Chatham Rock Phosphate has been granted a 20-year mining permit to extract phosphate nodules from an 820 square kilometre area of the Chatham Rise, the first key step in its approvals to strip the sea floor of the fertiliser chemical.
The permit is the first granted under the amended Crown Minerals Act which came into effect in May. The proposal to mine phosphate off the ocean floor near the Chatham Islands would be a world-first, and could produce an industry that replaces imported Moroccan phosphate, widely used in agriculture as a fertiliser, with locally produced material and create a new export market.
Shares of Chatham Rock jumped 18 per cent to 33 cents when they resumed trading after being halted for the announcement.
The company still needs a marine consent from the Environmental Protection Authority under new law governing New Zealand's 200 nautical mile exclusive economic zone.
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While the Ministry of Business, Innovation and Employment's New Zealand Petroleum and Minerals branch approved the mining permit based on the company's proposed the work programme, technical and financial capability, and understanding of the geological resource the EPA must consider a wider range of factors, including the likely environmental and economic impacts.
Chatham Rock managing director Chris Castle he will apply for the marine consent early next year.
"We feel confident we can satisfy those concerns and demonstrate the environmental impacts of our operations will be minor and localised," Castle said. "We've also thought carefully about mitigation and monitoring and are continuing to talk to anyone with an interest in the project."
The project had the potential to add $900 million to the economy and generate $250 million a year in exports and import substitution, he said.