Licence lets miner get close to Kahurangi

FMG Pacific's licence borders the Kahurangi National Park where the Heaphy Track is located. Photo / Wairarapa Times-Age

Australian mining giant Fortescue Metals Group has been granted a prospecting permit for a huge area of the upper South Island bordering one of the best known national parks.

FMG Pacific, a subsidiary of the Perth company, has been given the green light to search for 23 minerals but is most interested in iron ore and coal.

The 3568sq km permit area is next to the Kahurangi National Park where the Heaphy Track is. The permit is the latest of 14 picked up by the company throughout the length of New Zealand, including an area off the Northland coast.

Prospecting in New Zealand was the first overseas foray for Fortescue, a $13.5 billion company which specialises in shipping iron ore to China from its mine at Pilbara in the north of Western Australia.

A company spokesman said initial work would be "desktop prospecting" - analysis of historic data and 3D modelling.

"We're in the very preliminary stages of this - it's not as though we'll be mining there in the next 12 months."

While the company's main experience was in bulk commodities it was interested in any economically viable minerals.

"Any discoveries that add value to the company would be of considerable interest."

The spokesman said Fortescue had experience of mining next to national parks in Australia and of "managing its environmental obligations".

Under the terms of the permit, FMG has two years to complete its preliminary work, including seismic reflection data.

The West Coast Commercial Goldminers Association last year expressed some reservations about FMG's entry into the area but yesterday said its members had established a good working relationship with the company. Association executive director John Wood said some smaller alluvial miners had come to agreements with FMG to surrender small pockets of its permit area to allow small-scale gold mining.

Forest and Bird Society spokesman Kevin Hackwell said his organisation was concerned about prospects of any large-scale mining no matter where but particularly in or near national parks. He said any mining of coal or iron ore would be likely to involve large-scale above-ground projects which had an immediate impact on the environment and left a potentially toxic legacy.

But a mining industry group has welcomed the Australian company.

Straterra chief executive Richard Michael said Fortescue's growing interest in New Zealand was a vote of confidence in the mining sector here.

"The Government has done a lot of work in promoting New Zealand overseas. It's got to be welcomed as a sign this is becoming a prospector-friendly environment."

Fortescue, formed six years ago, calls itself the "new force in iron ore".

It is trying to nail down an $8 billion deal with bankers in China to fund ambitious expansion plans but that could result in Chinese banks holding the biggest stake in the company.

In August, when iron ore negotiations between the big producers and China were at a standstill amid strained diplomatic relations, Fortescue broke ranks and agreed to sell all of its second-half production to that country's biggest steelmaker at a 35 per cent discount to last year's prices.