Update - 18th December 2014

 

Merry Christmas

The Chatham Rock Phosphate board and management team would like to wish all our shareholders and stakeholders a Merry Christmas and Happy New Year.  We’re especially hoping for the latter and that January will bring good news.

 

Decision expected in January

A decision on CRP’s marine consent application should be announced on or before 30 January.

The Decision-making Committee assessing CRP’s application officially closed the hearing last Friday, setting the clock ticking on 20 working days (excluding from 20 December to 10 January) to consider its decision.

The DMC adjourned the hearing on 19 November to consider whether it had sufficient information to formally close the proceeding.  In the intervening time it concluded it didn’t need any further input from the parties, hence the decision to close.

While we’d obviously have liked a decision before Christmas, we’re pleased the DMC is taking its time to consider what is complex and very detailed information. All groups with an interest in seabed mining are waiting for the decision with bated breath. 

 

Trials show Chatham rock highly effective

Earlier this week we announced the results of new glasshouse trials demonstrating the performance of direct application Chatham Rise rock phosphate compares favourably with manufactured fertilisers. We commissioned Lincoln University and AgResearch to undertake trials in a glasshouse over four months to assess the effectiveness on plant productivity of phosphate samples we collected during 2012 voyages.

The trial found our phosphate delivered on average 85% of the productivity of low-sulphur triple superphosphate. The tests used clover grown on five pasture soils from Chatham and the South and North Islands.  The testers used three application rates and took three harvests with plant yield and phosphorus uptake in the clover used to measure performance.

The study achieved comparable results to extensive field trials conducted during the 1980s, which also found Chatham Rise rock phosphate to be an effective pastoral fertiliser. 

We’re planning field trials in the new year in a range of environments and pastoral systems across the country.  They will update and confirm the applicability of the product to modern farming practices, with a focus on New Zealand farming conditions but the results are expected to be applicable to global markets.

News of our trials featured on Radio New Zealand’s midday rural news.  If you want to listen, our item starts about half way through the bulletin:

http://www.radionz.co.nz/national/programmes/ruralnews/audio/20161273/midday-rural-news-for-16-december-2014

 

CRP to receive Callaghan R&D grant

Receipt of a Callaghan Innovation Research and Development (R&D) Growth Grant is a strong vote of confidence in CRP’s innovation. Thanks to our Chief Operating Officer Ray Wood for the extensive work he put into the application.

Callaghan provides grants to increase R&D investment by businesses.  The grants provide 20% public co-funding for qualifying firms’ eligible expenditure, capped at $5 million a year. After two years, businesses can be granted a two-year extension of funding.

We see the grant as an endorsement of CRP’s innovation since 2010 in developing our pioneering marine mining project with its strong ties to agriculture.

Planned field trials will be one of our first research priorities with scientists from AgResearch and Lincoln University to test direct application of CRP’s phosphorite rock to determine optimum application programmes for typical New Zealand pastoral uses, including established hill country grazed pasture and high producing pastures under intensive dairy grazing.

Other research priorities include collecting environmental data from the Chatham Rise to better understand the variability of oceanographic conditions and sea floor habitat and trialing the placement of hard material on the sea floor to encourage re-establishment of sensitive benthic habitats.  We also want to test components of the mining system at 400 m on the Chatham Rise and develop new techniques to monitor the dynamic sediment plume generated by the mining operations.

 

Helping our neighbours

Ray Wood attended the Pacific-Europe Network for Science, Technology and Innovation (PACE-Net Plus) workshop on Reconciling Mining and Sustainable Development in Pacific Countries held in Auckland on 8-9 December. The project is a 3-year programme to encourage bi-regional dialogue between European and Pacific researchers.

The workshop identified priority areas for future research cooperation to address the challenges of reconciling mining industry (both terrestrial and seabed mining) and sustainable development in the Pacific countries. The workshop discussed enhancing environmental considerations in mining, increasing knowledge on environmental and social impacts and corporate social responsibility.

The objectives were to define and update the science, technology and innovation priorities in the area; identify future EU-Pacific cooperation, make recommendations to policy makers, and identify innovation niches. The group also identified joint initiatives such as calls for research proposals and exchange of knowledge.

