On one hand, in many quarters there is a strong sense that more of New Zealand’s mineral wealth should be kept in New Zealand and not sent offshore.

On the other hand, there is a reluctance to create or participate in the ownership of vehicles to do just that.

Overseas, large institutions – including pension funds – frequently allow broad groups to invest in such projects.

Without direct ownership, Kiwis are left to benefit from mining through measures including job creation and increased economic activity, and through the tax and royalties that directly plump government coffers.

But the extent to which such benefits will flow from the country’s proliferating slate of planned new gold mines is the subject of debate.

Gold mining booms don’t happen quickly in New Zealand these days; but, in the contemporary way of such things, there is a boom in planning for both new and expanded mines.

A key driver is the record gold price, which has soared past $7000 an ounce. Another is the current Government’s effort to drive economic growth, and, in particular, the fast-track legislation it passed late last year, which is aimed at speeding and easing the otherwise mired consenting and permitting path for a wide range of large projects, mines included.

In recent days, it introduced a bill to amend the Fast-track Approvals Act. Collectively, the amendments are expected to speed up the process of considering projects for approval by over six weeks, according to a related official disclosure.

The main gold mine development plans in the works are: Snowy River; a project known as Bendigo-Ophir in Central Otago planned by dual-listed (ASX and NZX) Santana Minerals; and an expansion of the Waihī mine in Waikato, owned by TSX-traded, Canada-based miner OceanaGold.

Earlier-stage exploration is also proliferating, pursued by players including: ASX-listed Siren Gold; Rua Gold, which trades on the junior Canadian exchange, TSX Venture; and ASX- and NZX-listed Uvre.

The Bendigo-Ophir mine plan and the Waihī expansion plan are both advancing through the fast-track regime.

However, the Snowy River mine near Reefton may be closest to fruition. Endura, previously called Federation Mining, bought the project from OceanaGold last year along with its existing permits. It’s fully consented and first production is slated for December next year.

O’Hara said the company has already invested over $200m in the mine, and another $200m is being spent through the construction phase – the centrepiece of which is an on-site ore processing facility.

He said the majority of that money is spent in New Zealand, on the likes of kilometres of underground tunnels, exploratory drilling and construction. But he acknowledged that much of the machinery, including parts and specialised equipment, is shipped in from abroad.

Endura has largely been welcomed by locals on the West Coast, and is unopposed by environmental advocacy groups.

Asked about the mine, Forest & Bird’s general manager for advocacy and policy, Richard Capie, said the group isn’t against mining per se, but takes “a clear position” against new mining on public conservation land and against new coal mining: “it’s a matter of the right mine in the right place”.

The West Coast relies on mines for roughly 10% of jobs and Endura has steered clear of some of the more speculative claims, declining to estimate the corporate taxes or royalty payments the mine will ultimately pay back to New Zealand.

Though, thanks to its pre-2013 mining permits, the project enjoys a very light, grandfathered royalty obligation – more on that later.

Snowy River already employs 80 staff, and that figure is expected to rise to 200 as construction is completed and the mine moves to production; that level of staffing is expected to be roughly stable across the 10-year life of the mine.

Santana estimates the Bendigo-Ophir mine will directly employ some 350 staff and contractors across the 14-year life of its mine. And Oceana estimates the Waihī North project will employ 389 staff and contractors across 18 years.

Oceana says that without Waihī North, the entire Waihī mine, including the existing Martha operation, will shut down by 2032; on that basis it included all of the mine jobs in its job creation estimate for the expansion plan.

Job creation

Jobs are likely the easiest benefit for the proponents of new mines to pin down. Patrick Phelps, manager of Minerals West Coast, a trust that promotes mining, said jobs are easier for miners to project than future royalties or corporate taxes.

“They’ll have a good idea of how much dirt they need to shift, and how many machines they need, and, from there, how many people they need to operate them,” he said.

He noted that tax and royalty obligations are both predicated on making a profit, which is hard to predict with certainty (base royalties are calculated as a percentage of net revenue, but a higher rate kicks in if a significant accounting profit is made).

The relative value of those jobs is also clear. Stats NZ figures show the median weekly wage in the mining sector is $2407, over $125,000 per annum. That makes the sector’s workers among the best paid in the country.

By comparison, median weekly earnings in retail trade and accommodation are just $941, while in agriculture, forestry and fishing they come in at $1309. Both sectors are comparatively large employers in regional New Zealand.

In addition, worker productivity in mining, which can otherwise be described as economic output, is also very high – a recent Infometrics analysis pegged it at more than $500,000 per worker.

That’s likely because the capital intensity of mining (capital investment per job) is very high relative to other sectors.

That’s an obvious boon for a small country that trails our peers in the OECD in productivity.

In the context of its fast-track application, however, Oceana’s jobs claims have stretched credulity for some.

Alongside its estimates of direct jobs related to the Waihī expansion, it also listed as benefits an additional 240 jobs per annum, which it said would be indirectly created among suppliers, and, more tangentially, it said a further 200 jobs per annum would be induced, in effect supported by the consumption of mine workers, contractors and suppliers.

In total, the company said the Waihī expansion “will support” 895 jobs annually.

It relied on work it commissioned from Shamubeel Eaqub, of the economic consultancy Eaqub & Eaqub.

Several submitters to the fast-track panel raised questions about the analysis, including Simon Upton, the Parliamentary Commissioner for the Environment.

