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https://theconversation.com/the-hard-questions-nz-must-ask-about-the-claimed-economic-benefits-of-fast-track-mining-projects-259779>
"Much of the debate about the fast-track applications by a number of new or
extended mining projects has, understandably, focused on their environmental
impacts. But the other side of the equation – economic growth and investment,
the government’s rationale for new mines – is rarely interrogated.
In fact, the environmental and economic debates are inseparable. Section
85(3)(b) of the
Fast Track Approval Act allows for project applications to be
declined if any “adverse impacts are sufficiently significant to be out of
proportion to the project’s regional or national benefits”.
So, the claims of economic benefits from the current round of proposals need to
be scrutinised closely. If those benefits don’t stack up, any adverse
environmental impacts become harder to justify.
Having spent more than 35 years researching and consulting on mining projects
and mineral policy in the Pacific, I have noted several important economic
characteristics of the mining industry.
First, the capital spend – the setup cost of an operation – is typically
largely spent offshore. In the case of Trans-Tasman Resources, currently
seeking to fast-track seabed mining off the Taranaki coast, this amounts to 95%
of the $1 billion construction estimate. This will largely be spent on the
building in China of a huge, sophisticated barge and two 450-tonne seabed
crawlers.
The government’s recent Investment Boost policy will also mean 20% of this
investment is an immediate tax deduction for the company – money lost offshore
to the foreign investor.
Second, any estimate of annual revenue, operational costs, taxation and
distribution of net profit has to come with a caveat. Annual variations in all
these factors are typical across the sector due to commodity price volatility,
high rates of depreciation on capital expenditure, unexpected events, and
exposure to changing operating costs.
The same applies to average annual figures for taxes and royalties. Mineral
resource companies cannot be regarded as stable sources of government revenue.
For example, foreign-owned OceanaGold – the largest gold producer in the
country and operator of the MacRaes Flat and Waihi mines – paid no corporate
income tax in 2021 or 2023 on gold production worth hundreds of millions of
dollars.
Essentially, the country can often receive a minimal share of the value of its
own natural resources. Unlike forestry, dairy, wine, tourism and other major
sectors, with mining we don’t get a second chance: when the resource is gone,
it’s really gone.
If New Zealand does decide to expand mineral resource extraction, however,
there are four things that could be done to ensure the country benefits more."
Cheers,
*** Xanni ***
--
mailto:xanni@xanadu.net Andrew Pam
http://xanadu.com.au/ Chief Scientist, Xanadu
https://glasswings.com.au/ Partner, Glass Wings
https://sericyb.com.au/ Manager, Serious Cybernetics