There was repeated emphasis on the importance of community engagement by mining companies. The workshop concluded with several proposals for projects that could benefit the South Pacific such as an institute to provide advice to Pacific Island countries on mining-related issues, and developing underwater robots to make exploration and development more efficient and affordable for these countries.

CRP was chosen as a case study for the deep-sea mining topic. We are providing a copy of all the documents, evidence and testimony from the marine consent hearings to the island states.

 

Funding Round Successfully Completed

Completing a final tranche of $820,000 in new capital takes us fully through the marine consent application process.  We don’t plan to seek any additional capital until a decision on our application has been made.

We’re thankful to shareholders for their continued strong belief in and support of the project over the past few years and sincerely hope the next cash we raise will be at significantly higher prices.

Meanwhile it’s gratifying to see the share price recover in recent weeks from the 12c level at which we’ve been issuing shares, to around 19-20c since the capital raising pressure ended.

 

 

Financial Result

The interim report issued in late November provided shareholders with a more detailed summary of our operations.  The trading result for the six months to September 30 was a loss of $1,870,507 (2013: loss of $675,788), reflecting the costs associated with higher levels of activity – especially the marine consent process.  For the full report go to our website:

http://www.rockphosphate.co.nz/news/2014/12/8/chatham-rock-interim-report-for-the-six-months-to-30-september-2014

 

Updated presentation

We’ve updated our investor presentation and it’s on the front page of the website. For a useful overview check out:

http://static.squarespace.com/static/51d24098e4b0d519d0c065f5/t/54869d25e4b003a45498dfd0/1418108197469/CRP+8+December14.pdf

Chris Castle, Managing Director chris@crpl.co.nz or +64 21 55 81 85

NZX Announcement: Media Release - Chatham Rock Phosphate marine consent decision due by 30 January

12 December 2014

A decision on Chatham Rock Phosphate’s marine consent application is expected to be announced on or before 30 January 2015.

The Decision-making Committee hearing CRP’s application today officially closed the hearing.

Once closed the DMC has 20 working days to consider its decision which would mean the decision would be given on or before 30 January. When adjourned the DMC said a decision would be released as soon as practicable after it has been made.

The DMC adjourned the hearing on the application by CRP for a marine consent on 19 November to consider whether it had sufficient information to formally close the hearing.  In the intervening time it has concluded that it does not need any further input from the parties hence the decision to close the hearing today.

“We are delighted we have some certainty regarding the time frames,” managing director Chris Castle said.  “This has been a long, complex and costly process.  We feel confident we have presented a compelling case for consent. We have done the science and engineering work to show we can carefully manage the environmental impacts.

“I know the industry, both here and internationally, and representatives of the wider economy are watching this application with interest as it is the first of its kind in the world.” 

The 26 days of hearings were held in Wellington, Hamilton and Chatham over a seven week period from September to November.  CRP submitted its application in May following four years of research and preparation.

CRP received its mining permit from New Zealand Petroleum and Minerals in December last year.  The permit grant is conditional on a marine consent under the Exclusive Economic Zone  and Continental Shelf legislation.

Contact Chris Castle on +64 21 55 81 85 or chris@crpl.co.nz

NZX Announcement: Media Release - Chatham Rock Phosphate to receive Callaghan R&D grant

Media Release

10 December 2014

Chatham Rock Phosphate to receive Callaghan R&D grant

Chatham Rock Phosphate (CRP) is delighted to announce it will receive a Callaghan Innovation Research and Development (R&D) Growth Grant.

Callaghan provides R&D Growth Grants to increase R&D investment in businesses.  These on-demand, three-year grants provide 20 per cent public co-funding for qualifying firms’ eligible R&D expenditure, capped at $5m per annum. After two years of funding, businesses can be granted a two-year extension of funding.

“We are honoured our project has been recognised.  We consider the grant to be a strong endorsement of the innovation CRP has demonstrated since 2010 in developing a pioneering project in the marine mining industry with strong ties to New Zealand’s most important export earner, agriculture,” managing director Chris Castle said.

