NZX Announcement: Media Release - Chatham Rock Phosphate issues draft conditions

Media Release

12 November 2014

Chatham Rock Phosphate issues draft conditions

Chatham Rock Phosphate Limited (CRP) has provided an updated set of draft conditions to the Environmental Protection Authority Marine Consent hearing to comprehensively address the issues discussed by experts and raised by submitters.

The conditions cover mining operations, the mine plan and environmental management - including of marine mammals and seabirds.  The conditions include extensive monitoring and mitigation proposals and a detailed adaptive management approach, which involves staged mining and addresses unexpected adverse impacts. 

It also provides details of a proposed environmental reference group, an environmental compensation trust and Chatham Islands Trust.  Proposed protections include mining exclusion areas, a remediation bond, a dispute resolution process and a review process.  The conditions also spell out environmental thresholds and monitoring conditions.

The full draft conditions have been supplied to submitters and the decision-making committee and can be found on the CRP application pages of the EPA website.

Managing director Chris Castle said the conditions have been developed following the helpful expert conferencing that enabled experts representing CRP and submitters to agree on a wide range of scientific information. The most significant areas where experts have agreed include:

·       The area is not important for commercial fishing and CRP activities will have either no or negligible impacts on fish stocks

·       There are no concerns about radiological effects

·       Environmental impacts are almost entirely confined to the immediate mining area .

CRP's annual mining footprint of 30 km2 compares with an annual seabed fish bottom trawling footprint of 50,000 km2 including 3,000 km2 of previously untouched seabed damaged by fishing activities every year.

The phosphates will be recovered from a total area of 450 km2 over the 15 years of the proposed mine life, less than half of 1% of the Chatham Rise.

“Our 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.” Mr Castle said the project will create a new industry with strong ties to agriculture, New Zealand’s most important export earner.

“Our product will enhance New Zealand’s security of supply and reduce our exposure to politically risky sources of a critical input to our biggest industry.”

The conditions will be presented in the final evidence heard by the EPA decision-making committee on Monday 17 November.  This will be followed by submitters and (on 19 November) CRP counsel James Winchester presenting closing statements.

The committee will provide a decision on the marine consent application by 18 December.

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

NZX Announcement: Update: Thank you - and we need just a little bit more please

5 November 2014 

Thank you - and we need just a little bit more please….

There’s been a great response to our latest tranche of capital-raising. Habitual investors (including existing shareholders) contributed more than $900,000 towards the rights issue shortfall, and we’ve had continuing interest since we closed off the latest allotment last week. We ‘ve reached this position (effectively in sight of the finish line in a marathon) with your continuing support. Thank you for your ongoing faith in the project.

We still need another $1 million to complete this Marine Consent application process.  This a bit more than we were initially expecting, partly because we’ve done some additional research to ensure we’ve covered all of the bases. Budgeted costs charged by the EPA have also increased.

The offer, for habitual investors, is priced at the same level as the recent rights issue, i.e. 12 cents with an entitlement to a 68.8 cent option and compares attractively with recent share price trading at up to 23c. (Note these options have been extended for a year). The price rose in response to profit guidance that reinforced the robust financial basis of the project and then fell again - normal market behaviour given share placements being offered at a market discount.

We will seek to raise only the funds we really need to achieve the Marine Consent.   This opportunity is not without risk but in my view has significantly greater upside than downside.  So if you’re up for another contribution, I’d love to hear from you.

Marine Consent hearings on track

We’re now nearing the end of the Marine Consent hearings. This week we’ve heard from the fishing industry, we’re completing the presentation of some scientific evidence that could not be scheduled earlier and next week we’re heading to the Chathams for a rescheduled visit after the first planned hearing was postponed due to a death on the island.

In the week starting 17 November our final two witnesses, from environmental consultants Golders, will summarise our environmental impact assessment and present our proposed consent conditions.  Then there will be closing statements with legal counsel James Winchester from Simpson Grierson presenting on 19 November.  If you have the opportunity to attend this session at the RA Vance Stand at Wellington’s Basin Reserve it will be a comprehensive overview of why this project is so compelling.

