Sea of Trouble - New Zealand Herald Article

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The rough seas of the southern Pacific Ocean are set to be the focus of resource consent debate as a mining company's bid to dredge the sea floor comes up against the fishing industry and environmentalists. Andrew Stone reports

Chris Castle and partner Linda Sanders are part of the team heading up Chatham Rock Phosphate.

Alfred Preece has crossed the heaving seas that separate New Zealand and the Chatham Islands three times.

"It's a wild piece of water," says the farmer and Chathams' mayor. "You need to be on your guard out there."

"Out there" is the Chatham Rise, fast becoming the aquatic battleground of the country's next big resource conflict - pitting a small, ambitious mining company against the fishing industry, which on this occasion has the environment lobby on its side.

The project generating strident invective as big as the roaring 40s swells that roll through the stretch of southern Pacific Ocean involves plans by miner Chatham Rock Phosphate to hoover up the top 30cm of sea floor and pump it 400m up to a big ship where the marine silt will be sifted for nodules of rock phosphate before the sediment is pumped back to the seabed.

The miner has its eyes on 450sq km of the Chatham Rise, a flat-topped ridge that runs 700km beneath the sea from Canterbury to the Chathams. Warm ocean currents from the tropics meet cold sub-Antarctic waters above the ridge, making the area one of New Zealand's most productive fishing grounds, as well as a key element in the Chathams economy.

The process of extracting phosphate lumps from the sea floor is far from straightforward. Besides the technical challenges it faces, Chatham Rock, which has ploughed millions into the project, still needs two vital consents before its partners in the venture can start work.

It is striking formidable resistance in New Zealand and wariness on the Chathams, where Mayor Preece says the islands' dependence on the sea has made the community apprehensive about new technology in their maritime backyard.

The latest critic to weigh in against the scheme was Green Party MP Gareth Hughes, who this week argued that the law covering the deep-sea riches was inconsistent.

"I think it makes a mockery of our marine protections to allow literally vacuuming up the seabed in a marine protected area," Hughes said.

The MP was referring to the status of the Rise as a Bethnic Protection Area, which makes it off-limits to bottom dredging but not, under existing law, to seabed mining.

Chatham Rock managing director Chris Castle replied in an open letter: "We're astonished you have formed such a negative opinion about our project given the compelling potential environmental and economic benefits it offers and its minimal environmental impacts."

In a nutshell, Castle's remarks identified where this conflict is likely to be settled - the environmental battlefront.

Castle, an accountant who cut his teeth in the hard-nosed corporate world of Brierley Investments, insists his company wouldn't contemplate the new undersea frontier if the work caused "more than very minor environmental impacts".

He says 85 per cent of the material it wants to lift from the Chatham Rise would be placed back from where it came. "Modelling indicates the material will not be widely dispersed and the sediment that doesn't immediately settle will rapidly dilute to insignificant levels."

He says more than 30 expert reports commissioned by Chatham Rock for a draft environmental impact assessment had not identified any long-term impacts on fish habitats - a key claim because of the fisheries interests.

Castle insists that any impacts would be confined to the areas mined, and be "short-term, reversible and of low environmental risk".

Responds George Clement of the Deepwater Group, a fisheries industry lobby: "We just don't know."

Clement calls the project "potentially catastrophic" for the marine environment and fears that sediment plumes carried on sea floor currents will drift over long distances, smothering corals and sponges that act as nurseries for valuable fish species. "We need to be reassured that this isn't so," he says, and uses the term "strip mining" to describe the scheme.

Argues Clement: "Our seafood is here forever, long after the phosphate has gone."

Chatham Rock and the Deepwater Group also have exchanged barbs over their technologies. Castle, the mining advocate, says his project has to jump through the hoops to get a mining licence and a marine consent, the underwater equivalent of a resource consent.

"These cost millions of dollars, require years of research, consultation and official process and involve full public scrutiny."

Bottom trawling, he argues, needs no consents and each year disturbs or destroys creatures more than 50,000 sq km of New Zealand's seabed. He believes the fishing industry is making a rod for its own back by reminding those observing the controversy just how destructive of the sea floor its methods can be.

