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Mining industry experiencing considerable growth

Mon, 30 Aug 2004

Keynote Address: Australasian Institute of Mining and Metallurgy Conference

Mining industry experiencing considerable growth


Firstly welcome to our international visitors, ladies and gentlemen. It is always a pleasure to visit the South Island, in particular Nelson where there is a strong tradition of exploration and mining.

This is now my third appearance at the AusIMM Conference. Since taking on the position of Associate Minister of Energy, I have come to appreciate that this is an industry that appreciates a person who gets straight to the point.

So here are the facts. The mining industry is experiencing considerable growth.

Minerals production figures for the year 2003 show that for the first time production values for key commodities, notably coal, aggregate and iron sand exceeded $1 billion.

In addition, Coal production has doubled since 1990 and the amount of coal exported has increased seven fold. The rise in production of domestic sub bituminous coal reflects the increasing demand for electricity production. The export increases are linked to high international demand and prices for New Zealand's high quality (low ash and sulphur content) coking coals.

At this point can I quickly congratulate Solid Energy for bring named New Zealand's top exporter for 2004 at the New Zealand Trade and Enterprise Export Awards 2004.

There have also been increases in aggregate production. Overall aggregate production in New Zealand has increased, with particular increases of building and roading aggregates. The increase in specific regions appears to be linked to increased regional economic growth. For example regions such as Taranaki, Manawatu, Hawkes Bay, and Nelson show the most significant building aggregate production, and Gisborne, Taranaki and Manawatu show the most significant roading aggregate production increases.

On the other hand, there has been a fall in gold production. A decrease in production of just under 5% can largely be attributed to declining production from the Matha Hill mine and to a lesser extent decreased placer gold production activities. However, gold production is set to increase over the coming years with a number of new mines currently under development around the country, for example; expansion of existing mines at Macraes and the Favona mine at Waihi as well as on the West Coast.

While all of this good news is cause for celebration, there is room for improvement, which both the industry and the government can contribute to.

Back in February this year representatives from the NZMIA met with several ministers, including myself, to discuss building a partnership between Government and the industry on key issues that would help better develop mining in New Zealand. These issues included:

a. Developing an industry code of conduct; b. Rehabilitation of the Tui mine; c. Improving access to DoC land; d. Geological mapping and surveying; e. Promoting economic development in key regions with mining potential f. Developing a strategic relationship with Maori; and Improving access to industry skills; and attracting foreign direct investment into the industry.

I am sure that some of these issues will be recurring themes throughout the presentations and will be discussed by many of you over the next few days.

For the Government's part, I would I would like to comment on what I consider to be some of the most important issues raised by the industry, namely:

g. Improving the availability of high quality data; h. Attracting new investment in exploration and production; i. Ensuring equitable access to land; and j. Appropriately skilled employees.

The Government has supported the review of Crown Minerals and the key recommendations that arose from this review. It has already acknowledged the need for additional funding to enhance the quality of geo-technical data and to develop a streamlined permitting process. Crown Minerals will discuss this in more detail in a later presentation.

Crown Minerals will also be releasing in the next few months an Investment Strategy for Minerals, similar to the recently completed Petroleum Investment Strategy. It will be a blueprint for the future of minerals in New Zealand. It will both endorse the strategic importance of minerals such as coal, aggregates, and precious metals to regional economic development and New Zealand's economy, and will include practical measures to promote responsible development of these resources. Again this will be discussed in more detail in subsequent presentations during the conference.

But having a strategy in place is not sufficient. There are critical issues facing the industry, which are outside the immediate scope of the Crown Minerals Act. These issues include the impact of RMA and the significance of the current review of this Act on economic development.

I can tell you that the final Cabinet Paper on this issues has been sent to the Associate Minister for Environment (David Benson Pope). The first phase of work is largely complete in terms of consultation and the proposals will be considered by Cabinet shortly. It is proposed that amendments to the Act will be introduced in September with further opportunity for public input through the Select Committee process. Although I am unfortunately not in the position to discuss the details with you at this stage, I am confident that the review will demonstrate an appropriate balance has been achieved, particularly in relation to issues such as the need for national policy statement to guide local authorities, avoiding vexatious submissions and better recognition of issues of national interest.

It was brought to my attention last year that the Crown Pastoral Lease Tenure Review process was not giving any regard to the mineral value or potential of the land under review. Subsequent discussions with Land Information New Zealand on this matter have been extremely positive and I am happy to report that agreement has been reached to involve Crown Minerals much earlier in the process. This will enable an assessment of the land's mineral potential to be provided to LINZ during the early information gathering phase which will then be considered along with all other information and reports gathered to develop the preliminary proposal that is presented to the leaseholder. Further work is now required to determine how land that has been recognised as having high mineral value can be held or appropriately tagged so that future exploration and mining is not unduly impeded.

However, legislative reviews aside, I think it is also important to recognise that much can, and has been, achieved within the existing regime. Crown Minerals advocacy for recognising the economic benefits of the mineral estate, together with industry's advocacy for mining, at the recent Environment Court on the draft Thames Coromandel District Plan is one such significant achievement. Crown Minerals will continue to participate in RMA issues, and I understand that next week they will appear before the Franklin District Council's Rural Plan change hearings Panel. Crown Minerals has also liaised with permit holders and DoC on a number of occasions and will continue to facilitate land access wherever there is seen to be a development benefit for the mineral estate.

The government as a whole is also working hard to ensure that issues such as national infrastructure do not impede the mineral industry's ability to successfully operate and grow. For example, while it is pleasing to see Solid Energy's export growth, it is unsatisfactory that future growth is constrained by the West Coast to Canterbury rail. My colleagues are well aware of this issue and will be working hard to resolve this constraint.

The last key issue facing this industry is availability of skilled employees, or the lack of. This problem is not unique to New Zealand. Australian exploration and mining industry faces similar constraints. The issue for us is to develop an industry that can sustain employment opportunities to retain these skilled people.

It does not look as though our economy will slow down with new developments happening at Pike River, Cyprus and the Globe Progress on the West Coast, plus further expansion planned for the central North Island coal fields and the Favona Gold Mine will be getting underway at Waihi. Aggregate producers will also need to lift their game to meet Transit's budget of over $2 billion in major roading projects in Auckland over the next 15 years. It should also be noted that other industries are also expanding and are demanding skilled workers.

So who is to blame for the skills shortage? I have heard some people criticise past administrations for the current situation. However, apportioning blame when unemployment is around 4% and the economy is growing is not going to solve the problem, the challenge is for industry to front up with recruitment strategies and to work with training institutes. There is only so much Government can do.

I was very pleased to have been approached by the NZMIA at the beginning of the year to discuss the initiatives that I have touched on. However, a number of issues raised as part of this partnership proposal need to be driven by the industry. I will be looking forward to responses from some of the leaders within industry as to what plans exist to further develop these initiatives.

Coming from Taranaki, I am often recognised as a strong supporter of the petroleum industry. However, as Associate Minister of Energy, I am equally supportive of the contribution that the minerals industry makes to economic development in New Zealand. I believe that the industry will soon start to see the benefits from changes to the RMA, initiatives on geological data development and investment promotion.

I will continue to support these and other developments that Crown Minerals will outline this week. And I encourage you all to identify industry-lead initiatives that will complement these to demonstrate a mutual commitment to a partnership for minerals development in New Zealand.

Ladies and gentlemen, thank you for listening and enjoy your conference.


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