The hearings are panning out pretty much as we expected. We were pleased the decision-making committee agreed to our request for the supplementary staff report not to include any recommendations. The report authors appeared at the hearing but offered very little in terms of additional information or insight and we continue to believe the report is an expensive waste of resources and inappropriate to the process.

Our scientific experts have met to caucus with those hired by the opposition and are mostly reaching a consensus. This includes common ground on all the major elements of our proposal including the plume, sedimentation deposition, effect on fishing, uranium (non) effects, etc. As a result, it appears that these perceived issues are unlikely to have a significant influence on whether or not the DMC will grant consent.

Thanks to shareholders Mac Beggs and Paul Martin who appeared at the hearings, putting a lot of effort into well-researched professional presentations. 

Remember every word of what happens is on the EPA website.  Each day’s proceedings appear the day after.  Check out: http://www.epa.govt.nz/EEZ/chatham_rock_phosphate/Pages/default.aspx

Profit guide enthuses investors

Issuing guidance on our expected business plan and financials had a (at least temporary) positive effect on our share price. We issued the guidance because of confusion among some witnesses at the hearings regarding our financials.  It was a good opportunity to clarify to the decision-making committee and financial markets the significant economic benefits our project offers for New Zealand and the attractive profitability.  

Environmental benefits - As we’ve commented before, we’re also proud our project offers new environmental benefits for New Zealand’s farming industry, in terms of using a low cadmium, low carbon footprint, low run off, potentially organic product.  This project will create a new industry with strong ties to agriculture, our most important export earner.  Our product will enhance New Zealand’s security of supply and reduce our exposure to politically risky sources of a critical input to this country’s biggest industry.

Over the past few years our marketing vice president Najib Moutia has undertaken extensive market research and sales development in international and local rock phosphate markets. The factors potential buyers consider in assessing the attractiveness of the different phosphate rock available on international markets include the level of phosphorus and other minerals and ease of handling. CRP rock phosphate can be used to make either medium or high grade superphosphate, direct application fertiliser, or even dicalcic phosphate.

We’ve identified buyers in eight Australasian and Asian countries and expect to export 1.15 million tonnes annually and for 350,000 tonnes to be used within New Zealand, with two thirds of the total used to make single super phosphate and one third sold for direct application use. 

Big potential - Rock sold for direct application use sells at a substantial premium in some markets so we’ll focus on maximising direct application use. We believe the market for direct application rock phosphate in New Zealand is 100,000 to 200,000 tonnes a year, but  with potential for significant expansion, given:

·       this product has not been readily available from a local source

·       there is a desire or likely requirement to reduce leaching run-off effects, and

·       our product is the ideal for high country use and for maintenance in dairy farm application. 

We are undertaking pot trials to validate the work done in earlier years proving the strong performance of our product on New Zealand soils, and evaluating the market potential for RPR on home garden use in New Zealand and internationally.

Price confusion - There’s also been some confusion at the hearing about the use of the World Bank quoted spot price, which is simply a reference point and often bears little resemblance to the contract prices with individual buyers that are the industry norm. 

We expect an average revenue per tonne of USD 125 (NZD 158) yielding annual project revenues of USD 187.5 million (NZD 237 million). These revenues are net of export freight costs.

One of the key financial strengths of the project is the cost of transport of imported rock phosphate to New Zealand is about equivalent to Chatham’s current estimated mining costs, which gives the project a significant financial advantage.

After deducting expected contract dredging costs, incoming port charges, environmental monitoring costs, community contributions, biodiversity offset costs and business overheads, the annual profit before royalties is estimated to be USD 54 million (NZD 68 million).  From this Chatham estimates paying USD 5.4 million (NZD 6.8 m) in royalties and USD 13.6 million (NZD 17.2m) in income tax.