Chatham Rise-based rock phosphate will offer the opportunity for New Zealand’s farming industry to derive new environmental benefits from the use of a low cadmium, low carbon footprint, low run-off organic product.

“The grant will enable CRP to increase its expenditure in innovative parts of our business, supporting and growing New Zealand’s scientific and engineering capability.

“Once production starts, CRP expects to be a $200 million dollar a year business with significant on-going investment in R&D.”

Over the past four years CRP has raised more than $33 million, much of which has been invested in scientific research to prepare the information required for a marine consent and mining permit.  CRP is currently in the final stages of its marine consent process, awaiting a decision on its application.  It was granted a mining permit in late 2013.

One of the first priorities of CRP’s research plan is to demonstrate the agronomic effectiveness of direct application of CRP’s phosphorite rock and to develop a strategy for growing the domestic and international market for this phosphorus source. Scientists from AgResearch and Lincoln University will supervise field trials of direct application of CRP’s phosphorite rock to determine optimum application programmes for typical New Zealand pastoral uses, including established hill country grazed pasture and high producing pastures under intensive dairy grazing.

Similar trials in the 1980s demonstrated the potential value of the resource as a direct application fertiliser, and these will be updated to demonstrate the applicability of the product to modern farming practices. The emphasis will be on New Zealand farming conditions but the results are expected to be applicable to global markets.

Benefits of direct application of CRP’s product include reduced cadmium build-up in the soil, lower phosphate runoff in waterways, and reduced need for fertiliser application in the medium to long term.

Other research priorities include:

Collecting environmental data from the Chatham Rise to better understand the natural spatial and temporal variability of oceanographic conditions and sea floor habitats

Triialling the placement of hard material on the sea floor to encourage re-establishment of sensitive benthic habitats

Testing components of the mining system at 400 m on the Chatham Rise

Developing novel techniques to monitor the dynamic sediment plume generated by the mining operations.

CRP has already started discussions with New Zealand and international research organisations about some of these projects.

Contact Chris Castle on +64 21 55 81 85 or chris@crpl.co.nz

NZX Announcement: Funding Round Successfully Completed

28 November 2014

Funding Round Successfully Completed

 Chatham Rock Phosphate is pleased to advise that it has raised approximately $820,000 in new capital. The allotment consists of new ordinary shares at $0.12 per share with one new listed CRPOB option allotted with each new share.

This completes the company’s funding round at $0.12 per share and funds the company through the decision point for its Marine Consent application.  It is therefore not intended to seek any additional capital until a decision on the application has been made. As previously indicated to the market the company remains optimistic that a decision on the application will be released in the next few weeks.

The Board  thanks shareholders for their strong belief in and support of the project.

Full particulars of the allotments are set out below.

Chris Castle

Chief Executive

Email: chris@crpl.co.nz

 

NZX Announcement: Results for announcement to the market for the 6 months to 30 September 2014

Financial Result

Your directors submit the unaudited financial statements of Chatham Rock Phosphate Limited (CRP) for the six months to 30 September 2014. The trading result for the period was a loss of $1,870,507 (2013: loss of $675,788). An analysis of the result is provided in the table below:

The increased deficit for the six months to 30 September 2014 is mainly due to costs related to the AIM listing process that commenced during the period.

Operations Highlights

It’s been an incredibly demanding, satisfying and yet at times frustrating six months but as we approach the end of 2014, we can look back on having achieved some significant milestones. Most satisfying and humbling is the continued tangible financial support shareholders have shown for this project.  Since August, shareholders have contributed more than $6 million towards our goal of a marine consent, bringing the total raised over the past four years to more than $33 million.

Naturally, we all hope we will get a great return on our investment as we advance this project towards mining; but the feedback from shareholders (both in New Zealand and overseas) is they also want this project to succeed for New Zealand’s agricultural and environmental benefit, and for it to be the first successful seabed mining project in the world.

We are all pioneers in a new industry – and your project team’s focus is to ensure we will continue to be well prepared, well-resourced and expertly managed.  The reason we receive such support from both shareholders and our many other well-wishers is we have a strong group of leading experts in their respective fields, who have designed such a powerful proposition that they have made the job of sourcing the necessary funding comparatively easy.

