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  • GDP, US$bn: 181.8
  • GDP per capita, US$: 39,005.4
  • Population, mn: 4.5
  • Inflation, CPI ave: 0.6
  • FX, LCY/US$: 1.4
  • Budget Balance, % of GDP: 0.9
  • Mining GVA, US$bn: 2.7
Regulatory Risk Rating
48
0
100
Score: 48
Substantial Risk
New Zealand's mineral legislation, as in the case of Canada and Australia, has introduced some provisions that show sensitivity to aboriginal groups, which have the effect of weakening the right to mine; the power of a surface rights owner to delay or impede development is a particular concern in the legislation; other concerns include the unilateral right to impose financial conditions on the grant of a permit. Overall, a highly undesirable regulatory framework on which to build a vibrant industry.

Corruption Potential Index

Score: 25
Very High Corruption Potential

Corruption Risk Index

Score: 93
Very Low Corruption Risk

Regulatory Risk Rating

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Mining Overview Commentary plus sign

NEW ZEALAND MINING REGULATION

 GENERAL

New Zealand has abundant mineral resources including coal, gold, ironsands, phosphate and limestone. The mining sector is smaller than New Zealand’s oil and gas sector, however it remains a significant industry in its own right. The mining industry in New Zealand is dominated by foreign investors with the exception of the state owned enterprise, Solid Energy. Around two thirds of New Zealand's coal is produced by Solid Energy, half of which is exported (primarily to Asia). Gold mining in New Zealand is largely contained in two main mines – Macraes and Martha Hill.

PRINCIPAL LEGISLATION AND REGULATOR

The primary minerals legislation in New Zealand is the Crown Minerals Act, together with its subsidiary regulation (including the Crown Minerals (Minerals and Coal) Regulations 2007 and the Crown Minerals (Royalties for Minerals Other than Petroleum) Regulations 2013 and the Minerals Programme for Minerals (Excluding Petroleum) 2013. The legislation is administered by the Department of Petroleum & Minerals, which reports to the Minister of Energy and Resources. The Crown Minerals Act establishes the Crown's ownership of minerals, the permitting system and the royalty regime in relation to minerals.

 With respect to the ownership of offshore minerals they are (with some potential exceptions in relation to Maori customary interests) vested in the Crown. The right to prospect for, explore for, and mine such minerals is granted by means of permits issued under the Crown Minerals Act 1991 and historic licenses issued under the Continental Shelf Act (Shelf Act). In 2011/2012, the New Zealand Government undertook a comprehensive review of the Crown minerals regime, as a result of which the Shelf Act regime was effectively incorporated into the Crown Minerals Act regime.

GRANT AND FORMS OF MINERAL TITLE

The Crown Minerals Act includes a two-tiered system for permit management. Generally, Tier 1 permits apply to complex, higher risk and return petroleum and minerals operations. Tier 1 involves a more hands on and pro-active management and regulatory regime. Tier 2 permits apply to lower return industrial, small business and hobby mineral operations, entailing a simpler and more pragmatic management regime. In order to prospect, explore or mine Crown owned minerals in New Zealand, a person must be the holder of a permit issued under the Crown Minerals Act. Three different types of permits may be granted by the Minister for Energy and Resources (Minister) under the Crown Minerals Act.

 

-          Prospecting permit: activities permitted pursuant to such a permit include geological mapping, hand sampling and aerial surveying. A prospecting permit ordinarily remains in force for a period of up to two years and carries a right of renewal for up to another two years; subject to relinquishment of up to half the original permit area. Subject to satisfaction of certain pre-requisites, the holder of a prospecting permit is entitled to "upgrade" to an exploration permit if its prospecting activities are successful.

 

-          Exploration permit: activities permitted include any activity undertaken for the purpose of identifying mineral deposits or occurrences and evaluating the feasibility of mining particular deposits. An exploration permit remains in force for a period of up to five years and carries a right of renewal for a further five years. An appraisal extension of up to four years is also possible.

 

-          Mining permit: granted to allow extraction of minerals. A mining permit may be issued for a maximum period of up to 40 years, but is more commonly 20 years or under. The duration granted will depend on the extent of the mineral reserves in the land, the permit holder's resources and its work programme. The duration of a permit may only be extended if the permit holder satisfies the Minister that the discovery to which the permit relates cannot be economically depleted before the date of expiration of the permit. The Minister may require a permit holder to submit a work programme for approval as a condition of the permit extension.

