INTERVIEW: New Zealand aims to ease seabed mining fears, draw investors: minister

New Zealand is looking to unlock the potential of seabed mining, against a backdrop of growing scrutiny, as countries globally rush toward securing critical minerals supply chains.

At the end of January, it released a national minerals strategy and critical minerals list, and applications for the government's new Fast Track program started arriving a week later, on Feb. 7.

The government still faces significant opposition to both terrestrial and seabed mining, but Resources Minister Shane Jones from the New Zealand First party is determined to reduce the country's dependence on exported energy sources and boost international confidence in the local mining sector, which is tied to the oil and gas industry.

Platts, part of S&P Global Commodity Insights, spoke to Jones about his plans for the country's mining industry and its relationship with the energy sector. This interview has been edited for clarity and space.

Platts: Among the reforms made recently, including those within the resources sector, which one do you think is the most significant?

Shane Jones: Without a doubt, this new Fast Track legislation has the most permissive regime for large-scale projects in the Organisation for Economic Co-operation and Development. I found that even in a pro-mining country like Australia, big projects are snagged, and people lose confidence about how long it will take before their capital generates a return.

I'm particularly proud that the three parties that created our coalition government are now promoting New Zealand's natural resource sector.

For some of these projects, I'm the first to admit, there will be...a lot of activism and protests. Not the least of which is extracting iron sands off the coast of New Zealand in an area called Taranaki, where historically we derived a lot of our oil and gas. It's got great potential as an earner and as an employer.

Let's face it: Seabed mining is something that New Zealand hasn't done before, so there's that level of uncertainty, but people exaggerate the risks.

The iron sands also have titanium, vanadium and various other minerals, so it could be a genuine game-changer here in New Zealand, but it would never see the light of day had we not created a Fast Track process that is focused on science and technology. It's a pro-development piece of legislation with guardrails, but we've limited the opportunity for the opponents of the natural resource industries to weaponize the environment.

What has happened since the law was enacted?

We have a range of projects that are already traveling through the statutory route. A well-known one from Australia is Santana Minerals Ltd., which has quite a lot of Australian capital behind it. There's OceanaGold Corp., a Canadian investment, and then some mineral sands applications.

For a number of these companies, they're already working. But they were very fearful that in the absence of a pro-development piece of legislation, the prospects of them continuing to exist were very, very bleak.

What's the greatest challenge going forward now for the metals and mining sector in New Zealand?

Capital is always a challenge. We don't have the depth of capital that the Aussies have, so we're going through a process of simplifying our foreign direct investment rules to attract investment capital into the minerals sector.

The owners of these enterprises need to be vigilant so that they don't inadvertently destroy their social license. In countries like Australia and New Zealand, you've got different constituencies that will never openly embrace mining...A lot of our young Maori men and women are working in Australia's mining sector, but because mining projects often court controversy, they're reluctant to get embroiled in that. That has to be carefully managed.

Adding gold and coal to the critical minerals list is interesting as they're not often on other nations' lists of minerals with strategic and geopolitical impacts. What was your rationale?

The officials did not identify coal and gold as candidates for the list originally. The reason that the politicians put them on the list is that, firstly, gold is an existing industry capable of growing substantially. It is also a critical piece of our minerals sector in regions where there aren't a lot of other economic opportunities that pay as well as the gold industry -- and in New Zealand, we're finding where you discover gold, you find antimony.

Coking coal is a very good earner and a great employer in New Zealand. And if it is not on the critical list or cannot go through the Fast Track process, we would be preparing for the demise of the coking coal industry.

Thermal coal is also important because, despite our "clean, green" image, it is needed for firming purposes. We're the only country in the world that is transitioning from gas to coal. Former Prime Minister Jacinda Ardern asserted that she was experiencing a "nuclear moment" [when the climate change law was passed in 2019], and the effect of that was the cancellation of the oil and gas sector in New Zealand. Once the investment dried up...we're now reduced to keeping the lights on in New Zealand with Indonesian coal. It's not an ideal situation, but no government wants to preside over a situation where there are brownouts or cascading episodes of power stoppages.

What is the government's stance on developing New Zealand's thermal coal reserves?

We've got a substantial thermal coal reserve, but power companies believe it's more efficient to just import it from overseas. The last government passed legislation that made it impossible to mine for thermal coal. That legislation has been overturned, but we've got a highly privatized approach to energy generation in New Zealand, and to date, none of the energy companies has been willing to offer a 10-, 20- or 30-year contract for the thermal coal companies to restart their mines.

If there were to be a change of government that said, no, we're not going to tolerate any energy generated by New Zealand-based thermal coal, then they'll have stranded assets. It's such a volatile issue in the world of climate change, but I'm very much in doubt of that.

It's my view that the high-tide mark has come and gone on climate change. People are now more interested in economic resilience and dealing with other environmental issues, and climate is only one of them.

At this stage, in terms of addressing the power vulnerabilities, our focus has been on the first NZ$60 million to open up the supercritical geothermal energy resource. We've had a lot of interest from overseas, and a lot of the areas where there is great potential for this energy is on Maori land. We already had a very big meeting with the Maori tribes, and they're 100% behind the idea, with appropriate guardrails. There are some engineering complications, but given that our gas is very, very uncertain, we've got to take a chance on other sources of energy. It's also increasingly difficult to get big hydro projects through in New Zealand; their heyday was up to 50 years ago.

So, what's your next milestone, then, regarding the metals and mining sector?

We're just about to pass the legislation overturning Ardern's 2018 ban on future developments of oil and gas in New Zealand, which scared away international investors and basically destroyed the gas market.

Overturning the oil and gas ban will have positive spillover effects on the mining sector. It's about international confidence. A lot of the guys who come to invest in mining in New Zealand are traveling companions with those that invest in oil and gas.