The hearing

We have now (we hope) concluded the 26 days of hearings over seven weeks.  The Decision-Making Committee will formally close the hearing once they are confident they have all the necessary information to make a decision.  Chair Neil Walter indicated that the assessment of completeness for the decision would largely focus on our comprehensive draft conditions.  

We’re still hoping for a pre-Christmas decision. Whatever the time frame, the latest tranche of money raised – thank you for your enthusiastic support - gives us enough to keep the wheels turning in the New Year if we need to wait a bit longer.

The Committee will consider four decision options – from a full grant for what we applied, to a decline.  We told the committee there was ample evidence for full approval to mine for up to 35 years across the marine consent area. We said the option of trial mining is not financially feasible because of how much money we have invested already and the further capital involved in building a suitable vessel.

Asked whether an option to grant consent for the smaller, already granted mining permit area for 15 years was workable, we said it was not our preference, because of future consenting costs and process. We noted that this option would involve legal and practical issues such as undertaking monitoring in a wider area, and providing for mining exclusion zones.

We’ve provided shareholders with regular updates on the hearing process, including our views about its shortcomings – particularly relating to the staff reports.  Overall we think the process works, though it is expensive, time consuming and has imperfections.

We recognise we are only the second seabed mining application using the new Exclusive Economic Zone law, so the process is still being bedded in.  For example, we think the Crown played a useful role in our hearing process with its submission, but were disappointed – given what it calls its growth agenda (including exports) - it did not advance the wider economic impacts of the project, and simply focused on conservation issues.

In summary, our key messages are:

  • our proposal involves very limited environmental risks in a small area;
  • it has economic, strategic and environmental benefits;
  • it will not harm any other industry or resource user in New Zealand's economy;
  • the few material environmental risks can be managed by conditions;
  • our proposed impacts are minuscule compared with those of fishing, which should be taken into account in considering our application;
  • our models are based on significant data, which can and will be further validated; and
  • Benthic Protection Areas should be replaced by more refined protected areas.

In summary, the project offers new environmental benefits for New Zealand’s farming industry, by using a low cadmium, low carbon footprint, low run-off, potentially organic product. It will create a new industry with strong ties to agriculture - New Zealand’s most important export earner. CRP’s product will enhance security of supply and reduce exposure to politically risky sources of a critical input to New Zealand’s biggest industry.

Financing

While the primary focus of the period under review has been the marine consent process, the companion to that has been continuing to finance the costs.  Consenting is an expensive process – the company’s shareholders pay for all of the relevant costs of the Environmental Protection Authority, as well as our own.  In addition, your money has been invested in a range of scientific reports, witness costs and of course the cost of the legal guidance we have received.

Our best success in raising capital over the past year has come from ongoing strong support from our Kiwi shareholders, plus a small group of overseas investors – mainly from the United States and more recently from Britain and Australia – complementing the earlier investments from corporate sources such as our technical partner Boskalis and from Odyssey Marine.

We’ve had little success from our two attempts so far at a broader public offering.  Perhaps it’s arguably too early in the process – certainly most institutional investors tell us to “come back when you are permitted”, even though the share price will likely be much higher when the project is “de-risked”.  However, local financial markets seem to have far more appetite for raising substantial capital for early stage “tech” projects, than a proposition such as ours.

Broader financial markets are obviously much less informed than our loyal shareholders.  So they are more unnerved when there is bad news.  Our efforts for an Initial Public Offering and listing on the London AIM market were severely damaged by the negative decision regarding Trans Tasman Resources’ application for a marine consent.

Our decision to go to the London market was based on considerable enthusiasm for our project earlier in the year.  But as most experienced investors know, markets run hot and cold – and it doesn’t take much sometimes to change sentiment.

Thus, we ultimately made the decision our AIM IPO would not fly in 2014, though we remain determined to list our shares – given their unique appeal – on an international market in 2015.

