Address to the 2007 Australasian Institute of Mining and Metallurgy New Zealand Branch Conference

Harry Duynhoven highlights the fact that it has been another successful year for the minerals industry

Good morning ladies and gentlemen. Thank you for the invitation to again join you at your annual branch conference, it is a pleasure to be here.

I would like to open this morning by congratulating the New Zealand Branch of AusIMM as I understand that this is the conference's 40th anniversary which is a remarkable achievement.

This is the sixth minerals conference that I have had the pleasure of accepting an invitation to attend. Over this time I have come to fully appreciate why this gathering has rightly become such a significant annual event. It provides an important opportunity for you, as key players in New Zealand's minerals industry, to come together with like minded people to exchange views and ideas, to listen to technical presentations, to network, and to do some business. Minerals are an important national asset, and your attendance here is an indication of your commitment to the ongoing development of your industry.

This morning, I would like to take the opportunity to comment on your industry's achievements over the past year and to provide you with an update on some of the government's current initiatives and work streams that affect the minerals sector. We can then use any remaining time for an open question and answer session.

Let me start by commending you all on another successful year. Expenditure for prospecting and exploration activity over the past year has remained at a steady level at over $24 million (this excludes exploration activity within mining permits) and remains a 10 fold increase on the level of activity only 5 years ago.

Crown Minerals has reported to me that the extent of area under permit is high, as well as applications for new permits. It is pleasing to see the conversion of prospecting permits to exploration permits - this is clearly demonstrating that you, the industry, are successfully moving through the project generation process.

Another pleasing aspect that I have noted over the past year is the inventiveness being applied to exploring our nation's mineral estate. Airborne geophysics is returning to prominence again as an exploration tool, and I would like to thank Simon Henderson and his team from Glass Earth and the Otago Regional Council for the opportunity to view the process and results first hand back in March.

I know that many of you are applying similar lateral thinking in your projects, to not only unlock the geological secrets but to minimise project cost and environmental impact without it being of detriment to the value of the knowledge sought.

In regards to mining, it has again been another highly productive year. For the fourth year in succession the value of commodities mined and quarried throughout the country has increased. The 2006 national coal, metals and industrial minerals production topped $1.5 billion in value - an increase of around 15% (or $197 million) on 2005.

Looking at 2006, in summary it saw:
• A record year for coal production with 5.8 million tonnes being produced. The value of this coal surged 33% reaching a record $678 Million.
• Gold production increase slightly from 2005 to almost 375,000 ounces - again dominated by output from Oceana Gold's Macraes operations and Newmont's Waihi operations. The value of the gold produced was over $250 million; and
• The total value of all industrial minerals produced increase to $558 million which is a reflection of the sustained need for the minerals required as building blocks for burgeoning infrastructure development.

With several other major operations coming on stream (such as Favona, Globe Progress, Pike River), numerous alluvial gold operators gearing up for production, and increased extraction from several major quarries (particularly in the Auckland region), it all bodes well for the sustained performance of the industry. There will undoubtedly be challenges along the way - including the current valuation of the New Zealand dollar, equipment shortages and competition for skilled personnel - but I am certain that you will rise to these challenges.

I would now like to make a brief comment on the recently released Northland Resources Assessment and Northland Economic studies. I noted in my address to you last year that this project was pending, and I am delighted to see it come to fruition. I am pleased to see the constructive way in which central and local government and industry are working together on initiatives that contribute to a higher quality of decision making and planning regarding mineral wealth. I hope that the region can build on this initial knowledge investment to increase the benefit that your sector has on the regional economic development of Northland in much the same way as the West Coast, Otago and Waikato regions have benefited. They will however need your commitment to achieve this.

I am aware that other projects of similar nature may be in the pipeline and I look forward to hearing more about these in the future.

There is little doubt that mineral exploration and development can offer significant regional economic benefits. One needs to look no further than Reefton and Westport to see this. On one hand we have the recent economic rejuvenation of Reefton flowing from the development of the Globe Progress gold mine. The mine has created demand for workers, increased the need for locally supplied goods and services, and presented many business opportunities for local contractors and suppliers. The future is looking bright for Reefton.

On the other hand, the people of Westport are rallying to retain the economic benefits that stem from the nearby Cape Foulwind quarry and cement works. Many in the community don't want the operation to close and relocate to North Otago. The reason is simply because the operation is economically very important to Westport. It is one of the three main employers in the town, contributes 5% of the district rate take, supports local businesses, sustains a fertiliser plant, and helps keeps the harbour open. The economic consequences to Westport should the operation relocate are likely to be profound.

Together Reefton and Westport, although contrasting situations, highlight community recognition and acceptance of the considerable regional economic benefits that can accrue from environmentally responsible and socially acceptable mining projects.

Generally speaking, New Zealand's minerals estate has a potential that is widely recognised but not yet fully realised. To achieve that potential we need to continue with more sustained and larger scale investment in exploration. We all know that prospectivity, supported by readily accessible information about prospectivity, is the cornerstone of most exploration decisions. Accordingly, Crown Minerals is maximising the value of existing data by improving data quality, quantity, and accessibility. For the past 2 years two major IT projects have been underway to put New Zealand at the forefront of international regulators in its use of technology to streamline permitting processes and enable greater access to geotechnical data.

