Tuesday 8th October 2019
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In a surprise turnaround, the government has given OceanaGold a greenlight to buy land to expand its Waihi mine after the application was previously turned down by Land Information Minister Eugenie Sage.
The ASX-listed firm, New Zealand’s biggest gold miner, is mostly owned by US and UK investors and needed Overseas Investment Office approval to buy about 178 hectares of farmland on Trig Road, south-east of the town.
Sage argued the expansion of gold mining at Waihi is inherently unsustainable, will increase emissions, and will provide only moderate employment benefits relative to winding down the operation and remediating the site.
Associate Finance Minister David Clark, however, had believed the sale was likely to deliver substantial benefit. It was the first time since the Overseas Investment Act took effect in 2005 that ministers were split on an application. In that event, the legislation requires the application be declined.
OceanaGold has applied to judicially review that decision and has argued that future expansion at Waihi – Project Quattro – could extend employment for more than 300 workers and contractors by nine years.
In August, the OIO received two new applications from OceanaGold to buy the parcels of farmland totalling approximately 180 hectares near the current mine.
The decision-making roles were transferred to Finance Minister Grant Robertson and associate minister of finance David Parker to ensure a fresh analysis of the application.
The OIO considered the new applications under the benefit to New Zealand pathway of the Overseas Investment Act and recommended to ministers the applications be approved.
The ministers were satisfied the investment would result in substantial and identifiable benefit to New Zealand. They noted that they are required to assess only the benefits described in the Overseas Investment Act when making their decision. They consider the investment will benefit New Zealand because of the retention of about 340 full-time jobs over nine years and exports valued at $2 billion over nine years.
Minister Sage said she was not involved in Minister Robertson and Parker’s decision. "They assessed a different application and made an independent decision on the information in that application."
Sage said, however, that "I stand by my original decision, which I formed on the application I carefully assessed. I have no further comment."
OceanaGold chief executive Mick Wilkes said the company will "seek to make further significant economic contributions to the Waihi and surrounding communities."
He said OceanaGold is making "additional significant benefits to grow our business in New Zealand. Through these investments, we expect to secure the long-term future for our operations and host communities in both the South and North islands for decades more."
Brent O'Riley, chief executive of the Employers and Manufacturers' Association, said "OceanaGold should be congratulated for its persistence in modifying the application to take it back to these senior ministers."
This is the "right decision for the region around Waihi," he said. He also said it is a "more consistent signal to send to those overseas businesses already investing in New Zealand, and those looking to invest to help our economy grow and become more productive."
BusinessNZ also said the decision was confidence building. "We welcome ministers' decisions on this application as it signals the type of certainty and stability that long-term international investors need in order to continue to provide valuable investments in and for New Zealand," said BusinessNZ chief executive Kirk Hope. "This decision sends a positive signal to the resources sector and wider economy that New Zealand is open for business."
Gold has been mined at Waihi for more than 100 years. The company, which also operates the Macrae’s Mine near Dunedin, produced 83,500 ounces of gold at Waihi last year and is aiming for 60-70,000 this year.
In December, the company was granted consent to extend mining there by about 12 years.
OceanaGold needs resource consent from the Hauraki District Council before it can begin operations on the land. The approval to purchase the land does not imply that the Crown either supports or opposes its application, the ministers said.
The ASX-listed shares were recently up 1.3 percent at A$3.98.
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