Benefits for NZ - There are also significant economic and employment benefits for New Zealand including:

·       Port charges to the port where the operations and product stockpiles will be based of several million dollars a year

·       Port support services relating to product handling

·       Overseas phosphate export vessels provisioning support services ( 30+ ships)

·       Survey vessel services

·       Portside engineering services

·       Jobs on the mining vessel

·       Other jobs relating to environmental monitoring services

·       Maritime training opportunities

·       Ongoing scientific research and data gathering

·       Mining vessel provisioning and bunkering

·       Jobs arising from increasing farming outputs where CRP rock is used on marginal land.

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

NZX Announcement: Allotment of Shares and Options

31 October 2014

Allotment of Shares and Options

The ongoing support of Chatham Rock Phosphate Limited (NZX: CRP) shareholders is underscored by the strong response to the company’s latest capital raising, Managing Director Chris Castle said today.

“I am delighted to advise our investors have committed a further $908,000 to our funds.  This brings the total money raised over the past four years to $31.4 million.  That reinforces the belief our investors continue to demonstrate in the financial merits of this project and its economic and environmental benefits for New Zealand.”

CRP today allotted new ordinary shares (Shares) and new listed CRPOB options (Options) from the Shortfall under its Rights Offer dated Monday 8 September 2014. The Shares and Options have been allotted at the same price as under the Rights Offer, being $0.12 per Share (with one Option granted for every new Share allotted).

“We’re now within sight of the finish line in our four-year marathon of research and planning for this project.  This last tranche of funding is being used to finance the Marine Consent hearing process that is now in its last few weeks of consideration.”

Mr Castle said this tranche complements the funds raised in the recent rights issue. The offer compares attractively with recent share price trading at up to 23c, which reflected a positive response to profit guidance issued earlier this month that reinforced the robust financial basis of the project. The ensuring price weakness over recent days reflected normal market behaviour when these share placements were being negotiated at a discount to market.

“We don’t need to raise much more capital and we will seek to raise only the funds we really need to achieve the Marine Consent.”  Mr Castle said investors’ latest show of confidence demonstrated they assessed the project’s risk has significantly greater upside than downside.  
Full particulars of the allotments are set out below.

Chris Castle

Chief Executive

Email: chris@crpl.co.nz

NZX Announcement: Extension of exercise period for CRPOB listed options

30 October 2014

The Board of Chatham Rock Phosphate Limited (NZX: CRP) has resolved to extend the exercise period of its listed $0.688 CRPOB options (Options) in accordance with their terms of issue.

The exercise period for the Options commences 15 business days after CRP has been issued a marine consent from the Environmental Protection Authority over its Chatham rise project (Marine Consent). Prior to the Board resolving to extend the exercise period, the exercise period ended on the date that is 3 months after the Marine Consent has been granted.

The extension is for an additional nine month period meaning that the exercise period will now end on the date that is 12 months following the date the Marine Consent is granted.

The Marine Consent is the critical regulatory hurdle that CRP needs to able to commence its proposed mining operations on the Chatham Rise. The Marine Consent hearing process is ongoing and a decision is expected at the end of this year. CRP believes the hearing has been proceeding well and remains optimistic as to its outcome.

CRP’s share price significantly depreciated over recent weeks principally due to a market misconception created by the EPA staff report.  More recent volatility is due to a combination of positive announcements and ongoing capital raising initiatives.

The Board is of the view that the extension of the Exercise Period is in the best interests of CRP in order to give a longer period for the share price to recover and stabilise if the Marine Consent is granted. This will give option holders a greater opportunity to see the share price exceed the exercise price of the options with a view to promoting the exercise of the Options and providing the Company additional working capital.

For these reasons the Board has exercised its discretion under the terms of issue of the options to extend the exercise period by nine months.

