in
2005, and
these are expected to rise strongly as oil output increases.
Resource potential
New Zealand is rich in natural resources. Our sub-surface resources, gold and coal particularly were
major
drivers of the early development of this country. Since the mid 20th century oil, gas and geothermal
energy
resources have been developed as well, and are now major additional indigenous sources of energy.
The
output of non-metallic minerals (aggregate, limestone and specialised high value minerals) and their
processed products such as cement have increased in line with economic and population growth.
New Zealand’s past production of high value minerals has been dominated by gold, with total
recorded
production now more than 1,000 tonnes (33 million ounces) with a present day value of more than
$NZ 30
billion. Coal production totals more than 270 million tonnes. New Zealand has large resources (about
10,000
million tonnes) of coal, mainly in the form of lignite or brown coal, and ironsand (about 900 million
tonnes of
titanomagnetite).
Mining uses less than 0.1% of New Zealand’s land area, and sites of former mines are now
rehabilitated for
other uses. The table summarises recent estimates of the total area of land that is directly affected at
present by a range of rural industrial land uses (including mining), and export values.
Table 1: Export value of main primary industries
Sector Land area (sq km) Export value
($million per year)
Export value
($/ha per year)
Production forestry 18,000 3,300 1,833
Dairy 20,000 7,000 3,500
Horticulture, viticulture 1,100 2,200 20,000
Mining 40 700 175,000
Sources: Crown Minerals, Ministry of Agriculture and Forestry, Statistics NZ.
NZ Natural gas production 1970 - 2006
0
50
100
150
200
250
1970
1975
1980
1985
1990
1995
2000
2005
Net Gas Prodcution (Bcf)
Source: Ministry of Economic Development
Figure 7
Gas users 2006
(percent)
Electricity
generation, 56.4
Methanol, 10.6
Ammonia Urea,
4.8
Residential, 4.6
Commercial, 3.3
Industrial, 20.2
National
transport, 0.1
Source: Energy data file 2007
Figure 6
Natural resource potential of New Zealand. March 2008
7
Oil and gas
New Zealand’s gas resources are estimated at about 2,000 PJ, sufficient to maintain the existing level
of
output until about 2015. Continuing exploration could see that date extended, and the graph below is
based
on a “maximum plausible” assessment of that potential.
Estimates of potential resources of the Taranaki Basin, New Zealand’sonly economic petroleum
producing
basin have varied widely between 79 and 1,144 million barrels oil equivalent, indicating the
uncertainties that
surround such assessments. Expert opinion is that large fields remain to be discovered in New
Zealand’s
petroleum basins, given their size. The recent discovery of major new oil and gas resources in the
Santos
Basin in the deep continental margin of Brazil are a reminder that the more you look the more you
find.
These new discoveries “…could change the regional and even global balance of energy power” 1.
Unconventional resources such as gas hydrates may become significant in the future, but the
technology to
develop them is yet to be developed.
Metals
NZ has excellent potential for the discovery of new, high value minerals including platinum, gold and
other
metals. New Zealand’s potential mineral resources were assessed by GNS Science in a study in
19992. It
identified potential for 16 metals in 32 different types of mineral deposit. These potential metallic
mineral
resources were valued at $86 billion using 1999 values, based on conventional resource modelling
techniques. Real prices of most metals and minerals were at historical lows in 1999. Since then
further
investigations and price rises have increased the potential value of the assessed resources to more
than
$200 billion. More detailed studies have now been carried out into the mineral potential of the
Northland and
Otago Regions, and the Thames-Coromandel and Hauraki Districts.
Table 2 lists details for 7 metals –gold, silver, platinum, copper, iron, molybdenum and titanium. The
values
are derived from the “Mineral potential of New Zealand” resource estimates, updated using 2008
prices.