An integrated permit management system will revolutionise the permitting process, ultimately enabling on-line permit applications, payment of fees and royalties, compliance management and comprehensive permit portfolio management by Crown Minerals and permit holders alike.

Complementing the permit management system is the online technical database which provides free public access to a comprehensive range of resource, technical and permitting data and reports. This system uses the latest geotechnical and spatial data management technology to allow data to be easily discovered and accessed.

Along with the up-skilling and recruitment of technical staff these systems provide a solid foundation on which to continually build and extend the information management capabilities of the Group.

The recent initial release of these systems in tandem with a website refresh heralds the rollout of a programme of initiatives aimed at improving the quality and currency of information available on-line.

On the regulatory front, there has been a continued focus on making the regulatory regime for mineral exploration and mining more efficient and user-friendly, particularly through improvements to both the minerals programmes and the reporting regulations.

I hope to soon be announcing the release of the revised Minerals Programme for Minerals (Excluding Petroleum). I am mindful that this has been a long time coming. However, you can be assured that the end product, which results from a comprehensive technical and legal analysis of industry and public submissions, should deliver us a strong point of differentiation with other regulatory regimes for the international exploration dollar. The proposed primary benefits to industry from the minerals programme will include a freeing-up of relinquished prospective land to wider permit allocation, increased permit allocation efficiency, and a simplified royalty regime.

In tandem with this, the review of the minerals and coal regulations has been steadily progressed. The changes to the current regulations are mainly technical in nature and focussed on improving the administrative and data collection requirements of the regulatory regime. In particular, the proposed amendments have been designed to support Crown Minerals' new on-line data and permitting systems, and will assist in minimising compliance costs to the industry sector.

I would now like to discuss the regional economic importance of access to minerals. It's been heartening to hear that local authorities around the country are increasing the consideration they give to minerals and aggregates in their planning documents. I see that the handful of councils whose proposed districts plans had attempted to zone away land from resource development have now backed away from this approach.

I am in no doubt that this shift is due to the advocacy efforts of industry and also my officials in Crown Minerals who have continued to prepare and present submissions on mineral related issues to local authorities. Crown Minerals are encouraging councils to give increased recognition to the economic importance of minerals and to ensure Council plans contain minerals inclusive policy frameworks. Work in this area over the past year has involved:-
• Submissions on several second generation regional policy statements;
• Crown Minerals becoming a party interested in minerals-related appeals to the Environment Court on the decisions version of the Proposed Waikato District Plan;
• the Ministry of Economic Development, together with the New Zealand Minerals Industry Association, responding to a minerals-related planning appeal (concerning the lower Courts' approach to 'prohibited' activity status) instigated by Coromandel Watchdog, with Auckland Regional and Auckland City Councils as interveners, in the Court of Appeal; and
• Submissions in support of resource consent applications for the expansions of the Hunua and Belmont quarries.

On that final point, I note the issue of reverse sensitivity increasingly comes to the fore now days in resource consent hearings for quarry expansions. It is certainly no easy task for quarry operators, when ramping up production, to internalise all adverse effects in the face of life style blocks and the like that have established themselves near an existing quarry zone over the years. In such situations, I have sympathy for the quarry operator who might expect some externalisation of effects, and provisions to accommodate these effects, on the neighbouring recent-comers. Where it is not economically viable to fully internalise every last cost of a quarry that is of regional economic significance, it seems fair that a balance should be reached between conflicting land uses.

As part of their advocacy role, Crown Minerals has stepped up its dialogue with the Department of Conservation to ensure conservation strategies contain provisions that are permissive for minerals access. You can be assured that my officials in Crown Minerals will continue to engage with local authorities and DOC to advocate for ongoing access to mineral resources.

I say this because the reality of the minerals industry in the 21st century is that it is much different to the minerals industry of previous decades. Today's explorers and miners operate within a framework of high regulatory and community expectations, and generally deliver to these expectations.

Some of you may recall that last year I closed my address to you by mentioning the Tui Mine tailings on Mt Te Aroha which, I'm sure we would all agree, are a legacy from a previous regulatory era far removed from that under which you all currently operate. A legacy all too often wrongly used to tarnish the reputation of New Zealand's modern minerals industry.

The rehabilitation of the Tui tailings has been high on the government's priority list for some time. This priority was realised in this year's budget with the government allocating almost $10 million to clean up the site over the next two years. The clean up will involve the tailings dam being reconstructed and capped, and the mine adits sealed with bulkheads. Now that the planning and options assessment has been finalised and the funding has been committed, the way is open for the remedial work to commence shortly - that is, once resource consents are in place.

The clean up, which will be undertaken in partnership with the local authorities (Environment Waikato and Matamata-Piako District Council), will significantly improve the catchment's water quality, eliminate the unacceptable risk of dam failure, ensure public safety and improve access to reserves around the site.

I'm happy to say that we now can all look forward over the next couple of years to seeing this well known environmental eyesore receiving the clean up it deserves. Not before time I might add.

On this positive note I will now conclude my address.

Thank you again for the invitation to speak to you this morning and I trust that you will use this your 40th conference as a fertile field for seeding new ideas, building relationships, and developing strategies to address the challenges facing your industry.

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