For further information, please contact:

Chris Castle

Chief Executive

Email: chris@crpl.co.nz

NZX Announcement: Media Release - CRP issues business plan guidance

23 October 2014 

Introduction

For commercial reasons Chatham Rock Phosphate has refrained from publishing detailed information of both its marketing strategy and other sensitive aspects of its business plan including prospective future profitability. However, in the context of the Environmental Protection Authority hearing of our Marine Consent application it is now necessary to do so in view of:

1.      Uninformed comment from opponents and their economists about the project’s economic viability;

2.      The increasing need to fully inform the decision-making committee (DMC) of the business logic that underlies this initiative and the flow-on economic benefits accruing to New Zealand.

As these matters are arising through the hearing process it is necessary to ensure that there is a fully and properly informed market for Chatham Rock Phosphate’s shares.

 Marketing Strategy

In recent years Chatham’s marketing vice president Najib Moutia has undertaken extensive market research and sales development in international and local rock phosphate markets. This research has involved contact on a regular basis with fertiliser manufacturers in many countries.

Relevant factors affecting the demand for CRP rock phosphate include a range of product characteristics including but not limited to:

·       the level of contained phosphorus

·       the normal levels of iron and aluminium

·       calcium carbonate levels

·       very low cadmium levels

·       ease of handling, including suitable angle of repose and low dust levels

·       and the opportunity to certify the rock as organic.

Due to these product characteristics CRP rock phosphate can be used to make either medium or high grade superphosphate, direct application fertiliser, or even dicalcic phosphate.

The dialogue with potential buyers has led to the development of sales projections by product use and by country for eight countries. The location of target countries is partially governed by freight costs and hence they are mainly in Australasia and Asia-Pacific. Sales or supply agreements have not been entered into however the high degree of interest received has given CRP confidence that such agreements can be secured following the project being fully permitted.

In each case product specific sales projections and expected selling prices have been developed based on intra-country market needs.

In summary approximately 1.15 million tonnes are expected to be exported annually and 350,000 tonnes used within New Zealand. Of this two thirds of the total are expected to be used to make single super phosphate and one third will be sold for direct application use, in six countries. Notably, rock sold for direct application use sells at a substantial premium in some markets so the product mix will be focussed towards maximising direct application use.

We believe the market for direct application rock phosphate in New Zealand is 100,000 to 200,000 tonnes a year with potential for significant expansion, given

·       this product has not been readily available from a local source

·       there is a desire or likely requirement to reduce leaching run-off effects, and

·       the ideal characteristics of our product for high country use and for maintenance in dairy farm application. 

We have commissioned updated pot trials to validate the work done in earlier years proving the strong performance of our product on New Zealand soils.  We are also evaluating the market potential for RPR on home garden use in New Zealand and internationally.

Indicative Project Economics & Cost Structures

CRP proposes to use one vessel to mine 30km² of seabed per annum, consisting of about three 2km wide by 5km long mining blocks. It is expected that the mining cycle will consist of approximately one day’s travel to the mining block, four to five  days mining, one day transit to port and three days unloading. Allowance is made within this cycle to accommodate weather delays and equipment servicing. This mining plan is intended to satisfy an annual production target of 1.5 million tonnes of phosphate.

Based on the  projected uses above and taking into account currently prevailing contract prices (not merely the World Bank-quoted spot price, which is simply a reference point) applicable to our product range we expect an average revenue per tonne of USD 125 (NZD 158) yielding annual project revenues of USD 187.5 million (NZD 237 million). These revenues are net of export freight costs.

After deducting expected contract dredging costs, incoming port charges, environmental monitoring costs, community contributions, biodiversity offset costs and business overheads, the annual profit before royalties is presently estimated to be USD 54 million (NZD 68 million). 

From this estimated profit Chatham is presently estimated to annually pay USD 5.4 million (NZD 6.8 m) in royalties and USD 13.6 million (NZD 17.2m) in income tax.

One of the key financial strengths of the project is the fact that the cost of transport of imported rock phosphate to New Zealand is about equivalent to Chatham’s current estimated mining costs, which gives the project a significant financial advantage.