The future

While the hearing process and financing have been our main areas of focus this year, we are also working on a range of other areas. We are talking with Boskalis to advance our contract discussions and Najib Moutia continues to undertake sales development work through his amazing array of international industry contacts.   We’re also conducting pot trials of our product to validate the positive findings of the extensive testing undertaken in earlier years, among other research work. 

We remain very confident we have done what it takes to get environmental approval for our project.  It’s been a bit like a golf tournament: we’ve done the preparation, we’ve played every shot with care and precision and the ball has generally landed where we wanted it.  Ultimately we – including all our loyal shareholders – have done everything we can to win the prize.

We can’t determine the outcome – but we definitely deserve to win. 

Chris Castle                                                                                                      Robert Goodden

Managing Director                                                                                           Chairman

 27 November 2014

 To download this announcement as a PDF - click here

NZX Announcement: November Update

Update

21 November 2014

Hearings finished – hopefully

After 26 days over seven weeks and three locations, the team had a welcome debrief over a relaxed lunch and a glass of wine.

James Winchester and Hamish Harwood from Simpson Grierson took nearly four hours to present the compelling arguments of our closing statement on Wednesday to the Decision-Making Committee with a public gallery of shareholders, and industry and government participants. 

At the end of our submission DMC chair Neil Walter said the committee would now consider whether it has sufficient information to formally close the hearing. It then has 20 working days to consider its decision, currently scheduled to be made around 18 December.

Mr Walter said the committee adjourned rather than closed the hearing so they could decide if there were any outstanding issues – particularly related to our updated proposed conditions for consent. He said the committee will decide on the closing in the next couple of weeks and will then advise the date of the decision.

(Note these are detailed conditions CRP has drafted, based on feedback from expert witnesses.  If you have noted some late submissions on the EPA website on the topic, don’t read too much in to them – they are simply opinions from members of the public.)

We, along with other submitters, were also asked to nominate which of four options the DMC should choose, being three levels of grant or a decline.  We argued there was ample evidence to approve the full consent sought by CRP, being mining for up to 35 years across the marine consent area.

Asked whether an option to grant consent for the smaller mining permit area for 15 years was workable, we said it was not our preference (because of future consenting costs and process - but it would be obviously better than trial mining or a decline).  We noted the option would involve legal and practical issues such as undertaking monitoring in a wider area, and providing for mining exclusion zones.

Which means?

We remain hopeful a decision can be delivered before Christmas but indicated in our submission if the committee needs more time we’re ok with that.

We remain very confident we will get a positive decision – the focus seems very much on how we can get across the line, rather than why we should not.

Time delays add cost though…so you can see where I’m going.  The process has meant CRP commissioning further reports and late witnesses to ensure we presented the strongest case possible.  We think it was money well spent but it was additional to our budgets. 

In addition the EPA’s costs are higher than their budgets.  We’re scrutinising them line-by-line but it looks like we’ll still be in for costs higher than planned.

So we’re still looking for more cash. If you would like to support the cause further, please talk to me this week as this is a limited opportunity at a discount to current market.

Closing submission

Our submission focused on the project’s merits but also made some observations about: 

·       Serious problems relating to the staff reports

·       Possible improvements to the Crown’s involvement in our hearing process; its focus was limited to conservation issues rather than considering broader economic impacts or those related to farming or fishing. 

·       Submitters either misrepresenting or failing to understand the key issues and not approaching the hearing in a constructive manner.

Our closing submission said our proposal involves very limited environmental risks in a small area. Put simply it’s a good project worthy of consent, with economic, strategic and environmental benefits and is an opportunity for New Zealand that shouldn’t be missed.

Even the opposing experts agreed that it will not harm any other industry or resource user in New Zealand's economy.  There are effects on the environment (primarily benthic habitats and organisms), but not of a scale significant in the Chatham Rise or EEZ,  nor of such significance in terms of the intrinsic conservation value. The few material risks are all manageable under the framework of conditions CRP proposes and risks should be the focus of the DMC's consideration.

Fishing and Existing Interests

The areas mined will be small compared to the marine consent area - just 0.6% year or 8.6% over 15 years or 20% over 35 years, with proposed mining exclusion areas covering 19% of the marine consent area, almost equivalent to the maximum area that could be mined.

