Thursday, May 31, 2012

Coromandel Mining Conundrum

The message is loud and clear.   Stark NO MINING signs pop up all along Coromandel's hilly roadsides to warn the Drillers and diggers they are not welcome.  The regions rich mining history is celebrated in the quaint museums and tourist sites but today it's a big NO-NO.  Not in our back yard, thank you. It is clear the descendants of these early miners have totally lost any empathy with the industry of their forefathers.

Before making any more comments I should declare that I invest in Australian mining companies that operate in Asia and Africa. In those regions the vast majority of responsible mining projects are very welcome, bringing roads, royalties, jobs, education and health benefits to local people.  If you don't believe me read the annual reports of the companies involved. You can see how much local workers appreciate the benefits by the enthusiasm in their faces.  As a shareholder, I may benefit too although not in the past year.

But rest easy Coro protestors!  Why?  The political risk is too high in your District.  The mining industry remembers Helen Clark's unilateral decision to ban mining in Coromandel with no compensation to existing Licence holders.  Very few companies, beyond the energy sector, are going to dig holes in your backyard given the political risk, hostile locals and the expensive drawn-out public process needed to get approval even to prospect, let alone mine.  The orebody would need to be worth billions to risk the capital and effort. On the other hand, if such an orebody exists, the rest of NZ may say we cannot afford to leave it in the ground?

Assuming the unfound billions are a myth, where does this leave Coromandel?  Does it pay it's way in NZ Inc? I doubt it.  Not much sign of revenue here.  Farming north of Thames, with a few notable exceptions, looks like it barely earns enough to pay rates.  There are good mussel and oyster farms but that industry is also the subject of protest.  There is logging but the rate of cut suggests that work will soon be over for a few decades until the next plantation crop is ready.  A local sawmill would have generated more sustainable jobs, but that option was protested away.  Tourism? Well yes there is obvious potential but the local industry seems to consist mainly of low key, low profit activities.

The only boom industry evident is building holiday houses for Aucklanders along the sea coast.  It is amazing to see the millions, probably billions, of real estate and pleasure boats, that sit unused apart from a few days per year.  Can NZ really afford this?  But judging by the number of local real estate listings and few sales, its game over since the global financial crisis.  The governments budget announcements over the tax treatment of pleasure assets just nails the coffin shut.

What is poorly recognised is that holiday homes, i.e. urban development, has had far more visual and environmental impact than any potential gold mine.  Simply compare New Chums beach with Whangapoua!  Brings to mind the truism often quoted overseas "that the total land area disturbed by mining in Australia is less than the area covered by concrete car parks in the cities".

I have no answers to Coromandel's conundrum.  NZ will likely just leave the place to struggle along as Auckland's playground. In winter when there are few people about, it's a nice place to step off the planet and chill out along the beautiful coastline.


  1. This is the first time i am reading your post and admire that you posted article which gives users lot of information regarding particular topic thanks for this share.


  2. Spot on!

    Beautiful place, next to no work and only some holiday home building going on.

  3. Spot on!

    Beautiful place, next to no work and only some holiday home building going on.