CRP commissioned RSC Consulting Ltd (“RSC”) to undertake an independent Mineral Resource estimation study on its project earlier this year and prepare a report to comply with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2012 Edition (“Jorc Report”). The JORC Report considered that the project area contains a total of 80 million m³ of phosphate at an average grade of 290 kg/m³, classified as an Inferred Mineral Resource at a cut-off grade of 100 kg/m³ for a total contained 23.4 million tonnes of phosphorites.

This Inferred Mineral Resource is consistent with an expected project life of 15 years. Chatham Rock Phosphate will, based on our existing assumptions, earn tax paid profits of USD 525 million (NZD 663 million), pay royalties of USD 81 million (NZD 102 million), and pay income tax of USD  204 million (NZD 258 million) during this period. 

Other Economic Benefits

CRP will pay incoming port charges to the port where the operations and product stockpiles will be based. These are not yet quantified but will be (at the least) several million dollars a year. 

Further, a number of local employment opportunities will be associated with this project, including:

1.      Port support services relating to product handling

2.      Overseas phosphate export vessels provisioning support services ( 30+ ships)

3.      Survey vessel services

4.      Portside engineering services

5.      Jobs on the mining vessel

6.      Other jobs relating to environmental monitoring services

7.      Maritime training opportunities

8.      Ongoing scientific research and data gathering

9.      Mining vessel provisioning and bunkering

10.  Jobs arising from increasing farming outputs where CRP rock is used on marginal land

Conclusion

In summary, Chatham’s project financials offer significant economic benefits for New Zealand and the potential for attractive profitability for investors.   In addition it offers new environmental benefits for New Zealand’s farming industry, in terms of using a low cadmium, low carbon footprint, low run off, potentially organic product.  This project will create a new industry with strong ties to agriculture, our most important export earner.

Chatham Rock Phosphate product will enhance New Zealand’s security of supply, reducing our exposure to politically risky sources of a critical input to this country’s biggest industry.

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

Warning - Forward Looking Statements

This release contains forward looking statements.  Forward-looking statements and information are not historical facts, are made as of the date of this release, and include, but are not limited to, statements regarding discussions of future plans, guidance, projections, objectives, estimates and forecasts and statements as to CRP's expectations with respect to, among other things, mineral properties and the matters described in this release.

These forward looking statements involve numerous risks and uncertainties and actual results may vary. Important factors that may cause actual results to vary include without limitation, the timing and receipt of certain approvals, changes in commodity prices, changes in interest and currency exchange rates, risks inherent in exploration results, timing and success, inaccurate geological and metallurgical assumptions (including with respect to the size, grade and recoverability of mineral reserves and resources), changes in development or mining plans due to changes in logistical, technical or other factors, unanticipated operational difficulties (including failure of plant, equipment or processes to operate in accordance with specifications, cost escalation, unavailability of materials, equipment and third party contractors, delays in the receipt of government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters), political risk, social unrest, and changes in general economic conditions or conditions in the financial markets.

NZX Announcement: Media Release - CRP says second staff report has no bearing on final decision

22 October 2014 

Chatham Rock Phosphate is pleased the second staff report, released by the Environmental Protection Authority today, contains no conclusions or recommendations, managing director Chris Castle said today.

“At our request the decision-making committee (DMC) agreed and directed that the staff report should contain no recommendations or conclusions.

“Following its release we still think the supplementary report has little relevance to the proceedings and still contend it should not have been prepared, because it only looks at information up to the start of the hearing and also ignores the very valuable work completed by expert conferencing. Even more critically, it does not consider evidence at the hearing.

“The DMC ruled the supplementary report should be prepared but not take account of developments during the hearing itself.  More importantly, the DMC said, given the scope for potentially significant developments to occur over the course of the hearing, it would be of questionable value for the supplementary report to include an overall conclusion or recommendation on the merits of the consent application. 

“We note this is in marked contrast to the first report which reached totally premature conclusions on the basis of information which would inevitably be, and has been, substantially supplemented through various steps of the hearing process. 

