Mining sector in shock over seabed mining rejection
By Pattrick Smellie
June 19 (BusinessDesk) - Mining industry leaders are in shock over the rejection of an application to mine ironsands from the ocean floor off the coast of southern Taranaki, and one is questioning whether the six month fast-track process administered by the Environmental Protection Authority is too swift for complex mining projects, where changes to plans are often a feature of obtaining consent.
A decision-making committee (DMC) appointed by the EPA yesterday rejected TransTasman Resources' bid to mine up to 50 million tonnes of ironsands annually, of which 90 percent would be returned to the seafloor after extraction of titano-magnetite iron ore, which would be shipped to Asian steel mills and would have added around $150 million annually to export receipts, TTR had argued.
TTR spent seven years and more than $60 million before seeking the first ever marine consent under a new regulatory regime established for the Exclusive Economic Zone, the vast area of ocean between the 12 mile territorial waters limit and 200 kilometres from the New Zealand coastline, but was told by the DMC that its bid was "premature."
The executive director for the minerals lobbyist Straterra, Chris Baker, said he was "struggling with a reaction other than shock."
"I understand the level of uncertainty that the DMC identified as being too big an issue to allow them to say yes, but where do we go from here? We've never had a process that's so binary."
With more time than is allowed by the EPA's six month process, Baker suggested conditions could probably have been agreed to allow the mining project to go ahead in what he described as "a barren ironsands wasteland", inhabited predominantly by sandworms, which have adapted to re-establish because rough seas in the relatively shallow waters routinely disturb the seabed.
"They come back very quickly and we're touching a few percent of it anyway," Baker said. The DMC was also concerned about the 50 kilometre by 20 kilometre sediment plume that mining would have created, and its impact on the productivity of the marine environment, since it would receive much less sunlight. Uncertainties about the environmental impact of the project were too great to grant a consent, the DMC concluded.
"One has to ask the question: has the process let us down and not allowed adequate consideration of the uncertainties and the conditions that would allow these uncertainties to be dealt with," said Baker. He predicted TTR's dilemma now would be whether to appeal the decision on points of law or mount a fresh application, and whether its coterie of mainly Australian, American and New Zealand investors would have the appetite to spend more on a project that had been rejected once.
TTR chief executive Tim Crossley has been unavailable for comment since yesterday's announcement, although the company issued a statement expressing "extreme disappointment" at the decision.
The chief executive of peak business lobby group Business New Zealand, Phil O'Reilly, said the decision was "a blow for prospects for new industries and growth in the EEZ."
“Any new industry is bound to have some uncertainties. Millions can be invested in researching and estimating the likely effects of a new industry without realistically being able to achieve absolute certainty about all outcomes," said O'Reilly.
“The rejection of an application to establish a new industry on the grounds of uncertainty - when 100 percent certainty for a completely new industry is impossible - may raise the question of whether our regulatory settings themselves may be preventing new industry from being established.
“It would be unfortunate if this was the message being heard by potential investors in New Zealand,” said O'Reilly.
The TTR rejection comes as public submissions open for a second applicant, Chatham Rock Phosphate, which wants to mine phosphate nodules on the Chatham Rise, hundreds of kilometres out to sea from Christchurch.
In a statement from London, where he is putting finishing touches on a plan to list the company on London's AIM stock exchange, CRP chief executive Chris Castle said it was "important to remember our application cannot be compared with TTR’s."
"It is for a different mineral, in a very different marine environment and using different extraction methods and will be considered by a different DMC."
CRP shares dropped 20 percent this morning to 20 cents apiece.