That’s miniscule on an EEZ-wide scale. In contrast fishing activities cause significant environmental effects on the Chatham Rise through dragging heavy trawling equipment over extensive areas, damaging sensitive benthic organisms (including corals) and generating sediment plumes in areas where commercial fish species accumulate. The annual average trawl footprint over recent fishing years on the Chatham Rise has been 17,791 km2. 

The effects of fishing activities must be considered when assessing the nature, scale, and significance of the effects of CRP’s proposal. Despite widespread destruction, damage and removal of fauna such as sponges and corals, there are no reported significant ecosystem effects from this habitat loss – fishermen catch their quota from the same places year after year.

Cultural Interests

We also said the EEZ Act does not, except in limited circumstances, provide for a cultural interest to be an existing interest. The location of the proposal must also be relevant. 

What is the basis for an existing interest from a cultural perspective being claimed for an area of seabed 450km from the mainland and 250km from the Chatham Islands?  What is the lawfully established existing activity that takes place there or would otherwise be affected by the proposal if it is not fishing?

Because social and cultural factors are absent from the EEZ Act definition of “sustainable management” the focus of the DMC’s decision must be on economic and environmental considerations. This view is supported

By legal advice provided last week by the DMC’s own lawyer.

Sufficient Information

The models used in evidence are based on significant data which we’ve always accepted would need some final validation.  Given the significant input data there should be no difficulty for the DMC concluding the information provided met the EEZ Act’s definition of best available information. 

Regarding Benthic Protection Areas, we said there would be benefits if a more refined series of protected areas was created.  CRP’s proposed non-mining areas and its best endeavours to achieve full legal protection for them could be an important first step and an initiative that CRP would take great pride in pioneering.  Given the vacuum of national ocean management policy that is all that can realistically be done at this time.

EPA Staff Reports

We continue to be concerned about the staff reports regarding issues of bias, fairness, natural justice, lack of expertise, timeliness, relevance, and the level of assistance they provide to the DMC.

The EPA staff’s answers to questions when under cross examination also raised many concerns including their failures to have read or understood relevant documents, their ability  to assess CRP's effects and issues in context or even to appropriately interpret the Act and to arrive at a correct legal view.

They couldn’t explain how and why the organisation had made decisions or reached a view as to how the Act should be applied and had either misunderstood or were ignorant of the expert evidence presented and which was not now in dispute.

They did not understand even basic scientific issues and were unwilling to advise the DMC about possible conditions or how it should approach various evidential issues.  Instead they adopted an unduly negative and conservative assessment,  falling back on "uncertainty" without putting it into any context.

For all those reasons we don’t think the DMC should place weight on any staff findings and we certainly don’t think we should be expected to pay for work which has added no value to the process and provided no material assistance to the DMC.

Further, staff reports are not required under the EEZ Act at all and are merely a practice the EPA staff have

adopted for some reason best known to themselves. However, it’s obvious that staff reports are at best a complication and at worst a hindrance to the marine consent process.

Project Summary

To sum up, the project offers new environmental benefits for New Zealand’s farming industry, by using a low cadmium, low carbon footprint, low run-off, potentially organic product. It will create a new industry with strong ties to agriculture, New Zealand’s most important export earner. CRP’s product will enhance security of supply and reduce exposure to politically risky sources of a critical input to New Zealand’s biggest industry.

Last Thought

If you need another reason why this project is important consider the comment from Rabobank board member Berry Martin to the F20 (the farmers global meeting held to coincide with the G20 in Australia).

“We need to double world food production by 2050 but with half the resources.  We are already using more than one planet’s resources so we need to be more efficient.”

If you want to read the whole submission go to:

http://www.epa.govt.nz/EEZ/chatham_rock_phosphate/hearing/daily_transcripts_proceedings/Pages/Hearing-Day-26.aspx

 

 

Chris Castle, Managing Director

chris@crpl.co.nz or +64 21 55 81 85

NZX Announcement: Media Release - CRP closing statement presents strong case for marine consent grant

Media Release

CRP closing statement presents strong case for marine consent grant

19 November 2014 

Chatham Rock Phosphate’s proposal for seabed mining on the Chatham Rise involves very limited environmental risks in a small area, counsel James Winchester told the Environmental Protection Authority today.