“We argued a recommendation in the supplementary report could create a premature and misleading impression about the likely outcome of the hearing.  This is precisely what happened with the first report where shareholders, prospective investors and other observers, many of them overseas, incorrectly concluded the EPA had already reached a decision. The first report halved the market value of the company and effectively cost CRP shareholders more than $15 million ”

The updated staff report contains a spreadsheet summary and analysis of the information up to the start of the hearing and expert witness conference reports.

“We are pleased the DMC agreed it would be unfair and contrary to the principles of natural justice that unknown report authors who have not and will not attend the hearing will reach conclusions without having heard the evidence.” 

Mr Castle said in contrast, the DMC will consider:

·       the information provided in the application and environmental impact assessment (470 pages and more than 30 scientific reports)

·       responses provided to 62 separate requests for information, including the preparation of additional research reports

·       the results of 14 separate rounds of expert conferencing covering everything from economics and ecosystem effects to fishing and mammals

·       the expert evidence heard over 25 days including answers to questions asked by the committee and counsel.

CRP notes there will be the opportunity to question the authors of the second staff report during the hearing process.

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

Chatham updates on EPA hearings

Update

6 October 2014

Hearings into third week

Our hearing travels to the Chatham Islands this week, with sessions held on Wednesday and Thursday.  A number of local individuals and groups are making representations both in support of, and in opposition to our proposal.

While we understand people have concerns, we believe our application addresses those, especially through suggested conditions, which include comprehensive monitoring.

You can follow every word of what happens in the hearings on the EPA website.  Proceedings of each day appear the day after. 

Check out:

http://www.epa.govt.nz/EEZ/chatham_rock_phosphate/Pages/default.aspx

Seven days down ……

Public hearings got underway on 25 September at the RA Vance stand at the Basin Reserve in Wellington, and continued each day last week.

We’ve had visits from a regular stream of people with an interest in the project and there’s been media coverage on TV, radio, newspapers and other electronic media. 

We’ve chosen to ignore the snapshot comments posted on social media from some submitter supporters randomly present at the hearings.  They are made completely out of context, are inaccurate and misleading.

Fundraising Opportunity

Following the recent capital raisings, including the last two successful shareholder rights issues, with a strong show of support from our 700 New Zealand shareholders, we now offer other investors a chance to participate at share prices last seen in 2010.

The shortfall from the most recent issue is being offered to qualified habitual investors in a limited, short term opportunity to participate.  The shares are offered at NZD 0.12 per share (or the approximate foreign currency equivalent). In addition, for each share issued, one CRPOB $0.688 option is offered.

We continue to believe these share price levels represent exceptional value and that after the Marine Consent grant the share price should be much higher.  If you are interested please immediately contact me.

Boskalis evidence very impressive

Three representatives from Boskalis made the long trip from Holland for a three-day visit to watch some of the relevant evidence first hand and to give their own expert evidence.

Sander Steenbrink, development dredging manager, talked about the close links and commitments between the two companies.  In a report by Business Desk he is quoted as saying Boskalis has a strong track record in managing these types of projects.  He considered measures to mitigate the impact of mining on the environment by leaving areas to aid re-colonisation of the marine ecosystem met the firm's corporate social responsibility goal of 'building with nature'.  He didn't think there were any technical concerns that would limit monitoring the project.

Boskalis senior engineer Jamie Lescinski said the modelling used to determine the impact of the plume of discharged sediment from the mining operation took a conservative approach. The plume is expected to average 10m above the seabed during a mining cycle, but she said it could go as high as 20m without any substantial variation.

Lescinski said lessons and samples from the initial mining stage would be used to model the potential impacts in expanded areas if the project proceeds to those later stages.

"I would advise that, before mining in a new area, a condition should be imposed that seabed samples need to be collected and analysed and that information should be used in the model as inputs to rerun operational predictions before moving into new mining," she said.

"My expectation is it would be similar, but that's an expectation. I would want to see that sediment first and see if there are any similarities to the area that's already known."

