Dollars and Sense
The West Coast Ironsands are a vast potential mineral reserve. We expect the demand for iron will continue to grow as the population expands and new applications are developed, such as the use of steel as a wood substitute in house frames.
“New Zealand titanomagnetite has proven amenable to the production of high purity steels, but it is different from most other iron ores, requiring specialised technology and market development. Production of added-value iron and steel products in New Zealand rather than export of the raw material ironsand should be the goal.” from NZPAM website.
NZPAM recognises that any scheme that offered significant employment benefits from mining activities would have to be seriously examined. It is hard to argue against the economic and social benefits of projects like the Glenbrook steel mill. But under the current proposals to mine the west coast seabed, land-based employment would be small, with sea-based activities even circumventing the need to use port or land storage facilities.
NZPAM operate a regime of granting extraction licenses to the “first cab off the rank”, irrespective of the ownership structure of the company involved. This allows speculative foreign owned entities to lock up large amounts of New Zealand’s resources for little or no cost. TTR, the company currently looking at several large areas of the west coast is 85% foreign owned. Most of the revenue from their activities will go offshore. Central Government will absorb the royalties paid.
To make matters worse, NZPAM charge the 4th lowest royalty rates in the world for mineral extraction. Taking 3 cents on the dollar for the value of this particular raw resource is maybe equivalent to taking one thousandth of its value when processed. When you consider we (the NZ taxpayer) developed the technology to turn this particular mineral into steel, and we have the other two key raw materials required in abundance (coal and limestone), the farce deepens.
Exporting raw ore and the failure to add value to the resource in New Zealand almost forces the government into an environmental tragedy if it wants to harvest this resource. Because the returns are so small, it would have to allow large quantities to be mined to make it worthwhile.
“But, to be economic, it’s all about volume. The scale of extraction we are talking about is vast.”
The scale of the current models being thrown around would almost certainly create an ecological wasteland in parts of the Tasman, with extensive down sides for the fishing and tourism industry, and no local benefits whatsoever.
“While these are early days in ascertaining the precise scope of reserves, and the technical and economic viability for extraction, the potential value is immense. Numerous New Zealand and international companies and ventures are spending hundreds of millions of dollars a year on prospecting and exploration.”
“Yet, here’s the sting. Just as nobody knows the full extent of reserves, nobody knows the full extent of the environmental risks of extraction, let alone how to mitigate those risks. There’s some knowledge about deepwater species and ecosystems, potential impacts, and steps to recovery, but the understanding is far from comprehensive. What is certain is that deepwater environments themselves have immense value, supporting sustainable fisheries and perhaps carbon sequestering, as well as holding their own intrinsic worth.”
“Given the value of the mineral resources and how many companies are now interested, it’s time to ask some serious questions about how to manage them,” argues Dr Alison MacDiarmid, NIWA Principal Scientist, Marine Ecology.
“We need to balance mineral extraction with the other benefits of the marine environments. Some degree of exploitation of the resources is probably fine. But what degree? What is the balance?”