MPs quiz Govt on mining benefits

Mining companies currently pay the Government royalties of about 1 per cent of the value of the mineral mined. Photo / Greg Bowker

The vaunted economic benefits of mining protected land have been called into question after figures suggested the Government would make a tiny fraction of earnings.

The Government faced a barrage of questions from Labour and Green MPs in Parliament yesterday over plans to open up 7000ha of Schedule Four conservation estate land to mining, including chunks of Great Barrier Island and the Coromandel.

National has emphasised the potential economic benefits of its proposals, but information from the New Zealand Minerals Association website suggests royalties from mining gold on the 700ha area of Great Barrier Island eyed up by the Government may yield royalties to the taxpayer of just $43 million.

The estimated value of royalties on the $60 billion worth of minerals, primarily gold and coal contained in all land being considered from removal from Schedule Four protection is about $600 million based on the NZMA figure of 1 per cent of the value of production.

The Ministry of Economic Development was yesterday referring questions on mining royalties to Energy and Resources Minister Gerry Brownlee's office.

A spokesman for Mr Brownlee was unable to supply information on current mining royalty levels before deadline but confirmed they were being reviewed as a result of the minerals stocktake.

He could not say whether royalty levels would go up or down.

Auckland Central MP Nikki Kaye has said she did not support mining on Great Barrier Island as it didn't stack up environmentally or economically.

But her National Party colleagues - Coromandel MP Sandra Goudie and West Coast-Tasman MP Chris Auchinvole, whose electorates also contain areas affected by the proposals - are supporting their party's stance.

"I'll be absolutely representing the constituents and making sure any of their concerns are conveyed back to the minister," said Ms Goudie.

Mr Auchinvole said the majority of people on the West Coast were aware of modern mining practices and "they don't seem to have an undue concern".

Opposition Leader Phil Goff accused National of hiding its mining policies from the public ahead of the last election.

"I've got no doubt they talked very closely to the mining lobbyists they just forgot to tell New Zealanders before the election."

But Mr Key said his party simply "did not have enough information" to talk about its plans at that time. He downplayed the prospect the proposal would prove electorally difficult.

The country's biggest gold miner said it was in no rush to take up opportunities that could arise from the review of land available for mining although it is remaining open-minded.

Listed Oceana Gold has the country's biggest opencast mine in Otago and an opencut mine near Reefton, which between them last year produced about 300,000 ounces of gold.

A company spokesman said it was spending about $10 million a year on exploration near its existing projects and this would remain the focus.

Clipping the ticket

* Mining companies currently pay the Government royalties of about 1 per cent of the value of the mineral mined but it can vary depending on the type of mineral.

* They enjoy a tax regime described by the New Zealand Minerals Association as "concessionary". Mining companies may immediately deduct their exploration, building, mine shaft, plant and machinery, production equipment and storage expenses.

* Mining companies pay the Government nominal fees for prospecting, exploration and mining permits ranging from $3.50 per square kilometre for a prospecting permit and $10 per hectare for a mining permit.

* Mining employs about 8000 in New Zealand but an Industry group says there could be another 25,000 jobs over the next 10 to 15 years.