Clement uses his own analogy to compare seabed mining and bottom trawling. "It's like [comparing] a bulldozer in a national park removing all life including topsoil down to half a metre with a farmer running over his paddock with a roller. "

He calls the Chatham Rise "our CBD" and says he could imagine the uproar if a miner wanted an open-cast dig across the Auckland isthmus.

Responds Castle: "We're not losing any sleep over the nonsense coming out of the Deepwater Group ... they regard it as their sandpit and don't want us there at all. They've just decided they don't want us on their patch."

Phosphate nodules formed by a complex interplay of ancient erosion, ocean chemistry and currents have lain undisturbed on the Chatham Rise for millions of years. Discovered in the 1950s, the deposits caused flutters of excitement 30 years ago when the Government and some big corporates took a close look at exploiting the resource. Costs made the work prohibitive then, but a shift in phosphate prices and new mining technology has put the nodules within tantalising reach.

Three years ago Castle, managing director of Chatham Rock, secured an exploration licence covering 4726sq km of the Chatham Rise. The licence - issued on a first come, first served basis - remains the company's most valuable asset, though Castle says the knowledge it has built up about the sea floor resource and the means to extract it is valuable intellectual property.

Castle is chuffed his company - he calls it a "tinpot" set-up from Golden Bay - is still afloat when swags of miners have gone to the wall. He runs the show from an office in Wellington, where he and his partner, Linda Sanders, spend the working week before flying back to their home at Onekaka, a tiny settlement near Takaka that in the 1920s supported an iron ore industry. Sanders, who writes an investment column for the Listener, chairs Chatham Rock's board and is charge of corporate affairs. Its team includes a geologist, scientist and an environmental consultant.

Castle has had the mining bug for years, ever since he worked in the minerals arm of corporate raider Brierley. He created Charter Corp, which collapsed in 1988, and went on to set up mining investor Widespread Portfolios, now called Aorere.

Financing the Chatham project had been tough, recalled Castle, with capital markets going into a tailspin after the global financial crisis. A breakthrough came last year when Subsea Investments, an American private equity firm, took a stake in the company, before Dutch multinational Royal Boskalis got on board. Odyssey Marine, an American firm specialising in recovering shipwrecks with submersible robot craft, also has a share in Chatham Rock.

Boskalis took its slice in return for the early mining work. It is also designing the technology to recover the fertiliser and, if the consents come through, would adapt one of its giant vessels for the mid-ocean work.

The big dredging company would need to modify one of its 200m long vessels to harvest the phosphate. Each trip would cover a 12-day cycle. Three days would be set aside to fill its holds 50,000 tonnes of phosphate, with a further nine days to unload the cargo and return to the Chatham Rise.

Company estimates say the resource could be mined for at least 15 years, deliver a $900 million benefit to New Zealand, and offset the need to import phosphate from Morocco.

Given the forbidding environment where the ship must operate, Chatham Rock expects that wild weather could sometimes disrupt work. But the miner still expects to shift 1.5 million tonnes of phosphate each year from the sea floor to an as yet undetermined New Zealand port.

Castle admits the project has taken longer than his company had anticipated. In public statements, Chatham Rock was confident of getting its mining licence this year, with work starting in 2015. That date has been pushed back to 2016. Castle says his company has received a "letter of comfort" from NZ Petroleum and Minerals, the Economic Development Ministry agency which manages the country's oil, gas, mineral and coal resources, that they are dealing with the application as a matter of priority.

He doesn't expect further hiccups. "We expect to get both permits by mid-2014. Then's it's two years to modify the ship. The day we get those consents this company is worth $500 million." Its present market capitalisation is $46 million.

Castle has been active building support for the project. He's taken a team to the Chathams, suggesting the mining could be a "game-changer" for the windswept territory. As part of its pitch, the company has mentioned delivering a load of phosphate, suggested service jobs could be created and raised the possibility of stationing a helicopter for emergencies on the island.

