Q&A for the general stakeholder
Who is Chatham Rock Phosphate?
Chatham Rock Phosphate (CRP) is a company, listed on the New Zealand Alternative Exchange, which has a mining permit to develop a major rock phosphate resource on the seabed of the Chatham Rise approximately 450 kilometres east of Banks Peninsula, New Zealand.
The permit area of 820 sq km is 450 km east of Christchurch, at 400 m water depths on the Chatham Rise and in New Zealand territory. Extraction of the rock phosphate nodules from the seabed would provide a locally produced alternative to the 1 million tonnes of this material annually used in New Zealand and primarily imported from Morocco, thereby reducing our carbon footprint as well as high transport and foreign exchange costs.
Rock phosphate is an essential ingredient of manufactured fertiliser and alternatively can be applied directly to pasture with less environmental damage than super-phosphate from run-off. Extensive exploration in the 1960s, 70s and 80s identified a potential 100-year supply for the New Zealand market. Recent substantial increases in the market value of rock phosphate and advances in offshore extraction technology mean it is now viable to harvest this resource.
How did CRP find the resource?
We were aware of the earlier exploration work undertaken in the region from 1952 to 1981, which revealed the existence of phosphate deposits. The primary aim of that exploration work was to replace the resources extracted on the island of Nauru and used in New Zealand. At that stage alternative sources could be imported for less than extraction costs from the Chatham Rise.
Rock phosphate prices and the freight prices from Morocco have risen significantly in recent years, as has Middle East political instability. We believe there is now strong economic potential to develop the resource.
CRP applied for a prospecting licence in 2007, which was granted in February 2010. We applied for a mining permit in September 2012, which was granted in December 2013. Our marine consent application was declined in 2014 and we are anticipating reapplying in 2017.
When and how will CRP determine the resource size?
About NZ$75 million (in present day dollars) has now been spent on exploration and data gathering. Work done to date mapping the area has revealed a resource of at least 35 million tonnes already.
What is the water depth?
Between 350 and 450 metres.
How big is the area proposed to be mined?
Our permit area covers 820 sq km, our main area of focus is about 450 sq km.
What do these deposits look like?
They are nodules ranging from 1 mm to 150 mm in size located in 1 m of sandy silt on the seafloor.
How will CRP extract the nodules?
Our technical partner, Boskalis is developing an extraction technique, using existing technologies, to separate the nodules from sandy silt while minimising any plume or other environmental effect.
How and where will CRP process the rock?
Some separation processing will occur on board the ship collecting the nodules. It is most likely we will sell directly to fertiliser companies, in New Zealand and other countries, which will undertake the processing.
When will CRP start operations?
Our intention is to begin commercial operations in 2020. Commencement of commercial operations will be conditional on factors such as obtaining a marine consent.
How will CRP pay for its development costs?
Chatham Rock Phosphate is talking with international and local investors to raise funds to finance development work for the project.
To whom will CRP sell the rock phosphate?
We aim to sell to the New Zealand market, which currently imports most of its phosphate needs from Morocco and export markets, and a range of countries in the Asia-Pacific area. We believe we can supply:
• phosphate for refinement into fertilisers in our target markets at a cheaper price than overseas suppliers; and
• phosphate for direct application as a slow release fertiliser.
What is the value of the resource?
That will depend on future fertiliser prices – but, based on current data, we believe there is at least a 20-year supply for the New Zealand market.
Why aren’t the big mining companies doing this?
We identified the project early and secured exploration rights. We expect larger companies will increase their interest in the project as we move towards commencing commercial operations.
What permits/consents does CRP need to get and who will make the decisions?
To commence commercial operations, we need, and have been granted, a mining permit from New Zealand Petroleum and Minerals, part of the Ministry of Business, Innovation and Employment.
We will also require a marine consent (covering environmental issues) from the Environmental Protection Authority under the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act.
Is this the only under-sea rock phosphate deposit?
A number of other marine deposits exist around the world, but none are near New Zealand.
Are we running out of rock phosphate?
New Zealand has no other rock phosphate deposits of any significance. We currently import most our requirements. While some new deposits are being developed internationally, having a local supply is a major advantage for New Zealand – in terms of cost, security of supply, import substitution and a lower carbon footprint for example.