Economics versus the environment at New Zealand’s NZ$1bn sand mining project
Mining News Pro - Trans Tasman Resources has been involved in a protracted legal battle over a proposed sand mining project off the New Zealand coast, which would see 50 million tonnes of sediment lifted and processed a year to mine for iron ore beneath the waves. With the case deadlocked, we consider the causes and consequences of the dispute.
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Subsea mining has proven to be a difficult business to crack, with the high-profile struggles of Nautilus’ Solwara 1 project serving as a cautionary tale for the rest of the nascent industry; yet this has not dissuaded investment in this lucrative, if uncharted, sector. Trans Tasman Resources (TTR) plans to extract five million tonnes of iron ore a year, for the next 20 years, off the New Zealand coast, generating NZ$159m for the New Zealand economy according to the company. The project was initially awarded a permit to begin work by the country’s Environmental Protection Agency (EPA) in 2017.

However, the scheme has come under heavy criticism for overestimating its economic benefits and disregarding its environmental impacts, leading to a protracted legal battle through New Zealand’s court system. Environmental group Kiwis Against Seabed Mining (KASM) has been instrumental in this battle, first appealing to the country’s high court that the EPA’s award of the permit was unlawful, and then defending a counter-appeal lodged by TTR in the court of appeal.

Undaunted, the miner is taking the claim to the New Zealand Supreme Court, aiming to defend its original permit.

With no end in sight to the dispute, the case has shone a light on the imperfections of the country’s environmental regulations and permitting apparatus, and the ultimate verdict could well set a precedent for future subsea mining projects. Namely, the court’s decision could answer the question of whether the supposedly incredible economic rewards can ever be squared with the substantial environmental risks.

Significant financial opportunities

Mining remains one of the world’s most lucrative industries, and this is especially true of seabed mining, with technology only recently developing to the point where the vast swathes of mineral resources beneath the sea can be reached. TTR’s project alone is thought to contain 3.2 billion tonnes of ore reserves, across an area covering no more than 36 square kilometres in the South Taranaki Bight, off the south-east coast of New Zealand’s North Island.

“The mineral recovery operation has the potential to deliver significant regional and national economic benefits, at no cost to the New Zealand taxpayer, with sustainable best practice environmental management practice that has minimal, confined short term environmental impact,” said TTR executive chairman Alan Eggers, before highlighting the project’s significant economic potential. “When approved, the project fundamentals are robust and present a compelling investment opportunity to develop the NZ$1bn project.”

The project’s economic credentials are certainly impressive. Eggers pointed to a proposed NZ$250m direct spend each year on projects in the Taranaki region, alongside the creation of 300 new local jobs and the development of port infrastructure at Port Taranaki and the Port of Whanganui, as significant impacts for the local economy and population. Beyond this, TTR anticipates the project to generate over NZ$120m a year in government royalties and corporate taxes, alongside the creation of over 1,600 jobs across New Zealand, establishing the project as one with a nationwide footprint.

Furthermore, the project offers a number of technological opportunities. While seabed mining is an unexplored industry, Eggers sees this not as a hindrance to development, but an opportunity to deploy and operate new mining processes. He hopes this could help demonstrate the efficacy of sand mining as a whole, encouraging future development in the sector.

“TTR’s system to extract and redeposit sediment is designed to minimise the plume effect,” he said, discussing the feared ‘sediment plume’ that will be kicked up as mining processes lift around 50 million tonnes of sediment a year, before depositing 90% of the material back onto the sea floor.

“Around 30km offshore, where the mineral recovery operation will take place, the seabed areas directly impacted by removal and re-deposition of the titanomagnetite sand are not ecologically valuable and are readily restored in relative short timeframes as part of the consent requirements,” he continued.

 

Economic concerns and environmental challenges

Yet there is a risk associated with using untried technology, namely that someone, somewhere, will be on the receiving end of these industrial experiments, an idea that Cindy Baxter, chair of KASM, is not comfortable with.

