Naturally Resourceful

26 Mar 2010

Maximising Our Mineral Potential: Stocktake of Schedule 4 of The Crown Minerals Act and Beyond

Much media attention has focused on the review or "stocktake" of the provision of access to minerals in "Schedule 4 land". The discussion paper, "Maximising our Mineral Potential: Stocktake of Schedule 4 of the Crown Minerals Act and beyond", was released on Monday and sets out the outcome of the review. This FYI provides some background to the review, summarises what the discussion paper states, and explains what the steps are from here.

What is happening? Why the fuss?

The National-led Government's goal to reduce the gap in per-capita income between Australia and New Zealand is well known. A programme of reviews and amendments to legislation has followed in an attempt to address real and perceived issues with the processes, costs and delays associated with doing business in New Zealand, and to make New Zealand more attractive for overseas investments.

Utilisation of New Zealand's mineral resources is one of the ways that the Government sees that it can help close the income gap with Australia. With an estimated 70% of the country's minerals located in Department of Conservation (DoC) administered land, how access to these resources is managed is key. One of the initiatives in reviewing the provision for, and the process to obtain, access to minerals in DoC administered land is the "stocktake" of mineral resources in land included in Schedule 4 of the Crown Minerals Act 1991 (CMA).

Schedule 4 of the CMA lists the DoC administered land for which no access arrangement may be granted by the Minister of Conservation, other than for certain low impact prospecting and exploration activities and underground mining with limited surface expressions. The land in Schedule 4 includes national parks; nature and scientific reserves; wilderness areas; sanctuary areas; wildlife sanctuaries; Ramsar convention wetlands; and two specified ecological areas. It also includes all Crown conservation land in the Coromandel north of the Kopu-Hikuai Road; adjacent offshore islands and the Hauraki Gulf Islands. Schedule 4 also includes most marine reserves.

The discussion paper emphasises that removing an area from Schedule 4 does not necessarily mean that mineral-related access would be approved. All it does is allow access to that land to be considered on a case-by-case basis, as is the case for all other conservation land not included in Schedule 4.

It is also important to note that access is only one of three types of "consent" required for a mineral operation in New Zealand. In addition to an access arrangement, it is necessary to obtain a minerals permit (where the minerals are Crown-owned minerals) and consents under the Resource Management Act 1991.

The review of Schedule 4 is an important new initiative for New Zealand's minerals industry, and if nothing else, has brought the debate surrounding mineral extraction to the fore.

The discussion paper - what does it say?

The discussion paper sets out the outcome of the stocktake of mineral resources in Schedule 4 land, and discusses the changes that are proposed.

Four main conclusions were reached following the stocktake, and the discussion paper states that these conclusions will guide the steps that the Government will take from here. The conclusions are also the basis on which comments are now being sought from the general public. The conclusions were:

1. New Zealand is mineral rich and the environmentally responsible development of this potential is a very real possibility.
2. Much of the country's mineral potential is concentrated, often in public conservation areas with high conservation and cultural values.
3. The mineral potential of Schedule 4 lands could be developed with only a very small proportion of the land being directly impacted.
4. Information on New Zealand's mineral potential is limited and Government has a role to improve our knowledge of the mineral estate.

The stocktake identified that areas of mineral interest within Schedule 4 land can be divided into two groups:

1. areas where there is sufficient information to identify specific targeted areas of highest mineral potential; and
2. areas where the particular potential for mineralisation is known but more information is needed to define targeted areas.

Against these conclusions and findings the discussion paper proposes:

1. the removal of several specific areas from Schedule 4;
2. the inclusion of additional areas;
3. the further scientific investigation of prospective areas of land;
4. introducing joint ministerial approval for access to Crown land; and
5. the establishment of a contestable conservation fund.

The discussion paper also mentions two initiatives already underway, namely establishing a national standard operating procedure for DoC processing minerals access arrangements and the review of the concession process.