Potential resources of these 7 metals now have a value of close to $140 billion. Potential is also
recognised
1 The Economist, February 12th 2008 .
         AB, Brathwaite RL,1999. The mineral potential of New Zealand. Institute of Geological and Nuclear
2 Christie
Sciences
science report 1999/4
NZ gas discovery forecast
0
50
100
150
200
250
300
350
400
450
500
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
PJ
Kapuni Other developed Maui
Pohokura Kupe onshore undiscovered
offshore W North Island undisc frontier undiscovered demand
Source: CAENZ 2004
Figure 8
Natural resource potential of New Zealand. March 2008
8
for deposits of other metals that include antimony, chromium, lead and zinc, nickel, rare earth metals,
tin and
tungsten. Occurrences of all of these have been located in New Zealand, and several have been
produced
in small quantities.
The resource values in the table are based on current metal prices and an assessment of the
probability of
finding deposits of specific geological types. New Zealand data is used where it is available (e.g. for
gold
deposits) but in other cases the assessment is based on similar geological environments in other
countries.
The values are gross, in situ values and give an indication of potential total value. They are not
predictions
of what is achievable in the near future.
Table 2: Potential value of metallic mineral resources
Metal Deposit type Potential
value
$NZ million
NZ Mining Main locations
Gold Mesothermal 17,350 Macraes mine, Otago
and Globe-Progress
mine, Reefton are
operating
Otago region
NorthernWestland
Northwest Nelson
Marlborough
Epithermal 18,800 Martha and Favona
mines at Waihi are
operating
Past mining very
extensive in Hauraki
region
Hauraki-Coromandel
Taupo Volcanic Zone, central North
Island
Eastern Northland
Alluvial gold 5,500 Operations inWest
Coast and Otago.
Large historical
production
West Coast, coastal flats and river
and terrace gravels
Otago River gravels, terraces and
older quartz gravels
Marlborough and Northwest Nelson
5 other deposit
types
3,180 Sams Creek, deposit
in NW Nelson is
undeveloped
Northwest Nelson, Westland,
Hauraki, Northland, Fiordland
Silver Epithermal 1,585 As for epithermal gold As for epithermal gold
Copper 5 deposit types 26,990 None currently
Historical small scale
mining only, e.g. at Gt
Barrier and Kawau
Islands, Northland,
Nelson
Eastern Northland and Coromandel
Northwest Nelson
Central Northland
East Cape, Fiordland
Nelson, Southland
Iron Shoreline sands 26,000 Waikato North Head
and Taharoa
West coast of North Island between
Wanganui and Kaipara Harbour
Molybdenum Porphyry 33,720 None Northwest Nelson
Westland
Fiordland
Platinum Magmatic 7,100 None Northwest Nelson, Southland
Titanium Shoreline sands 2,250 Pilot scale only West coast, South Island
Total 139,295
Sources: Christie and Brathwaite 1999. Mining Journal, January 2008 for current metal prices
The data above relates to on-shore resources only. Exploration is being carried out for gold and
ironsand
off the west coast of NZ, and for precious and base metals on the seabed to the northeast of the
North
Island. The potential value of these resources is additional to values indicated above.
Onshore, exploration is concentrated on precious metals, coal and ironsand. A company programme
using
sophisticated airborne geophysical methods has redefined the geology of Otago. The Regional
Council is
contributing $1 million to the cost of the survey because of its value as an economic development tool
and
for managing resources, water particularly. Central government declined to contribute.
Regional development agencies in Northland and the Waikato are carrying out research into the value
of
their mineral potential.
Natural resource potential of New Zealand. March 2008
9
Metallic minerals excluding gold
Figure 9
Natural resource potential of New Zealand. March 2008
10
Gold mines and prospective areas
Figure 10
Natural resource potential of New Zealand. March 2008
11
Aggregate and industrial minerals
Aggregates in New Zealand are made mainly from greywacke rocks that underlie much of both
islands.
These are quarried, or extracted from riverbeds and alluvial terraces where natural transport
processes have
upgraded their quality through the breakdown of weaker material. Volcanic rocks (andesite and
basalt) are
used in the North Island, mainly around Auckland and Taranaki, while various other rock types are
used in
the south of the South Island where greywacke is not available.