“We don’t want to be that guinea pig,” said Baxter. It’s an untried and untested technology and it’s very clear from Trans Tasman’s application [that] they just don’t know about the environmental effects. And none of the companies that have applied for seabed mining licences here have done their homework properly”.

Baxter also noted a divide between impacts on the local and national economies, commenting that the very nature of a large-scale seabed mining operation means that only a small percentage of any financial gains will be invested back into the Taranaki region.

“[TTR] was making claims about economic income to the region, but it’s 450m offshore, [staffed by] fly-in fly-out [workers] and skilled workers who wouldn’t actually bring money into the region; then in comes a ship to offload the ore, and off it goes to the Asian market,” she said. “There might be a helicopter pad or two, but the economic claims they were making would not stand up [to scrutiny].”

For its part, TTR has defended the financial credentials of its project, and Eggers pointed out that many environmental criticisms are unfounded, as the company is not planning to do anything that isn’t already being done to the local environment.

“The concerns expressed by some community groups are around the suspended sediment plume that results from the return of the seabed sediment to the seafloor during operations,” he explained. “It should be noted that many rivers in the Taranaki region are currently discharging high sediment loads continuously, from farming activities, into the most valuable and sensitive near shore and coastal South Taranaki Bight marine environments.”

TTR’s own reporting has also downplayed the potential environmental impacts of the project, noting a total absence of local seabird colonies which may be affected by the mining, and a negligible number of sightings of endangered sea creatures within range of the project. Only nine whales were reported to have been sighted within 20km of the proposed mining area, and only two of these were endangered blue whales.

Yet Baxter points to more recent scientific thought to argue that TTR’s initial environmental impact assessment fell short of what was needed, with many regions with confirmed whale sightings overlapping with mineral exploration permits . “There’s interesting new research coming out, as the research [suggests] New Zealand has its own population of blue whales, the pygmy blue whale, which feed and possibly calve in the South Taranaki Bight, right in this area,” she said.

 

Problems with procedure

Unsurprisingly, TTR supports the initial verdict of the EPA. Eggers stressed that: “TTR’s environmental consent conditions are not under challenge in the courts as these are agreed by the EPA. During the court process, nothing onsite or regarding the potential impact or effects of the approved operation have changed.”

However, Baxter and KASM dispute even this, claiming that an EPA reshuffle helped contribute to the ultimate verdict. EPA policy enables the agency to appoint a committee of anywhere between three and five members to oversee the award of permits, and the use of a four-person committee led to the split vote which ultimately went in TTR’s favour.

“The government leant on the EPA, which changed the way it held hearings and made its decisions, taking it from a five-person committee to a four-person committee and stacking it with business interests,” said Baxter. “Then two of that decision-making committee were completely against it, and there was a split decision with the chair making the casting vote.”

The chair in question was Alick Shaw, a former deputy mayor of the Wellington City Council. An EPA document published in 2017, investigating potential conflicts of interest within the four-person council, found that Shaw had announced “a connection” with Buddy Mikaere, a consultant who ultimately testified on behalf of TTR. Furthermore, two other decision-making committee members, EPA board deputy chair Kevin Thompson and former Wind Energy Association chair Gerry Te Kapa Coates, had each had a “professional connection” with TTR employees.

While these informal relationships are not damning of an EPA-TTR conspiracy, they do reveal a closeness between private interests and supposedly neutral arbitrators, a potential conflict of interests that underpins the legal uncertainties and disputes that have characterised the permitting of this project.

Ultimately, it is difficult to accurately predict the impacts of the proposed sand mining, as it aims to use untested technology in what could be a world-first for the industry. However, what is clear is that structural shifts within the EPA, and legal uncertainty beyond, have entangled and delayed the project to the point where there is no clear end in sight.

Baxter, speaking at the start of May, summed up this deadlocked state of affairs by saying that: “the legal process is very slow. I think there are another fifteen days to go before they have to put in all the submissions to the Supreme Court as part of their seeking leave to appeal. And then we have another fifteen days to respond, and you’ll get the Supreme Court making a decision which could take another couple of months.

“And then we wait for a hearing, and that won’t be until next year, then there will be a month after the hearing for a decision.”


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