Wednesday, March 24, 2010

Billions from nowhere

The government's main strategy in arguing its case for digging up our national parks is that it will make us rich. They rely heavily on the mining lobby's assertion of the value of New Zealand's minerals, while ignoring the much lower value calculated by Statistics New Zealand, an impartial government agency, using an internationally accepted method. They extend this strategy to talking about individual areas of schedule 4 land. For example, here's what their discussion document [PDF] says about the mineral value of the Otahu Ecological Area and the Parakawai Geological Area in Coromandel:

The Otahu Ecological Area and the Parakawai Geological Area are located within the formations that confine several significant gold deposits, including Te Aroha, Karangahake, Golden Cross, Wharekiraponga and Ohui. The two areas are likely to have excellent potential for development of medium-grade, medium-tonnage, gold-silver vein deposits, which would become apparent with exploration and increased knowledge of the areas. It is estimated that there is potential within the two areas for a million-ounce ore body, which would be worth approximately $1.5 billion at today’s prices.
Sounds impressive. $1.5 billion! What's a bit of intact native forest, a river, and some Hochstetter’s frog's compared to that? So you'd expect that number to be reflected somehow in the respective geologists reports on those areas, right?
There is no reliable basis for determining a dollar value for Crown minerals within the Otahu Ecological Area, due to a lack of sub-surface information.

[T]he [Parakawi] Ecological Area has the potential to contain a significant rock resource with a potential value of several tens of millions of dollars, and could host gold-silver mineralisation at depth.

Apparently not. In fact, there's no suggestion of any such gold resource in the geologists reports. The most they say is that the Otahu Ecological Area is near an area which is "highly prospective" for gold, and that "this mineralisation may extend beneath the ecological area". But neither report makes any sort of claim of a "million-ounce ore body", let alone put a value on it of $1.5 billion. Those figures seem to have come from nowhere.

As The Standard points out in passing this morning, its a similar story with Great Barrier Island. There, the discussion document asserts gold and silver "with a potential value of $4.3 billion at today’s prices". But the geologists report [PDF] estimates the value at only $1 billion. At the least, the government is padding its case, inflating mineral values in order to persuade a sceptical public. In the Coromandel, they seem to just be making shit up. The government says it wants a "rational discussion"; it should at least show us the respect of not trying to bullshit us from the beginning.