Industrial minerals
Figure 11
Natural resource potential of New Zealand. March 2008
12
The demand for aggregate is tied strongly to economic and population growth, and as urban centres
grow,
quarries within, and on the outskirts of these centres find that continuing operation becomes
increasingly
difficult due to the opposition from a growing local population. This problem is particularly severe in
Auckland where aggregate is being transported over greater distances as quarries within the urban
limit are
closed. Between 2002 and 2006 Crown Minerals data shows the average selling price of aggregate in
the
Auckland region increased by 40%, which has a significant effect on the costs of building and
maintaining
infrastructure, roads in particular3. Just 30 km of road transport can double the delivered cost of
aggregate,
and these costs are passed on to local residents via rates and taxes. Between 2000 and 2006 the
production of aggregate throughout NZ has increased by nearly 30% to 38 million tonnes. Maintaining
these
supplies from sites close to their markets reduces costs and the effects of heavy traffic on roads,
other road
users, and those living near transport routes. It would also reduce CO 2 emissions and reduce
household
costs through local authority rates.
Among non-metallic resources, industrial minerals have potential for producing new, high value
products.
Northland china clay and Canterbury bentonite are examples of how niche markets for high value,
unique
minerals can be developed successfully, and there is potential to repeat these.
Coal
New Zealand’s coal resources have been
investigated in detail by a Government
funded survey and more information is
available on them than for the other
resources4.
Coal production in the North Island is
dominantly for use by New Zealand Steel at
Glenbrook for steelmaking, for electricity
generation and for industrial use. Most
South Island production is higher rank
bituminous coal that is exported. Over the
last 10 years coal exports have doubled to
2.7 million tonnes in 2006, and have a value
of about $300 million per year.
New Zealand has large resources of lignite -
a low rank coal - in Otago and Southland.
These amount to more than 7,000 million
tonnes and are New Zealand’s largest conventional energy resource.
Table 3: Summary of the in-ground coal resources of New Zealand
Coal region Coal Rank In-ground resource
(million tonnes)
Recoverable resource
(million tonnes)
Northland Sub-bituminous 3 -
Waikato Sub-bituminous 2,100 700
Taranaki Sub-bituminous 380 170
Total North Island 2,483 870
Nelson Sub-bituminous 2 -
West Coast Bituminous, subbituminous
and lignite
980 340
Canterbury Lignite 4 2
Otago Lignite and sub-bituminous 2,700 1,220
Southland Lignite and sub-bituminous 9,400 6,300
Total South Island 13,086 7,842
Note: Only the lignite tonnages are likely to meet current standards for defining recoverable resources.
3 Brown, M, 2007: New Zealand’s Mineral industry –a national perspective. Presentation to combined IOQ and
AQAA
conference,Wellington
4 Barry JM, Duff, SW, MacFarlan DAB 1988: Coal Resources of New Zealand Energy and Resources Division,
Ministry
of Commerce, Resource Information Report 16.
Coal Exports
-
0.50
1.00
1.50
2.00
2.50
3.00
1998 1999 2000 2001 2002 2003 2004 2005 2006
Million tonnes
Figure 12
Natural resource potential of New Zealand. March 2008
13
Operating coal mines and coalfields
Figure 13
Natural resource potential of New Zealand. March 2008
14
Development potential
New Zealand has well defined potential for the discovery and development of oil and gas, metals,
industrial
minerals and coal. The sector could be much more productive than it is at present delivering improved
export performance, more secure energy supplies at internationally competitive prices, and more
efficiently
supporting other industry sectors and the development of infrastructure.
Oil and gas
At present natural gas accounts for more than 20% of New Zealand’s primary energy supply, and the
potential exists to increase that with further exploration.