Upton objected to the use of multiplier effects in the economic calculations and the inclusion of indirect and induced jobs, which he said should be set aside.

His reasons followed the commonly held view among economists that the known additional productivity for those directly employed in mining is a benefit, but beyond that, the value of indirect and induced jobs is less clear.

This is largely because, absent the mining, these other workers would likely be roughly equally gainfully employed elsewhere.

Equab made a further submission in response to the critiques; he noted that the analysis clearly identifies direct, indirect and induced jobs, and he called the work a “valuable tool” for decision-makers.

Bendigo-Ophir

At the beginning of the month Santana made a full application for permitting and consenting its Bendigo-Ophir project, planned for the Dunstan Mountains in Central Otago.

Chief executive Damian Spring told the Herald that 43% of company shares are New Zealand-owned, though he declined to name any New Zealand-based institutional investors because the information is bound by confidentiality.

Santana expects to begin open-pit mining in 2027, followed by the construction of an underground mine.

The project will produce up to 1.25 million ounces of gold and, banking on a gold price of $5383 an ounce, Santana estimates revenue of over $6.5b.

Over 14-years of production, the company projects payment of $448m in royalties to the Crown and over $1b in tax.

The $448m royalty figure has raised eyebrows. Local Otago environmental group, Sustainable Tarras, is extremely wary of it, and spokesman and local businessman Rob van der Mark pointed out that royalties and corporate taxes paid to the Crown on gold mining to date have paled in comparison.

That’s true. On much higher production, Ministry of Business Innovation and Employment’s (MBIE) figures show the government collected little more than $100m in gold mining royalties in the 14 years to fiscal 2023/24.

That’s not all down to the lower gold price over the period. In part, it’s because New Zealand’s only large gold producer, Oceana, pays an outdated, pre-2013 royalty rate.

While the royalty regime was updated and obligations for significant gold mines doubled in 2013 (for so called Tier 1 operations), existing minerals permits were grandfathered.

Indeed, Santana’s mine will likely be the first gold production subject to the 2013 royalty rate of 2% of net revenue or 10% of accounting profit, whichever is higher. Under the previous 1996 regime, gold miners pay just 1% of net revenue or 5% of accounting profit, whichever is higher.

MBIE has issued only two Tier 1 gold mining permits with the 2013 terms, one to Santana subsidiary Matakanui Gold and one to Waikaka Gold Mines whose proposed Southland mine remains unconsented.

It has surprised even close observers of the industry that both the Waihī expansion and the Snow River Mine are moving ahead on permits grandfathered to the 1996 regime.

Professor Glenn Banks of Massey University said the grandfathering has “short-changed” New Zealanders.

Despite its higher royalty obligations, Van der Mark is sceptical that the Santana mine’s tally of benefits would outweigh a tally of environmental costs.

He pointed to the planned pond storage of toxic tailings and what he described as “the inevitable” problem of seepage into groundwater and waterways.

He also cited dust, noise and damage to the tourism and agriculture sectors: “that great open pit would be seen by visitors flying down to Queenstown”.

Spring countered that the company’s “science is strong, the safeguards are firm, and our commitment to environmental standards is non-negotiable”.

Waihī North

Oceana Gold’s Waihī expansion plan is further ahead than Bendigo-Ophir in the fast-track process and interested parties have had an opportunity to articulate concerns, similar to Van der Mark’s, to the adjudicating panel over the weighing of costs and benefits.

The plan would expand the existing Waihī gold and silver mine, establish a new open pit and underground mines and another tailings storage facility, and facilitate the extraction of 1.6m ounces of gold and 2.2m ounces of silver over 13-years.

Oceana contends the expansion would inject over $1b in new foreign direct investment into New Zealand, and that revenue to the Crown would include $131m in royalties, and $726m of corporate taxes.

It’s hard to say if Oceana’s full tax estimates will eventuate, but critics note the company’s obligations have appeared light in the past – in 2023 and 2021 it paid no corporate tax in New Zealand.

Miners are allowed to reduce their taxable profits with deductions for many of their upfront and financially risky early-stage costs, including exploration (though there are clawback provisions should the activity lead to profitable production).

In addition, Oceana and the other miners are expected to benefit from the Government’s new tax deduction measures known as Investment Boost, introduced in the last Budget.

As with Santana, Oceana’s critics are most concerned with a weighing of both the mine’s costs and benefits.

Both the Parliamentary Commissioner for the Environment, Simon Upton, and Forest & Bird have called for a full analysis.

Upton’s submission on the project said “the applicant’s analysis completely overlooks environmental costs”; others, including Forest & Bird echoed the view.

Forest & Bird’s Richard Capie told the Herald the group has serious concerns about the possible effects of the Waihī expansion, on biodiversity in particular. And he’s concerned about the fast-track process more generally.

The fast-track bill’s aim is to speed-up and streamline decision-making for big projects, but Capie worries that it discounts environmental considerations and is geared for speed (the clue is in the name).

That’s about to be ramped up, the Government means to pass the Fast-track Approvals Amendment Bill under urgency before Christmas.

The process is so rushed that many of the fine details have yet to be written, including how Waihī North, Bendigo-Ophir, and other projects currently under review, will be affected. Ministry for the Environment officials say this will be worked out at Select Committee.

Ministers and miners say that the changes are hastening the arrival of a more prosperous future. But whether the mines prove a golden opportunity or just a missed one remains to be seen.