Mining payoff takes time, says industry

Photo / Greg Bowker

New mining projects on conservation land may take hundreds of millions to get started, but the long term payoffs will be worth it, says an industry lobby group.

Straterra acting chief executive Chris Baker says the feasibility studies needed for an average sized gold mine - one pulling in revenue of about $200 million per year - would be about $50 million, with another $10-$20 million needed on initial exploration.

Total project costs were likely to be about $200 million, he said, with another $100m-$150m in capital expenditure.

Baker said New Zealand should be encouraging new projects, despite the 'circumspect nature' of the mining industry.

It has been estimated $194 billion of minerals are tied up in more than 7000ha of conservation land earmarked for exploration in the Coromandel, Great Barrier Island and parts of the Paparoa National Park on the West Coast.

Environmental groups, including Forest and Bird, have said the Government previously had plans to remove half a million hectares but, fearing a public backlash, had trimmed it down to 7000ha.

Prime Minister John Key called concerns raised by Forest and Bird as "scaremongering". He also said there has been too much "hysteria" in the media.

Baker said those people who were complaining about mining, were generally the same people that were complaining there weren't enough teachers.

Mining gave direct benefits to the economy in capital expenditure, wages, taxes and payment for services such as engineering, he said.

Royalties paid to the Government from mining land usually totalled about 2 per cent of revenue or 5 per cent of gross profit, whichever was the highest figure.

However only one in 50 prospects drilled was likely to achieve a result from about 1000 prospective areas.

Business New Zealand chief executive Phil OReilly said mining prospects had the ability to transform our economy, provided New Zealanders were given their say.

"These resources belong to all New Zealanders and should be used carefully in creating new industries and growing our economy."

Blogger Keith Ng last night looked at the Government's numbers on the Public Address website saying wages for miners weren't as lucrative as they appeared.

Ng said the median income for wage and salary earners in mining during 2008 was actually $57,660, a long way off the "output per worker" of $360,000 quoted by Energy and Resources Minister Gerry Brownlee.

"Wow, $360,000, that's heaps! If we were all miners, we'd all be rich!

"Here's what Gerry did. He took the total worth of the mining sector, then divided it by the number of people it employed. It does not mean that more mining = higher productivity. It just means that mining is very capital-intensive and employs relatively few people, which are fairly obvious facts," said Ng.