The effect of the relatively small Tui oilfield on NZ’s exports is an indication of the potential value of
NZ’s
undiscovered oil resources. Dairy exports have been growing rapidly, and in December 2007 for the
first
time topped $1 billion for the month and were 77 per cent higher than in December 2006. Oil exports
are
growing too, and with production from the Tui field, oil exports were $254 million, 10 times their level a
year
earlier and enough to offset one-third of the month's record oil imports. The export value from just one
small oilfield is equivalent to a quarter of the value of the entire dairy industry.
Coal
Lignite feasibility investigations are under way in Otago and Southland. These resources are New
Zealand’s largest energy resource. The energy content of the recoverable lignite is estimated at
74,000 PJ,
equivalent to 20 times the energy content of the Maui gas field before it was developed, and about 35
times
natural gas reserves.
The lignite resources have the potential to form the basis of a large scale petrochemical industry that
could
produce liquid and gas fuels, and industrial chemicals such as methanol and urea.
Coal seam gas is methane gas that can be extracted via drillholes from coal that is in-situ. Gas
production
methods are being investigated internationally and in New Zealand in the Waikato, Otago and
Southland
regions particularly.
Coal exports The value of New
Zealand’s coal exports have
increased dramatically in recent
years, and now exceed $300 million
per year. Export production is
mainly from West Coast, South
Island coalfields for steel making in
Asia and the Pacific.
Metals
Exploration activity has increased
word-wide as a result of the rising
mineral prices due to demand
outstripping supply, but in New
Zealand the rate of expenditure has
declined in the year to March 2007,
despite continuing increases
internationally.
The Fraser Institute5, an independent
Canadian research and educational
organisation each year surveys
several hundred resource companies
that are active throughout the world.
It then ranks 68 jurisdictions
5 www.fraserinstitute.org
Exploration spending NZ and Global
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
NZ spending ($million)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Global spending ($US billion)
NZ Global
Data sources: Crown Minerals, Metals Economics Group
Figure 14
Natural resource potential of New Zealand. March 2008
15
(countries, states and provinces) using a policy attractiveness index. Mining is managed at the state
or
provincial level in countries with a federal system (Canada, Australia and the US).
In the 2007/08 survey Quebec, Nevada and Finland rank at 1, 2 and 3. Ecuador, Zimbabwe and
Honduras
take the bottom 3 spaces. New Zealand ranks at No 44, behind all 6 Australian states and 10
Canadian
provinces that are included in the survey. Poor policy and a failure to keep up with other countries in
such
fields and new digital data are the most obvious explanations for this dismal result.
Maintaining a high level of exploration is essential for maintaining and expanding the volume and
value of
the minerals we produce.
A 2002 economic study of the NZ minerals industry by the NZ Institute of Economic Research, built
on the
1999 study of NZ’s mineral potentialreferred to above1. NZIER modelled the economic effects of
mining
industry growth on the NZ economy and made the following key findings:
Within 10 years
  NZ has the mineral resource potential to
sustain a doubling of its value to the NZ
economy
  Employment potential of +25,000 jobs
  Overall household incomes increase by 1.7%
  Overall exports increase by 4%
Longer term
  GDP growth of 2.9% possible
  Potential for overall export growth of 7%
  Employment potential of 35,000 jobs
  Households would be 2.3% better off
Both scenarios can be achieved without access to
National Parks and other sensitive areas that are
now closed to mining.
Non-metallic minerals
New Zealand is producing industrial minerals with
a current value of about $40 million per year.
Minerals include: amorphous silica, bentonite, clay
for ceramics and brick making, diatomite,
dolomite, perlite, pumice, serpentine, silica sand
and zeolite. These have a wide range of uses by
industry in New Zealand and are exported.
Extensive research and development work is needed to upgrade natural materials and to find markets
for
the resulting products. The china clay operation at Matauri Bay in Northland is the only industrial
mineral
operation that depends entirely on exports. Other NZ industrial minerals including bentonite and lime
are
exported.
High quality china clay - Matauri Bay
   In 2006 sales revenues for Imerys
Tableware New Zealand Ltd were
NZ$13,000,000.
   Exports to 23 countries account for 99% of
this revenue.
