Here’s two mining stories. At least one, if not both, will annoy at least some, if not all, of you. Stay calm.
Story one starts in 1967 when Norpac Mining opened the Tui mine in the Kaimai Ranges near the town of Te Aroha to extract copper, lead, zinc, silver and gold.
After nine years of operation Norpac went into liquidation and walked off.. It abandoned a storage dam containing some 90,000 cubic metres of toxic waste. Lead and cadmium leached in to a stream flowing through public conservation land and through the town centre. Four years after the mine closed the town’s water supply was found to be contaminated. The wider catchment was loaded with heavy metals and some years on the dam was at risk of collapsing.
Over the last five years the taxpayers of New Zealand have forked out 21.7 million dollars to clean up the mess, and from now on it will require constant monitoring and reapplication of lime.
Story two is a current one. On May 21 the Minister of Conservation, the Honourable Nick Smith, approved an access arrangement for Bathurst Resources Ltd to mine coal over 106 hectares on the Denniston Plateau on the West Coast of the South Island.
Bathurst and the Department of Conservation negotiated a 21.9 million compensation package for the consequent environmental impacts from mining.
The Bathurst package includes a 35 year predator and pest control programme to protect plants and wildlife within about 25,000 hectares of the Heaphy River catchment in the Kahurangi National Park; and a 50 year predator and pest control programme over about 4,500 hectares of the Denniston Plateau and surrounding beech forest.
It also includes restoration and visitor enhancement projects on three historic mining sites. And of course there are the bonds and conditions to cover restoration and impacts.
Oh, and Bathurst is among the players looking to negotiate an agreed position between conservation and mining right across a broad area taking in all of the Denniston and Stockton plateaus and beyond.
I think we can conclude that the world has changed.
Across the globe the degradation and loss of biodiversity and destruction of ecosystems is starting to create major environmental problems, present limits to growth and bring worried citizens in to action. Quite simply, the world is consuming nature’s services upon which we rely at the rate of one and a half planets and you don’t need to be a mathematical genius to work out that isn’t sustainable.
As a consequence, the policy framework in which you can do business is shifting. For generations we have operated on the basis that only wealthy economies can afford healthy environments. Spending on the environment has been seen as a nice to have.
That approach underpins the concept of GDP, which discounts or ignores the environmental impacts of an activity on the basis that bature’s services are free goods and any impacts are well in to the future.
The Tui mine is a good example. The investors profits were inflated by not being required to meet the true costs of their business, and please don’t tell me they didn’t know.
But GDP is even more bizarre, because the massive construction industry activity involved in the clean up also counts as an economic plus. The mugs in the middle are the taxpayers who have subsidised the venture by paying for the cleanup. It’s a classic case of privatising the profits and socialising the costs, and that’s why GDP is so last century.
The public wear the crap and then have to pay to clean up the mess.
It’s also why dismissing the cost of being in harmony with nature as a discretionary spend is so last century. Nature is reminding us that to have a wealthy economy in any true sense of the word, you need a healthy functioning environment.
Because we have been operating on the polar opposite for years – kidding ourselves that healthy functioning ecosystems are a luxury that only rich countries can afford - we have built up environmental debt. Just like financial debt, environmental debt eventually needs to be paid off.
The global environmental crisis is as real as the global financial crisis, and its implications are far more harmful because the impacts can often not be reversed. But we struggle to see it because we make nature invisible in our policy and decision-making and accounting.
In New Zealand too often we like to think global problems are about everyone else. If you think that, next time you fly over coastal New Zealand on a good day, take a look at the mouth of many of our rivers and you will see a brown slick extending well out to sea and up the coast. That brown slick contains our topsoil. Topsoil is the platform for our pastoral economy. New Zealand has one of the worst rates of topsoil loss to air and sea. Depending on the soil type, it takes 100 to 500 years to build up two to three centimetres of topsoil – so in effect it is a non renewable resource. We are watching our economy flow to sea, and losing fish spawning grounds, closing aquaculture harvesting and building flood protection measures in the process.
Now I don’t have much time for the blame game and trashing New Zealand. Campaigns like dirty dairying highlight the problem, but they don’t solve the problem and they allow us to think its somebody else’s fault rather than the result of a system we have tolerated, and need to change.
So what, you might ask, has all this got to do with mining?
Everything, or nothing. At the moment you can still sort of choose. But you are caught up in the carbon issue, biodiversity degradation and loss, the fracking debate and environmental impact issues. There is an active consumer lobby that tries to differentiate people into those who are pro mining and those who are anti mining. I think that’s plain silly – especially when people travel in cars on roads to places of concrete and steel to discuss how to stop mining. But don’t make the mistake of dismissing the place that anti-mining is taking the public.
I’m much more interested in if you mine, where you mine, why you mine, what you mine, and how you mine.
But you need to be increasingly aware that your activity impacts on nature, and are operating in a world in which citizens are concerned about what’s happening to nature and they are creating political pressure points.
Consumers are regulating through their pockets and demanding that businesses demonstrate they are environmentally friendly. Access to supply chains and customer loyalty is increasingly depending on it.
