Expansion of gold mining at Waihi is inherently unsustainable, will increase emissions, and will provide only moderate employment benefits relative to winding down the operation and remediating the site, Land Information Minister Eugenie Sage says.
OceanaGold says its hoped-for future expansion at Waihi – Project Quattro – could extend employment for the site's 360 workers and contractors by nine years.
But the minister says that would be at odds with the government's goal to support "thriving and sustainable" regions and the country's transition to a carbon-neutral economy.
Part of that strategy is to encourage energy-efficient industries over energy-intensive activities like mining, she says in the just-released decision of the government to block OceanaGold's purchase of farmland for an additional tailings dam.
"While the proposed investment will likely create short-term financial benefits in terms of jobs and servicing for the local economy, the use of the land to establish a third permanent tailings reservoir to extend the life of the Waihi mine and allow the establishment of new Project Quattro is inconsistent with sustainable economic interests," she says.
"It is difficult for an economic benefit to be truly substantial if it is not sustainable. The nature of the proposed investment in non-renewable resource extraction is inherently unsustainable."
The government last week rejected OceanaGold's bid to buy 178 hectares of land south-east of Waihi for the new tailings facility. That was despite hearing arguments that the cumulative export return from extending mining would be roughly equivalent to 1,600 years of dairy production from the land.
For the first time since the Overseas Investment Act took effect in 2005, ministers were split on an application. In that event, the legislation requires the application be declined.
Associate Finance Minister David Clark had believed the sale was likely to deliver a substantial benefit.
Yesterday, Hauraki mayor John Tregidga accused Sage of bias and of exaggerating the environmental impact of modern mining practices relative to the farming she wanted to protect.
He said it was "astounding" that a government that committed $3 billion to support regional economies was prepared to allow "one ill-informed" decision put at risk hundreds of jobs.
Chris Baker, chief executive of mining lobby group Straterra, said Sage's decision showed she could not be relied on to weigh science and evidence in areas where she has a history of activism.
Today's decision has raised questions how two ministers (Sage and Clark) can apply the same legislative investment test and come to such diametrically different views.
The government's November 2017 rule change for rural land sales required that any sales to overseas investors provided benefits that were genuinely "substantial and identifiable."
Such investment should also provide economic, environmental, social and cultural benefits to their regional communities.
But of the 11 criteria the two ministers applied – Sage also added climate policy – they agreed on only the five most obvious ones.
Whereas Clark rated the benefits of jobs, export receipts, and Oceana's previous investments as high, Sage rated them moderate to low.
Sage considered more mining at Waihi as a negative for climate policy and argued that the economic impact was also negative when weighed against the risk of a tailings dam failure, the land that would be permanently taken out of use, and the impact of the current mining operation on Waihi residents.
Whereas Sage believed the mine had done little to lift the district's $23,000 median income, Clark noted the average Waihi mine salary of $120,000 and gave the economic benefit a high rating.
OceanaGold has two tailings storage facilities about three kilometres south-east of the firm's Martha Pit in the middle of Waihi.
The first was built in 1981 and stopped taking tailings in 2005. Since 2007, fresh water from that pond has discharged into the Ohinemuri River under a consent from the Waikato Regional Council.
The most recent dam was built in 1999 and is sufficient for the mine to continue operating through to 2030.
Kit Wilson, the company's senior community advisor at Waihi, said the third tailings facility would "future-proof" the business and enable the company to continue exploring for other gold resources in the region.
Gold has been mined at Waihi for more than 100 years. The company, which also operates the Macrae's Mine near Dunedin, produced 83,500 ounces of gold at Waihi last year and is aiming for 60-70,000 this year.
In December, an independent planning committee granted the company consent to extend mining at Waihi by about 12 years.
One of Sage's more surprising issues was her lack of confidence in the Resource Management Act.
She said the planned tailings impoundment would destroy about 5 hectares of a significant natural area, and that Oceana had provided no certainty that the area would be protected or the impacts offset.
The land is also close to the Ruahorihori Stream and the Ohinemuri River, which flow to the Firth of Thames – a wetland of international importance under the Ramsar Convention.
"There is no certainty around protection being provided through the Resource Management Act process," Sage said.
Clark observed that the application had included a special condition requiring OceanaGold to accept any conditions imposed through the RMA process requiring it to mitigate the environmental effects from the removal of any of that significant natural area.