Gerard van Raalte, who has been overseeing the project for Boskalis, said project would draw on existing techniques and equipment, but would also need its own bespoke solutions to deal with unique issues.

"What we have developed so far is complex, but in fact it's a combination of state of the art techniques that are applied in a new context," van Raalte said. "We are convinced we have chosen the best available technology with the best environmental practices to mitigate as much as possible what we can do in the design stage."

He said the project will need extensive monitoring in the early stages to ensure it would be able to cope with any unexpected problems that arise.

Conferencing almost there

In the lead up to and the first days of the hearing there has been intensive conferencing by experts from CRP and submitters.  This is designed to find out agreed common ground and areas still in dispute. 

Areas covered include:

• impacts on commercial fishing
• fish
• rock lobsters
• sediment modelling
• benthic ecology
• seabirds
• radioactivity
• spatial planning
• economics
• toxicology and water quality
• ecosystems effects.

There are a couple of sessions yet to complete including one on mammals.

It’s heartening to see how effective this process is and how much “noise” it removes from the hearing process – though it doesn’t stop some opposing legal counsel from inferring uncertainty even where it is negligible.

The conferencing is pretty intensive, especially as some of the experts are joining from all parts of the globe and sometimes in the middle of their night!  CRP is very grateful for the high level of professional input.

Chris Castle, Managing Director

chris@crpl.co.nz or +64 21 55 81 85

Boskalis defends track record at Chatham Rock hearings

Thursday 2nd October 2014

Royal Boskalis, one of the world's biggest dredging companies, defended its track record in making the case for a proposed phosphate mining project on the Chatham Rise, and is confident the measures it would take to protect the environment would aid recolonisation of the area by marine life.

The Rotterdam, Netherlands-based company is the proposed partner with NZAX-listed Chatham Rock Phosphate to mine phosphate nodules from the seabed on the Chatham Rise, some 450 kilometres offshore to the east of Christchurch, providing the engineering expertise to undertake the project. While the two companies haven't formally entered into a contract, Boskalis is an investor in and an integral part of Chatham Rock's application to mine the area, and three of the Dutch firm's representatives gave evidence to the five-member decision-making committee hearing submissions on the project in Wellington yesterday.

"It is important to note both CRP and Boskalis have committed to work together on this project," development dredging manager Sander Steenbrink told the committee. "We have come a long way and it would very difficult for another company to come and step into the project and do that work."

If another company was successful in winning the bid to undertake the project, it would have to negotiate the use of Boskalis's intellectual property, which was part of the Chatham Rock application.

Steenbrink said Boskalis has a strong track record around the world in managing these types of projects, and that he considered measures to mitigate the impact of mining on the environment by leaving areas to aid recolonisation of the marine ecosystem met the firm's corporate social responsibility goal of 'building with nature'.

He didn't think there were any technical concerns that would limit monitoring the project, which would be the deepest underwater mining project the firm has undertaken, at 450 metres. Rather, it would come down to issues of cost, Steenbrink said.

Duncan Currie, counsel for environmental lobbies Greenpeace, Kiwis Against Seabed Mining and Deep Sea Conservation Coalition, put several critical reports over Boskalis's environmental record to Steenbrink, which the Dutch executive said either hadn't come to his attention or had since been rectified.

Boskalis senior engineer Jamie Lescinski told the committee the modelling used to determine the impact of the plume of discharged sediment from the mining operation took a conservative approach. The plume is expected to be at an average of 10 metres above the sea bed during a mining cycle, but Lescinski said it could probably go as high as 20 metres without any substantial variation.

The impact of the plume and how it disperses the sediment is a key point of contention in the project. Boskalis plans to blast jets of water into the ocean floor to loosen the seabed and suck up sand for separation and extraction of the phosphate, before dispersing it through a hose. Among concerns is whether clay, referred to as chalk ooze and which typically lies below the proposed layer of sand to be mined, would be sucked up into the suction system, 

CRP wants to initially mine an 820 square kilometre area for five years before widening its activity to a 5,207 sq km area for up to a further 30 years.