Governments are being forced to change their policy settings. The New Zealand Treasury is building a Living Standards measure of the economy that accounts not just for financial capital but also social, human and natural capital. The real economy, in other words.
So what should DOC do in this climate about mining on public conservation land?
If you take the current footprint of actual area mined and add in both the area approved for mining, and all the area approved for exploration, it covers about .03 of the conservation land.
If you take the footprint that pests destroy if not controlled, it covers 91.7 of the conservation land.
Where do you think DOC should put its focus?
But we have a problem. We don’t have the resource to control all that area, and the resource required is well in excess of any reasonable call on the taxpayer alone.
This has challenged us to rethink our framework and reorganise our business operating model. It has involved changes to our structures, systems, processes, policies and skill base.
The change is premised on the view that those who take from nature also need to give back to nature. Those who take the most should give the most back. Those who benefit the most should give back generously.
We are gearing up for a new era of value exchange in which the public of New Zealand get a fair return for their investment in public conservation land, and nature’s balance is restored, enhanced and maintained.
Business leaders are emerging to take up the challenge. Genesis Energy, Air New Zealand, Dulux, Mitre 10, Fonterra…the early starters are often the smart ones so it’s not surprising that these partnerships with DOC are delivering value to the businesses and helping us achieve more conservation gains.
That is our new operating model. To work in partnership with business, local government, iwi, private landowners …. for mutual benefit.
There is value in nature and the smart operators know how to make it work for them and are getting ahead of the game. You don’t need to take my word for it.
The Pure Advantage group, formed in 2010, includes some of New Zealanders most successful and influential business leaders – Geoff Ross, Chris Liddell, Rob Fyffe, Sir Stephen Tindall, Rob Morrison, Justine Smyth, Jeremy Moon, Sir George Fistonich, Phillip Mills , Sir Mark Solomon, Joan Withers…
In a 2012 report entitled, “New Zealand’s Position in the Green Race”, Pure Advantage states that many countries are “already demonstrating the link between green growth policies and strong economic performance. Countries all over the world are investing in green development to help their economies transition to a more robust, sustainable and environmentally benign platform”.
Corporates, the report states, “need to step up to provide the necessary leadership to get things moving”, but Pure Advantage says “what is ultimately required is a partnership between government and industry”.
That’s the context in which DOC and Bathurst negotiated an access agreement. If the result has sent shockwaves through the mining industry then it needs to get over it. The world has changed and this is the way of the future.
Bathurst has set the bar for the price of a licence to operate. My advice is practice your high jumping and experience the rewards of being a champion.
Having said that I am not trivialising the challenge for both of us. I know there is puzzlement over how we reached the value exchange with Bathurst. How did we get to $21.9 million.
The question is fundamentally about how we value nature and the services it provides.
For a start, it’s a 50 year deal. The value isn’t in front but over the long-term. That’s an important point, because it recognises that the impacts of mining are typically long term and the task of controlling pests to improve our natural environment is in perpetuity.
But the more important point is this. Valuing nature doesn’t mean putting a dollar figure on everything. You can monetise nature, and we do at times. There are plenty of studies to show the price paid for a house or apartment with direct beach access or overlooking central park in New York is much more than the same quality of accommodation a block or two back. So we put a dollar value on landscape and create a market.
Nature has commodity value, but it is often hard, if not inappropriate, to monetise. Healthy functioning ecosystems provide critical services to industry and the commons; services such as the quantity and quality of fresh water, the stability and regeneration of soil, pollination, climate regulation, fibre and food, flood control, fish stocks and so on. Sometimes we quantify and monetise those. For example, in the past commercial fishers valued their business in terms of capital investment in boats and plant. Now with the quota management system they actually value the fish; the service that nature provides as the base for their business and which used to be regarded as a free service from nature. .
And anyone who has been following the Fonterra debate will be more than aware of the value of nature to brand New Zealand. Brand reputation has bottom line impacts.
But we don’t necessarily have to commodify, quantify or monetise nature to negotiate a licence to operate. The key thing is that both parties recognise the full range of values and have a pragmatic willingness to reach an agreement that is good for both. The key to unlocking that for you is not what you pay, but the value you can add by paying it.
The explanation won’t necessarily remove the puzzle from how DOC and Bathurst reached the “take from nature-give back to nature” value exchange. To fully understand that you need to appreciate what it means for two willing parties with enough sense of value in common to create a shared objective. Those are the business leaders who are setting the trend for now. Anyone is free to resist the trend, but it will become increasingly difficult to swim against the tide.
But I haven’t come hear to tell you what you have to do. That will develop over time.
What I can confidently tell you is that DOC is reframing its thinking and reorganising its business operating model around the trend.
Companies that understand the growing public concern at the state of the natural environment, and operate in a way that shares that concern and accounts for it, are, In DOC’s books, the way of the future.
DOC wants to work with companies in a value-exchange context where the deal works for you and it works for conservation and the public of New Zealand. We need to own a common objective of a prosperous New Zealand built on a healthy functioning environment. It is not about locking everything up and nor is it about opening everything up. But where mining is a possibility, if you’re in that space, we’re open for business.