   Current operating expenses are in excess
of $500,000 per month and most of this is
spent in Northland.
   Although the operation has access to
three distinct deposits only two are worked
at present. The total area occupied by the
two active quarries (Matauri Bay and
Mahimahi), including waste disposal and
buffer areas is approx 178 hectares.
   This gives gross revenue per hectare per
year of about $73,000.
   The Matauri Bay operation supports 35
Full Time Equivalent staff in Northland,
plus another 5 in the company’s Auckland
laboratory and sales office.
Natural resource potential of New Zealand. March 2008
16
Changes needed to realise potential
Government administration and management
Until the early 1980s minerals and petroleum were administered by a stand-alone government
department
(the Mines Department) with Cabinet representation. Since then the group administering minerals has
been
progressively reduced in standing to a division within the Ministry of Energy, which was then
abolished and
incorporated into the Ministry of Commerce (re-named the Ministry of Economic Development).
Minerals and petroleum are now administered by Crown Minerals, a small group within the Ministry of
Economic Development. The Ministry has eight branches, one of which is Business Services Branch.
Crown Minerals is one of seven groups within the Business Services Branch. The Branch’s other
responsibilities include the companies office and radio spectrum licensing.
The management of Crown owned resources is structured within the government administration as a
service
to the private sector, rather than being managed as immensely valuable assets that are owned by the
public.
Public sector restructuring has resulted in fragmented management of resources. The functions of the
main
agencies are:
Crown Minerals, Ministry of Economic Development.
   Grants permits, collects information, publishes statistics, promotes investment, collects royalties
Regional and district councils
   Manage mineral resources and the environmental effects of activities under the Resource
Management Act
   Each region and district develops its own policies and rules
The Department of Conservation
   An estimated 70% of the mineral prospective land in NZ is owned by the Crown
   DoC controls access to minerals under most Crown Land (more than 8 million hectares - about
30%
of NZ’s land area)
   Conservation is defined as preservation and protection
   DoC has no incentive to facilitate exploration or development
The Department of Land Information
   Administers an area of about 3 million hectares of Crown land under Pastoral Leases and Forest
Licences
The Department of Labour
   Has primary responsibility for worker safety
GNS Science
   Has research functions of the NZ Geological Survey
No agency has the authority to take the lead in making more of New Zealand’s resource potential, in
spite of
these resources being owned almost entirely by the public.
Mineral ownership and access
All petroleum, gold and silver in its natural state throughout New Zealand is owned by the Crown,
whether it
is located on Crown land or privately owned land. Other minerals (including coal) may be owned by
the
Crown, the owner of the land, some other person, or may be of unknown ownership. There is no
reliable
register of mineral ownership, and it must be determined by searching individual titles back to the
original
(usually 19th century) Crown grant - a time consuming, costly process. Other jurisdictions (notably
Australian
States and Canadian provinces) that inherited this cumbersome, uncertain system from English law
have
moved progressively to a system of public ownership for high value minerals to facilitate exploration.
Natural resource potential of New Zealand. March 2008
17
Where minerals are owned by the Crown a permit is required that is granted by the Minister of Energy
via
Crown Minerals.
While the ownership for gold, silver and petroleum
is clear, the situation for other minerals (platinum
group metals on private land for example) is not.
Complications in determining rights are impeding
exploration for these minerals.
The complex mineral ownership regime is
compounded by an access regime introduced in
the Crown Minerals Act 1991 that requires a
negotiated access agreement with each land
owner and occupier. An arbitration process
operates for petroleum where agreement can’t be
reached, but not for other minerals. These access
agreements are not tied to permits to explore and
mine, so they can run on after a permit has
expired. A separate system of private access
rights to Crown owned minerals is developing
because of these deficiencies in the Crown
Minerals Act. Private agreements that are not
registered on land titles can prevent access to
land by a holder of a minerals permit granted
under the Act.
An overhaul of the mineral ownership and access
provisions of the Crown Minerals Act is required.