In his closing submission he said this is a good project that has demonstrated it is worthy of consent under the EEZ Act's framework. 

 “It will have significant benefits for New Zealand, in terms of economic benefits, and tangible strategic and environmental benefits.  This is an opportunity for New Zealand that should not be missed.

“The evidence is it will do no harm to any other industry or resource user in New Zealand's economy.  There are effects on the environment (primarily benthic habitats and organisms), but they are not of a scale that is significant in the context of the Chatham Rise or EEZ,  nor of such significance in terms of the intrinsic conservation value of those resources that they warrant consent being declined.

“The decision-making committee (DMC) has ample evidence to conclude the full consent sought by CRP, being mining for up to 35 years across the marine consent area, meets the sustainable management purpose of the EEZ Act.”

The few material risks are all manageable under the framework of conditions CRP proposes and risks should be the focus of the DMC's consideration, rather than uncertainty about outcomes. If there is uncertainty, but low or no risk, then appropriate conditions could deal with any small residual risks to ensure environmental protection.

Mr Winchester said submitters have asserted uncertainty without acknowledging the context or suggesting how a particular issue could be managed or addressed.  There were a number of instances where submitters’ witnesses could not fault the scientific research and modelling undertaken by CRP's experts and agreed with their conclusions, but still fell back on "uncertainty" to justify a negative or unduly conservative opinion.

“Lack of detail should not be confused with lack of certainty.  The nature and variability of the habitats and ecosystems are understood at a scale appropriate for the likely impacts from mining.  There has been sufficient information for experts to express an opinion as to the likely effects, which has from CRP's perspective mostly involved conservative or worst-case assessments.”

Fishing and Existing Interests

Mr Winchester said the areas mined will be small compared to the marine consent area, the Benthic Protection Area and the Chatham Rise, and areas affected by commercial fishing.  The mined areas of the application area are 0.6% per year, 8.6% over 15 years, or 20% over 35 years.  The proposed mining exclusion areas cover 19% of the marine consent area, an area almost equivalent to the maximum that could be mined.

“The activity and its effect is miniscule on an EEZ-wide scale. The direct effects are limited, in terms of scale and extent, and severity.” 

In contrast fishing activities cause significant environmental effects on the Chatham Rise through dragging heavy trawling equipment over very extensive areas, damaging sensitive benthic organisms (including corals) and generating sediment plumes in areas where commercial fish species accumulate. 

“Areas of seabed and all manner of marine life are disturbed and impacted by bottom trawling, often multiple times in a year, and year after year.  The annual average trawl footprint over recent fishing years on the Chatham Rise has been 17,791 km2.  This does not account for multiple fishing events in the same area which fishing witnesses acknowledge that they increasingly seek to achieve.

“Existing activities and their effects provide the wider context that must be considered when assessing the nature, scale, and significance of the effects of CRP's proposal.

“Even though there has been broad scale bottom trawling on the Chatham Rise and corresponding widespread destruction, damage and removal of upright habitat-providing fauna such as sponges and corals, there appear to be no observed significant ecosystem effects resulting from this habitat loss – the fisherman appear to catch their quota from the same places year after year."

Cultural Interests

The EEZ Act does not provide for a cultural interest to be an existing interest.  While CRP takes no issue with parties asserting such an interest, the interest is not recognised by the EEZ Act. 

“The location of the proposal must also be relevant.  What is the basis for an existing interest from a cultural perspective being claimed for an area of seabed 450km from the mainland and 250km from the Chatham Islands?  What is the lawfully established existing activity that takes place there or would otherwise be affected by the proposal if it is not fishing?

“It is important to understand what the existing interest is, so the effects can be assessed.  If for example an existing interest arose from a commercial fishing quota and a cultural interest was also claimed as a consequence, then are the interests (one being an existing interest, the other not) in fact different or are they one and the same?  If the interests are different, then in what way?”

