The Environmental Protection Authority (EPA) has today rejected an application for a major seabed mining operation proposed off the coast of Canterbury.
A decision-making committee appointed by the EPA to hear Chatham Rock Phosphate Limited's marine consent application concluded the mining would cause "significant and permanent adverse effects" on the benthic (seabed) environment of the Chatham Rise, where the operation was proposed.
As shares of Chatham Rock Phosphate fell 85 per cent, the company's managing director Chris Castle said in a statement to the NZX he was "aghast" at the decision.
But opponents have hailed it as "fantastic news" and a "victory for good science".
The bid was the second time a large seabed mining venture had been proposed in New Zealand - and the second time it had been rejected by the EPA.
Trans Tasman Resources' application to mine iron sands off the North Island's west coast was refused last year, and although the company recently withdrew an appeal of the decision to the High Court, it has indicated it will continue developing the project.
Mr Castle said Chatham Rock Phosphate hadn't decided on its next step, whether to appeal, resubmit, or walk away.
The company proposed to mine at least 30 square kilometres of phosphorite nodules each year from the Chatham Rise, at depths of between 250 and 450m, approximately 450km east of Christchurch.
It involved an annual minimum production target of extracting and landing 1.5 million tonnes of phosphorite nodules.
The EPA's general manager applications and assessment Sarah Gardner said despite the applicant's efforts to research and substantiate its case, the committee was left with a lack of certainty about the receiving environment and the adverse effects of the proposal on the environment and existing interests.
In these circumstances, the committee was required by the legislation to favour caution and environmental protection when making its decision.
Amid the benthic environment were communities dominated by protected stony corals which were potentially unique to the Chatham Rise, and which the committee concluded were rare and vulnerable ecosystems.
Ms Gardner said the committee had considered whether the adaptive management approach proposed by the applicant would enable the proposed mining operation to be undertaken.
"However, the DMC found that the destructive effects of the extraction process, coupled with the potentially significant impact of the deposition of sediment on areas adjacent to the mining blocks and on the wider marine ecosystem, could not be mitigated by any set of conditions or adaptive management regime that might be reasonably imposed."
The company had claimed sourcing rock phosphate locally would significantly improve New Zealand's balance of payments by reducing imports.
But Ms Gardner said the committee concluded that the economic benefit to New Zealand of the proposal would be modest at best.
"After weighing all the material before it, taking into account the matters listed in the relevant legislation and applying the information principles, the DMC has concluded that the application could not be approved either in part or in whole and therefore the application was refused."
The EPA is responsible for regulating the effects of certain restricted activities on the environment and existing interests in the Exclusive Economic Zone and Coastal Shelf under the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012 (EEZ Act).
The application attracted nearly 300 submissions with the committee holding public hearings last year in Wellington, Hamilton and the Chatham Islands.
The company's proposal had also pointed to the potential environmental benefits of a reduced carbon footprint, as all imported rock phosphate was presently shipped from the other side of the world, and a "more environmentally friendly" option of fertiliser that could mean less run-off from farm pastures to waterways.
"If we can't succeed having invested $33 million over seven years, then obviously the Government is not serious about economic development," Mr Castle said.
Declining the marine consent was "a seriously negative signal for New Zealand business. It will make it even harder, if not impossible for companies to attract capital for new projects in New Zealand".
"To say we are bitterly disappointed is an understatement. We are aghast," he said.
"The entire government process, and the EPA in particular, seems afraid to say yes to any project that involves any kind of environmental impact and that is simply not good enough if we are to provide a future for our country's young people."
But environmental groups that had opposed the application alongside Ngai Tahu and fishing industry representatives backed the committee's call.
The group Kiwis Against Seabed Mining described it as "logical, wise, and a victory for good science".
"It's an inappropriate activity, and, just as we saw with the last, failed, seabed mining application, this company hadn't done its scientific homework on many aspects of the environmental impacts, and the EPA rightfully saw the problems with this," spokesman Phil McCabe said.
Environmental Defence Society chairman Gary Taylor said when a decision-making committee was left with a lack of certainty about the adverse effects of a proposal on the environment, it was required to favour caution and environmental protection.
"What the refusal of this application and the earlier one by Trans Tasman Resources demonstrates is a clear need for a planning framework for our exclusive economic zone," he said.
"It is a big ask to expect an applicant for a single project to provide all the baseline information required in the absence of any strategic planning guidance as to what kind of activities are acceptable and where."
Mr Taylor said a system of marine spatial planning, based on good quality science, was needed to resolve potential conflict between potential users of the marine environment.
"In this case, for example, the mining was over a benthic protection area, set aside under different legislation."
He acknowledged the company principals had put an "enormous amount of effort" into the project and their level of consultation with the society had been exemplary.
"We understand that they will be disappointed but this is the right outcome."
The Deep Sea Conservation Coalition's Barry Weeber believed the existing regulatory framework had again been confirmed as robust, and should not be weakened.
Mr Weeber said the area on the Chatham Rise where the mining was proposed was home to many whales and closed to trawling, and the deep seabed held deep sea corals and many other species which would have been "destroyed by phosphate mining, including endemic species, species which are found nowhere else".
Chatham Rock Phosphate has 15 days to lodge any appeals, which can only be made on points of law.
The decision is the third to be made by the EPA on a publicly notified application for a marine consent.
An application by OMV NZ Ltd to continue development drilling at its Maari field on the South Taranaki Bight was granted in December.
Two non-notified marine consents for exploration activities on the South Taranaki Bight have also been granted by the EPA - one to OMV NZ Ltd in August 2014 and the other to Shell Todd Oil Services in September.