Areas proposed to be removed from Schedule 4

Several specified areas, totalling around 7,000 hectares or 70kilometres, are proposed to be removed from Schedule 4. This constitutes around 0.2 percent of the land presently included in Schedule 4.

The areas that are proposed to be removed from Schedule 4 include:

• seven areas on the Coromandel Peninsula;
• 705 hectares of the Te Ahumata Plateau area on Great Barrier Island;
• Otahu Ecological Area (part of the Coromandel Forest Park);
• Parakawai Geological Area (part of the Coromandel Forest Park); and
• the Inangahua sector of Paparoa National Park.

The discussion paper emphasises that the Government is not further investigating the potential of Kahurangi or Mount Aspiring national parks, which will remain protected in Schedule 4.

Additions to Schedule 4

Some public conservation areas have also been identified as appropriate for inclusion in Schedule 4. The proposed additions to Schedule 4 total an area of 12,400 hectares and include:

• six marine reserves (Horoirangi, Parininihi, Tapuae, Taputeranga, Te Paepae o Aotea (Volkner Rocks), Whangarei Harbour);
• two scientific reserves (Burwood Bush, Ianthe);
• one nature reserve (Orokonui);
  two scenic reserves (Kaikoura Island, Rakitu Island); and
• recent additions to three national parks (Abel Tasman, Egmont and Paparoa).

Further scientific investigation

The discussion paper notes the Government's planned $4investment in gathering further information on the mineral potential of specific prospective areas of the country. The investigative works will involve low impact techniques such as airborne geophysical exploration, mapping and sampling by mainly hand-held methods. This initiative relates to the second class of Schedule 4 land identified above, namely areas where the significant mineral potential of an area is known but more information is needed to target the areas, and the conservation estate outside Schedule 4. As a result of this further investigation, other targeted areas may be identified for removal from Schedule 4.

Joint ministerial approval for access to DoC land

Under the current provisions of the CMA, consent to access Crown land has to be given by the Minister responsible for administering the land. In the case of conservation land, this is the Minister of Conservation.

The discussion paper proposes that a decision on whether to grant access to Crown land for mineral development will involve the joint approval of the land-holding Minister and the Minister of Energy and Resources. The reasoning behind the proposal is that the joint ministerial approval process will allow the consideration of the potential national significance and economic benefits when assessing whether to allow access for a proposal to explore or mine Crown-owned minerals.

Contestable Conservation Fund

The last proposal included in the discussion paper is the establishment of a dedicated fund to ensure the conservation benefits from any mineral activity that might be allowed in the future on conservation land. The objective for the fund would be to enhance conservation outcomes.

The annual budget for the fund is proposed to be based on 50% of royalty income from minerals (other than petroleum) extracted from public conservation areas with a minimum of $2per annum for the first four years and a maximum of $10per annum.

What happens now?

The Ministry of Economic Development and DoC have sought feedback on the discussion paper and to assist in obtaining feedback have specified a number of questions relating to the various proposals outlined above.

Submissions must be received by 5.00pm on Tuesday 4 May 2010. Submissions may be made using the online form at www.med.govt.nz/schedule4; sent by email to or as a hard copy mailed to:

Schedule 4 Stocktake
Ministry of Economic Development
PO Box 1473
Wellington 6140

During the period May to August 2010 it is anticipated that the submissions will be reviewed and then recommendations on the proposals included in the discussion paper will be made to Cabinet for approval.

Please call us if you would like assistance in preparing a submission on the proposals.

Authors

Heather Ash

Partner - Public Sector

DDI: +64 9 977 5124

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Robert McLean

Partner - Corporate & Commercial

DDI: +64 9 977 5077

Mobile: +64 21 987 050

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Dave Trueman

Partner - Corporate & Commercial

DDI: +64 4 924 3548

Mobile: +64 21 403 612

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Michael Wood

Partner - Property & Infrastructure

DDI: +64 9 977 5329

Mobile: +64 21 772 974

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Michelle van Kampen

Senior Associate - Public Sector

DDI: +64 9 977 5258

Mobile: +64 21 221 4206

Email:

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