He also noted because social and cultural factors were absent from the EEZ Act definition of "sustainable management" also meant the focus of the DMC’s decision must be on economic and environmental considerations. CRP's evidence has demonstrated the opportunity to achieve improved biodiversity outcomes while also enabling a valuable and strategic mineral resource to be won.

“Social or cultural considerations may still be relevant, but they deserve less weight except to the extent that they may be captured in defined terms such as "existing interest".

Sufficient Information

He said all the models used in evidence are based on significant amounts of data. It has always been accepted the outputs of the model would need to be validated and there was a degree of uncertainty with the outputs.  That should not, however, be confused with an absence of input data underlying the model. There should be no difficulty for the DMC in concluding the information provided met the EEZ Act's definition of "best available information". 

Mr Winchester said the DMC could either ask CRP to provide additional information or issue an interim decision indicating an intention to grant consent, but request further work be done on conditions to address any areas of remaining concern or uncertainty.  CRP would consent to an extension of time to enable further information to be provided, further work to be done on conditions of consent (perhaps through additional conferencing of relevant experts), and if necessary for the hearing to be reconvened in either instance.

Benthic Protection Areas

Regarding Benthic Protection Areas, he said there would be benefits if a better and more refined series of protected areas was created.  CRP's proposed non-mining areas and its best endeavours to achieve full legal protection for them could be an important first step for that process. 

“CRP's initiative should not be devalued simply because it involves a volunteered "best endeavours" approach.  Given the vacuum of national ocean management policy that is all that can realistically be done at this time.

EPA Staff Reports

Mr Winchester said the value and relevance of reports prepared by EPA staff has been a bone of contention to CRP before and throughout the course of the hearing.  It has expressed its views and concerns about the staff reports, in terms of the way they raise issues of bias, fairness, natural justice, lack of expertise, timeliness, relevance, and the level of assistance they provide to the DMC.

“CRP does not resile from any of the previously expressed concerns.  If anything, the presentation of the second EPA staff report has heightened its concerns and has only served to demonstrate a staff report has no useful role and has added no value to this process.  While CRP appreciated the opportunity to test the authors of the second report, the results were alarming and reflect poorly on the organisation.

The EPA staff's answers to questions revealed a number of major concerns:

·       an unduly negative and conservative assessment, in which the authors fell back on "uncertainty" without putting it into any context;

·       a failure to have read or understood documents or material that they sought to draw to the DMC's attention as relevant to CRP's proposal;

·       a failure to assess CRP's effects and issues in context;

·       the failure of the organisation to seek legal advice as to the appropriate interpretation of an important and contentious definition in the EEZ Act;

·       an inability to explain how and why the organisation had made decisions or reached a view as to how the Act should be administered or applied;

·       a misunderstanding or ignorance of the expert evidence presented and not in dispute;

·       a failure of EPA staff to seek advice about the relevance of a separate piece of legislation administered by the EPA itself, with the consequence a legally incorrect view was presented to the DMC;

·       fundamentally incorrect understandings of basic scientific issues;

·       an almost total failure and/or unwillingness to advise the DMC about possible conditions or how it should approach various evidential issues in its decision; and

·       unwillingness to express a view on expert evidence (presumably because they did not understand it), instead repeatedly deferring answers to a range of questions to "the experts".

Regrettably, this exercise served to demonstrate that staff reports are inherently unreliable in this process and it would be an error for the DMC to rely on a finding in a staff report inconsistent with expert evidence, or place weight on any findings in it.

“Finally, it is submitted is unfair for applicants to have to bear the costs of these exercises.  If other EPA staff reports have been prepared in a similar manner and with a similarly poor level of care and rigour, it can only adversely affect the credibility of the marine consent process.”

Project Summary

The project offers new environmental benefits for New Zealand’s farming industry, by using a low cadmium, low carbon footprint, low run-off, potentially organic product. It will create a new industry with strong ties to agriculture, New Zealand’s most important export earner. CRP’s product will enhance security of supply and reduce exposure to politically risky sources of a critical input to New Zealand’s biggest industry.

Chris Castle, Managing Director +64 21 55 81 85 or chris@crpl.co.nz