Lescinski said lessons and samples from the initial mining stage would be used to model the potential impacts in expanded areas if the project proceeds to those later stages.

"I would advise that, before mining in a new area, a condition should be imposed that seabed samples need to be collected and analysed and that information should be used in the model as inputs to rerun operational predictions before moving into new mining," she said. "My expectation is it would be similar, but that's an expectation. I would want to see that sediment first and see if there are any similarities to the area that's already known."

Gerard van Raalte, who has been overseeing the project for Boskalis, told the hearing the Chatham Rise project would draw on existing techniques and equipment, but would also need its own bespoke solutions to deal with unique issues.

"What we have developed so far is complex, but in fact it's a combination of state of the art techniques that are applied in a new context," van Raalte said. "We are convinced we have chosen the best available technology with the best environmental practices to mitigate as much as possible what we can do in the design stage."

He said the project will need extensive monitoring in the early stages to ensure it would be able to cope with any unexpected problems that arise.

The hearings are continuing.

www.businessdesk.co.nz

In the News: TV3 - Phosphate Mining Ignites Debate

Click image below to be redirected to full news article on TV3.co.nz

NZX Announcement: Media Release - CRP Marine Consent hearing starts today

Media Release

CRP Marine Consent hearing starts today

25 September 2014 

Chatham Rock Phosphate today launched its application to the Environmental Protection Authority for a marine consent to extract rock phosphate nodules from the seabed on the Chatham Rise, 450 km from New Zealand.

CRP, a New Zealand NZAX listed company, has spent four years and nearly $30 million to research its proposals to mine 1.5 million tonnes for use on New Zealand farms and export markets.

Counsel James Winchester, in his opening submissions, said the research has found effects are confined to a small area.  He said the key conclusions from an enormous body of evidence were:

·       The area is not significant for fishing or spawning

·       There is expert consensus the effects on fish and fishing are low

·       Modelling of sediment plume shows the effects will be confined and the main impact on benthic (seabed) organisms will be within the mining blocks.  There will not be material adverse effects on fish, eggs or larvae over a wider area, with suspended solids quickly returning to normal between mining cycles.

·       Risks to marine mammals and seabirds from a single vessel and the mining operation are low and can be appropriately managed.

·       There will be significant and irreversible effects on the benthic environment where mining occurs, but these are unlikely to have flow-on consequences for the food web of the Chatham Rise.  While the impact included permanent effects on stony corals, these are present throughout the Exclusive Economic Zone and CRP is proposing significant mitigation.

CRP’s proposed mitigation includes mining exclusion areas covering one fifth of the marine consent area to include sensitive and important seabed features and benthic communities, and trials to create areas of hard substrate to enable recolonisation of stony corals and other species.

“It is submitted that the greatest impacts and risks to the fishing industry and the fish that they rely on arise from their own unregulated bottom trawling, rather than a very small amount of seabed disturbance in an areas that is not important for fishing or spawning.”

Mr Winchester began his submissions saying phosphate, a natural mineral, is as essential to life as water, oxygen and carbon.  It cannot be manufactured, there is no synthetic substitute and New Zealand has no on-land sources, so all phosphate is imported, much from politically unstable parts of North Africa.

“The availability of a high quality, low cadmium local source of rock phosphate on the Chatham Rise makes this a strategic resource of national significance.”

He said the proposed dredging process is one of the most environmentally benign forms of mining practised anywhere in the world.  No overburden removal is required and no chemicals are introduced to the environment.  Damage is minimal and restricted almost entirely to the mined area. 

In contrast the environmental costs and potential damage of using an alternative supply of phosphate involves removing vast quantities of overburden, containing much higher levels of cadmium and - shipped from the other side of the world - leaving a large carbon footprint.

Mr Winchester said CRP is proposing a suite of conditions to deal with risks and effects including an adaptive management approach.

Chris Castle, Managing Director +64 21 55 81 85 or

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