2% royalties for mining? Deal!

But Rob Dickinson already told me that, didn't he?

Snapshot post

Today, Shane Jones was courageous enough to front Q&A with Jack Tame.

Jack Tame is a bit of a legend. And that’s only because he strikes me as a good journalist i.e. well researched, knows his facts, doesn’t let spin or obfuscation pass, and never merely parrots narratives.

Good on ya, Jack. And thanks for your service.

Minister Jones turned up (kudos) and did his best to explain why he felt mining was essential for New Zealand’s economic development.

It was clear Jones feels that hard mineral mining will genuinely help our economy and boost regional areas such as the West Coast.

He felt that oil and gas and mining companies had been hard done by by prior Governments and he was doing his best to act as an intermediary with industry, and give them confidence in investing here again.

To me, he seemed like he genuinely believes this track will help us find our economic groove again.

I felt a pang of sympathy. Perhaps he really does believe what he is saying. Perhaps he really wants to help the constituents he talks to. [The only caveat being, it’d help if many of those weren’t people who were giving him and New Zealand First donations, but I digress. ]

I’ve been highly critical of Jones ever since his seminal speech about killing Archeys frogs and extracting minerals from conservation lands last year.

Today, Jones attempted to clarify his comments -

"I want people to realise that the size of the DOC estate is about eight million hectares out of 26 million hectares in New Zealand. We have about 1500 or 2000 hectares of the DOC estate currently under active mining. It's akin to a beauty spot."

He explained that Labour had scared off oil and gas companies, and he was using hyperbolic rhetoric to rebalance the pendulum. The only issue is, he seems overly invested in caring about those companies’ interests.

Did you know? New Zealand’s tourism industry, predicated on campaigns like “100% Pure New Zealand,” is 37 x more valuable than that of mining.

Still, the Coalition Conservative govt has always made the case that their “One Stop Shop” fast-track bill has been about re-gaining (wait, re-gaining?) economic superiority.

RMA and House Leader Minister Chris Bishop made it clear when he said:

"The status quo is not working. It's just not. We are going to do something different, and if the public don’t like it, they can throw us out in 3 years.” (Youtube video link)

And therefore, the pivot, and focus can be on reviewing the economics of the deal.

One of the most astute guys I know, Rob Dickinson (who is banned from posting topics on New Zealand’s largest subreddit - do they just stop all people who are insightful?) pointed something out to me the other day on a forum.

We only receive 2% of royalties on hard mining exports.

Pardon?

Yes, 2%

Jack Tame highlighted it again today.

Tame did more maths with Jones, assuming the most generous best case scenario. The two and a half minute excerpt is here if you want to watch it yourself.

Note: Tame used export value numbers and pretended they were profits i.e. in other words, actual profits would be much less.

But look - at doubling the mining exports value to $2 billion by 2035, which is the aspirational target here - that would only bring us ~$40 million in royalties. That’s 1/100th of how much this Govt is going to spend on pothole contractors over the next three years!

Even at Jones’s best case numbers, $60 million is a drop in the bucket. That amount is “1 out of 10,000th of New Zealand’s GDP.”

Fun fact: For every $1 we export of our finite, limited minerals, we get 2c on the dollar.

As a comparison, tourism contributed about $13.3 billion in 2023.

The technology sector ~$20bn.

And so as much as I sympathise that Jones is trying to do what he feels right, I’m not sure the equation makes much sense when you look at it with context.

You can’t allow foreign companies to come in, potentially make a mess like the Tui oilfields (with ~half a billion dollars in clean up costs on New Zealand,) extract our limited and finite resources, and put our people, environment and reputation at risk for 2% of royalties.

Even though Jones argued there are additional benefits to the Crown, like GST, PAYE tax etc. that actually applies to all economic activity so it’s moot. His numbers for additional employment were similarly unimpressive.

So, why so much effort and time on this?

It’s July.

Almost 9 months of the new right wing Coalition government.

And this is what they’ve been betting on.

Wake up and smell the roses, fam, you still have time to pivot.

We want you to succeed as much as you do, but not like this.