Oil and gas
The Government has announced its intention to
introduce an Emissions Trading Scheme
progressively covering all gases and major emitters:
• Electricity would becovered from 1 January 2010
• A Bill is before Parliament and legislation is expected to be passed during 2008
• The Government has also introduced legislation to give effect to its energy policy, the primary goal
of which is to try and achieve 90% renewable energy by 2025
• The Billincludes a 10 year moratorium on new thermal plants with some exceptions:
–security of supply
– non “base-load” plants
–replacement of retired plant
The strategy will increase the costs of gas production operations in New Zealand compared with other
countries and may act as a disincentive for future investment in the sector.
Two studies in 2008 by Infometrics6 and Castalia7 predict a doubling of electricity prices and an
increase in
petrol prices by 50%, accompanied by rising greenhouse gas emissions (Infometrics), and ongoing
amendments to the energy strategy and continuing uncertainty (Castalia), contrasting with the
cautious
approach being taken in Australia, despite its commitment to the Kyoto Protocol.
The key elements of the changes were not included in the draft energy strategy, and are likely to
discourage
investment in oil and gas exploration immediately because of the added uncertainty now faced by
potential
investors.
6 Carbon  Mitigation Scenarios. Report prepared for NZ Business Roundtable and Petroleum Exploration and
Production
Assoc of NZ. 5 February 2008
7 Climate Change (Emissions Trading and Renewable Preference Bill. Castalia 30 January 2008.
Access to Crown Forest Licence land
Crown Forest Licences cover an area of more than
480,000 hectares of Crown land, mainly in the North
Island. Much of it is prospective for minerals. The
licences were intended to privatise timber cutting
rights but have, in effect, transferred rights to the
minerals too. The following is required to carry out
an exploration programme on these areas of Crown
land:
1. An exploration permit granted by Crown
Minerals
2. An access arrangement with Land Information
NZ
3. An access arrangement with the Licence holder
(usually an overseas forestry corporation)
4. An access arrangement with the forest operator
(which is usually a different company).
Each imposes fees and conditions separately on
the explorer, and may seek a return from any
subsequent mining operation. If an access
arrangement cannot be agreed there is no right of
redress.
These consents are needed to enter the land for
exploration. Resource consents may be required in
addition for exploration activities.
Natural resource potential of New Zealand. March 2008
18
Coal
Coal (particularly Otago and Southland lignite) is affected by the costs and uncertainties of private
coal
ownership, the Crown Minerals Act access regime and by the fragmented administration of mineral
resources in New Zealand.
In addition, the proposed new
energy policies and the emissions
trading scheme will affect coal as a
domestic energy source.
High value minerals
In the 1970s New Zealand’s
resources of hard rock gold were
virtually zero and the conventional
view was that a resumption of
mining was unlikely. A surge of
exploration investment in the 1980s
was followed by rapid growth in
gold output as new discoveries
were developed. Maintaining a
high level of exploration investment
is essential for continued or
expanded mineral production.
New Zealand needs an internationally
competitive regime for
mineral exploration if it is to attract
the necessary investment.
Methods that have been successful
overseas include:
   Acquiring and publishing new geoscientific data
   Compiling existing data to make it more accessible
   Streamlining consents for low impact exploration
   Better structured mineral ownership and access regimes
   Taxation incentives for individual investors in exploration
Aggregate
The supply of aggregate, particularly to
growing regions such as Auckland, has
been long recognised as a significant
issue for the maintenance of infrastructure
and the growth of the Auckland region. In
spite of this, comprehensive data on
aggregate supply and demand is not
available.
Policies that apply to the management of
aggregate resources vary widely
throughout NZ due to differences in
regional and district council’s policies and
plans. Three local authorities in the
Waikato region (Thames-Coromandel,
Franklin and Waikato) have sought to
impose rules that would make mining or
quarrying a prohibited activity over wide
areas of these districts.
