Mining & Exploration

08 Sep 2010

The Government's decision on the proposed amendments to Schedule 4

We talk about the Government's recent decision on the proposed amendments to Schedule 4 of the Crown Minerals Act.

What is Schedule 4?

Schedule 4 identifies areas of Crown land that have special protection from exploration and mining.

Under the Crown Minerals Act, mining activities require both a permit (granted by the Minister of Energy and Resources) and an access arrangement (with the owner of the land). For Crown land, access is granted by the Minister responsible for the land. For land that forms part of the conservation estate, it is the Minister of Conservation that decides whether or not access will be granted.

The Crown Minerals Act provides special protection for particular parts of the conservation estate. Section 61 prevents the Minister of Conservation from granting access for exploration and mining activities over any land specified in Schedule 4. Apart from a few exceptions (discussed below), the practical effect is to generally prevent exploration or mining from occurring on land listed in Schedule 4.

The land in Schedule 4 includes national parks, marine reserves and various other reserves and conservation areas. It also includes all Crown conservation land in the Coromandel, north of the Kopu-Hikuai Road.

Why did the Government review Schedule 4?

The Government is keen to increase exploration and mining activity in New Zealand, as part of its efforts to grow the economy and reduce the "income gap" between Australia and New Zealand. With an estimated 70% of New Zealand's mineral resources located in Department of Conservation administered land (and almost half of this land being included in Schedule 4), the Government considered it worthwhile to review Schedule 4 and examine the possibility of opening up access to some of that land.

What did the Government propose?

Following the review, the Government proposed the removal of approximately 7000ha of conservation land from Schedule 4, including land on Great Barrier Island, in the Coromandel Peninsula and in the Paparoa National Park on the West Coast. The proposal is discussed more fully in our March 2010 FYI - Naturally Resourceful.

Prior to making a final decision on the proposal, the Government undertook public consultation, as required by the Crown Minerals Act.  

What was the final decision?

The Government has decided not to remove any of the land currently included in Schedule 4. This means the land on Great Barrier Island, in the Coromandel Peninsula and in the Paparoa National Park remains unavailable for most exploration and mining (the exceptions are discussed below).  

In addition, the Government has decided :  

• to add 14 new areas into Schedule 4;
• to provide for the automatic future inclusion into Schedule 4 of certain classes of land (eg. new national parks and marine reserves, although the details of the classes of land are still to be determined);
• that future decisions on mining-related access arrangements for Crown land, should be made jointly by the landholding Minister and the Minister of Energy and Resources, and should take into account the economic, mineral and national significance of the proposed ventures;
• to require public notification of significant applications to mine on public conservation land, so that mining related applications for access are treated the same as other applications for access to conservation land; and
• to carry out further studies on the resource potential of some specific Crown land (that is not included in Schedule 4), including aeromagnetic surveys over the Northland region and the West Coast of the South Island.

Does this decision mean that land in Schedule 4 will never be available for exploration and mining?

No, the decision doesn't mean land in Schedule 4 can never be explored or mined.  

The Crown Minerals Act still contains a process allowing land to be removed from Schedule 4, following public consultation and a recommendation by the Ministers of Conservation and Energy and Resources. However, in light of the recent decision (and the public opposition to mining in Schedule 4 areas), it seems extremely unlikely that the Government will press for large scale changes to Schedule 4 in the immediate future.  

Meanwhile, the Green Party is attempting to entrench Schedule 4. Metiria Turei (co-leader of the Green Party) has introduced a private member's bill which would mean that the removal of land from Schedule 4 requires a change in legislation. The Bill is yet to proceed through Parliament.  

There are still limited circumstances where exploration and mining can take place within Schedule 4 land. For example, the Pike River underground coal mine involves some mining of Schedule 4 land in the Paparoa National Park, but is permitted on the basis that the mine access is located outside Schedule 4 land. In addition, the Crown Minerals Act provides for limited exploration in Schedule 4 land.  

Will it be easier or harder to explore and mine other Crown land in the future?

Until we see the details, particularly of the proposed new requirement for public notification, it is difficult to know whether the Government's decision will make it harder to explore and mine other Crown land.  

Environmental groups have expressed concern about the involvement of the Minister of Energy and Resources in deciding access arrangements for mining over other Crown land. However the decision formalises, by a proposed change in protocol, what we understand was already taking place in practice. The Crown Minerals Act already requires the landholding Minister to take into account "relevant matters". In the context of a significant mining proposal, we have little doubt that the views of the Minister of Energy and Resources as to the "economic, mining and national significance" of the proposal would be a "relevant matter" and would be taken into account.  

There is uncertainty as to whether the proposed new requirement for public notification of significant mining proposals will have an impact.  

There is a chance that there will no significant impact. After all, public notification, awareness and input is already a factor in most significant mining proposals. Formal public involvement can already occur under the Resource Management Act and/or the Conservation Act. Of course, public input is not limited to these forums, and New Zealanders have a healthy appetite for public discussion of mining proposals via interest groups and media.  

However, the full impact of any public notification obligation will not be known until the details of how such public notification would operate in practice, and what will constitute a "significant application to mine", are provided. If the notification process is similar to that already provided for in the Conservation Act for concessions (Part 3B and section 49), then there is a danger of duplication and potential relitigation of issues already covered by existing processes such as the Resource Management Act. If this occurred there is an obvious potential to significantly increase the time and cost involved in obtaining the necessary approvals for a mining proposal.  

One would hope that the Government would recognise this and ensure, when designing the requirement for public notification of significant applications to mine, that duplication in processes and relitigation of issues is avoided.  

This would be consistent with the Government's expressed intention of aligning the processes under the Resource Management Act with other legislation. Accordingly, it is possible that the requirement for public notification of significant mining proposals will be developed as part of the broader review of the integration of statutory processes (in the Phase 2 reforms of the Resource Management Act).  

So has the Government given up on its strategy to increase mineral exploitation?

No. However its focus is no longer on Schedule 4 land.  

The Government has indicated that it is still keen to increase knowledge of New Zealand's mineral potential, and that it will be focussing on non-Schedule 4 land. Its announcement that it will fund further investigation of the mineral resources in the Northland region and West Coast of the South Island (to tune of $4.5m) shows it is still keen to enhance international interest in New Zealand's mineral resources, and is a similar approach to that taken by the Government for petroleum resources.  

The details of the scope of the further work to be undertaken are still to be provided. 

Authors

Robert McLean

Partner - Corporate & Commercial

DDI: +64 9 977 5077

Mobile: +64 21 987 050

Email: roberjt.mclkean@s2impsojngriesrson.icomj

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Dave Trueman

Partner - Corporate & Commercial

DDI: +64 4 924 3548

Mobile: +64 21 403 612

Email: dave.jtruemkan@si2mpsonjgriersson.ciomj

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Elisabeth Welson

Partner - Corporate & Commercial

DDI: +64 4 924 3400

Mobile: +64 29 924 3400

Email: elisajbeth.kwelso2n@simjpsongsriersion.cojm9

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Michael Wood

Partner - Property & Infrastructure

DDI: +64 9 977 5329

Mobile: +64 21 722 974

Email: michajel.wokod@si2mpsonjgriersson.ciomj

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Michelle van Kampen

Senior Associate - Public Sector

DDI: +64 9 977 5258

Mobile: +64 21 221 4206

Email: michejlle.vkankam2pen@sjimpsosngrieirson.jcom9

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