 

A permit does not itself confer a right of access to any land. Typically, permit holders are required to enter into separate arrangements with landowners to obtain access to the land covered by their permit interest.

All permits are subject to work programme obligations and conditions set by the Minister and the provisions of the Crown Minerals Act. Work programme obligations are typically set out in stages, with the complexity and scope of work that the permit holder must complete escalating along the life of the permit.   A work programme may specify specific activities that the permit holder must complete and/ or minimum expenditure obligations.

The consent of the Minister is required for the transfer of a permit or an interest therein, but not for a change of control of a permit holder. Nevertheless, a change of control is required to be notified to the Minister and, if the Minister is not content with the ability of the new permit holder’s financial capabilities the Minister can revoke the permit. The Minister is also able to revoke a permit under the Crown Minerals Act where the Minister is satisfied a permit holder has breached a condition of the permit and certain other circumstances.

DEVELOPMENT CONSIDERATIONS

With respect to mine development, one must produce the equivalent of an EIA. The relevant plan is called an Assessment of Environmental Effects (AEE). Under the Resource Management Act, 1991, an EIA is required as part of a resource consent application. Section 88 of the RMA specifies that the AEE must include "such detail as corresponds with the scale and significance of the effects that the activity may have on the environment". While there is no duty to consult any person when making a resource consent application (Sections 36A and Schedule 4), proof of consultation is almost certain required by local councils when they decide whether or not to publicly notify the consent application under Section 93.

ENVIRONMENTAL REGULATION

See New Zealand Environmental Regulation.

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Environmental Overview Commentary plus sign

NEW ZEALAND ENVIRONMENTAL REGULATION

GENERAL

The environment of New Zealand is characterised by unique flora and fauna and a variety of landforms contained within a small island nation. The land offers a variety of regional characteristics – volcanoes and glaciers, beaches and forests, and open plains. Dense native forests once covered the land, but most of it has been chopped down or burnt to make way for farmland, which covers almost half the country. But forest still covers much of the hills and mountains. High above the forests, tussock grasslands stretch out, dotted in spring and summer with bright alpine flowers such as mountain daisies and giant buttercups. New Zealand has been isolated from other lands for millions of years. This allowed some animals and plants to develop into fascinating forms, such as giant land snails and flightless birds, including the famous kiwi.

PRINCIPAL LEGISLATION AND REGULATOR

The Resource Management Act, 1991 (RMA) came into force on 1 October 1991 and replaced more than 20 major statutes and 50 other laws related to the environment (some dating from 1889). The RMA is administered by the Ministry of the Environment and provides a streamlined, integrated and comprehensive approach to environmental management. The stated purpose of the RMA as contained in section 5 of the Act is to promote the sustainable management of natural and physical resources. Resource users and developers are responsible for avoiding, remedying or mitigating the environmental effects of their activities. This principle is central to the resource consent process.

Other important legislation includes the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012.

EIA PROCESS AND OTHER PERMITS

District Councils deal with the use of the land and may or may not require land use consents to allow an applicant to undertake a prospecting, exploration or mining activity. This depends on the rules in the relevant District Plan. Generally, minimum impact prospecting work on rural land does not require a land use consent. The same applies to exploration, however, mining often requires a land use consent. Certainly, uses relating to water, the use of beds of rivers and lakes, and the discharge of contaminants to land, air or water may require a resource consent from the relevant Regional Council depending on the criteria set out in the Regional Plan. Consents will be necessary for water permits, water discharge permits, air discharge permits, coastal permits and land use consents for disturbance to the surface of the land.

With respect to mine development, one must produce the equivalent of an EIA. The relevant plan is called an Assessment of Environmental Effects (AEE). Under the RMA, an EIA is required as part of a resource consent application. Section 88 of the Act specifies that the AEE must include "such detail as corresponds with the scale and significance of the effects that the activity may have on the environment". While there is no duty to consult any person when making a resource consent application (Sections 36A and Schedule 4), proof of consultation is almost certain required by local councils when they decide whether or not to publicly notify the consent application under Section 93.

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