Existing quarries in areas of population
NZ Gold production and exploration spending 1977 –2006
(5-yearly intervals)
0
20
40
60
80
100
120
140
160
180
1977-81 1982-86 1987-91 1992-96 1997-01 2002-06
Exploration spending ($M)
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
5-yearly gold output (Moz)
Explo ra t io n spending
Go ld P ro duc t io n
Sources: 1977-1994 Mines statements, Reports of Ministry of Energy.
Estimates 1995-1999 as no data collected. 2000-2006, Crown Minerals
Exploration spending is March 2006 dollars deflated using CPI
Figure 15
Matukuturua Stonefields
Basalt rock from the Auckland volcanic field that underlies
much of the Auckland urban area has been the main source
of supply since European settlers arrive in the 19th century.
Conserving aggregate resources for future use has proved to
be difficult, as this example shows. At Matukuturua south of
Auckland, land containing a large basalt resource was bought
by a quarry company and zoned for quarrying purposes in
the District Scheme in the 1970s. Although the underlying
quarry zone remains, the current District Plan established
under the RMA designates the area for public open space for
heritage protection and passive recreation (Manukau City
Council 2006), precluding the development of the aggregate
resources.
Ironically, the present heritage value of the land at
Matukuturua is the result of it having been set aside in private
ownership for future quarry use. A total of 630 million cubic
metres of basalt remain available within the Auckland urban
area, but production from these resources has now virtually
ceased.
Natural resource potential of New Zealand. March 2008
19
growth (where demand is strongest) have been unsuccessful in dealing with the effects of urban
expansion,
and a number have been forced to close, resulting in cost increases and pressure on local authority
rates.
The difficulties that companies face in seeking to protect resources for future development are
highlighted by
the experience of Winstone Aggregates at Matukuturua in Manukau City.8, 9 (See box).
Exploration initiatives
During the 1990s slowing exploration activity in Australia led two states, Victoria and South Australia
to
undertake initiatives to promote exploration investment by the private sector. The Victoria Initiative for
Minerals and Petroleum, and the South Australian Exploration Initiative led to rapid increases in
exploration
spending. The initiatives consisted of field investigations that produced new information (mainly from
airborne geophysical surveys), compiling existing information to make it much more accessible, and
reviewing policies that might be unduly impeding mineral exploration. Geoscience Australia
investigated the
effects of these programmes in Australia and overseas, and found that each dollar invested in new
data led
to $5 of additional exploration spending by the private sector, and the discovery of in-ground
resources worth
$100 –150. They also estimate that each dollar spent on such programmes in Australia earns $360 in
exports, $15 in the export of services and $19 in new tax and royalty income.
Initiatives of this type have now been carried out in every state in Australia. New Zealand’s work in
this field,
while useful, has been small scale and uncoordinated compared to the practice in the best of the
Australian
states.
South Australia’s programme is now the most advanced. The second generation programme (PACE –
Programme for ACcelerated Exploration)10 began in 2004. Numerous new mineral discoveries have
been
made including the world class Carapateena copper-gold deposit, and the programme now extends
beyond
geoscience data, to a wide ranging programme of 8 themes that include developing protocols for
aboriginal
communities to benefit from resource development activities.
While the upsurge in exploration investment has been exceptional, increasing from about 2% of the
Australian total in 1995, to $150 million and 14% of the Australian total in 2006, the cost has been
quite
modest. The current 5 year PACE programme has a budget of $22.5 million, with $3.1 million
budgeted for
the current year. A total of 13 resource related projects with a capital investment of $24 billion have
been
proposed in South Australia, and 10 more are under investigation.
8 Johnson  JD, Happy AJ, Compton RG 1998. The dawn of a new stone age for Auckland. Roading Geotechnics
1998
Conference. Institute of Professional Engineers,Wellington.
9 Barker, R.G., Christie, A.B., Robson, R.N., Graham, I.J., 2006. Regional policies and minerals resource
potential
of New Zealand, The Institute of Geological and Nuclear Sciences (GNS Science) science report 2006/25
70p.
10 www.pir.sa.gov.au/minerals

				
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