In Wellington, Castle acknowledges he is "frequent visitor" to the Beehive and says he has worked hard to promote his scheme to ministers and officials. There remains some way to travel. No extraction at this depth has been tried before. Furthermore, the matter of marine consents is new bureaucratic territory. Just this week authorities in faraway Namibia put the brakes on an undersea plan to mine phosphate nodules. Reports said an 18-month moratorium had been slapped on offshore mining activities because of environmental uncertainties.

"In the end it's going to come down to the science," asserts Castle. He says the marine consent hearing by the Environmental Protection Authority - the first under a new law - will be persuaded by the facts, not signatures on a petition or lobbying by the fishing industry.

Over on the Chathams - the land at the end of the weather forecast - Mayor Preece says islanders view the plan to mine with a mixture of excitement and concern. "Fishing is our lifeblood. It's been the case since the days of whaling and sealing, so we're concerned that the industry we have now is not damaged in any way."

A farmer, Preece says Chatham Rock's suggestion of a shipment fertiliser went down well, given its prohibitive cost. "If it goes ahead safely we'd be keen to see some of the royalties come our way. We just don't want to get ripped off."

Economic feed

• Each year New Zealand uses about one million tonnes of phosphate, worth $300 million, to encourage pasture growth to drive its land-based economy.

• The fertiliser is made from rock phosphate from Morocco. There is, however, a catch - the north African phosphate contains relatively high levels of cadmium, a toxic element found naturally in soils. Chronic exposure to the heavy metal has been linked to kidney failure and brittle bones.

• Cadmium levels in New Zealand soils and farm animals are monitored by the Ministry for Primary Industries as part of a programme managed by the Cadmium Working Group, which includes state agencies, primary sector groups and the fertiliser industry.

• MPI says evidence to date indicates cadmium in soils poses no immediate concern, though export bans have been imposed on kidneys from sheep and cattle over 30 months. New Zealand fertiliser companies have a voluntary limit of 280 parts per million of cadmium for manufactured superphosphate.

• Chatham Rock Phosphate says tests on samples collected from 11 locations on the Chatham Rise showed an average of 2.2 parts per million. The lowest value was 1.3ppm, with a high of 5.3ppm. It argues the lower level is a factor in its favour in its bid to secure consents to mine the seabed.

 

Stuff NZ article - Fish v phosphate: Corporate sparring in action

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To read the article on stuff.co.nz - click here

Article text:  

OPINION: After much squawking, the Government will allow fishing enthusiasts to take seven snapper, rather than nine, when they head out in the boat.

A new recreational limit of three snapper had been proposed but the white-hot anger of weekend anglers soon saw to that. Now, those same anglers will, unsustainably, deplete snapper stocks.

The little guy has won - and snapper don't vote. No wonder we are worried about our 100% Pure brand.

The commercial fishing industry - blameless, in that it is catching to its regulated snapper limits - copped a lot of nasty flak, nonetheless. That is the trouble with being the fishing industry.

No-one thinks much of you, even when you try your best to protect the environment through the quota management system, still world-leading 30 years on.

Being kicked around unfairly seems to have rubbed off on parts of the fishing industry itself.

The unusually vehement attack by the Deep Water Group, representing deep-sea fishing companies, on Chatham Rock Phosphate's mining plan for the Chatham Rise is a case in point.

Corporate arm-wrestling is more usually resolved out of the public eye by commercial players who respect one another's desire to create wealth and have no desire to destroy value without good cause.

CRP wants to hoover up about 30 square kilometres a year of seabed on the Chatham Rise to remove valuable phosphate nodules embedded in the sediment, returning about 85 per cent of what it scoops up to the sea floor.

It would provide an indigenous source for the $100 million of phosphate imported annually for New Zealand farms from Morocco, creating economic productivity, balance of payments benefits and, potentially, a new export industry.

"We wouldn't consider extracting phosphate nodules from a very limited area of the Chatham Rise if we expected it to cause more than very minor environmental impacts," said CRP's aggrieved chief executive, Chris Castle, in an open letter this week to Green MP Gareth Hughes.

But the fishing industry is dead-scared that depositing spoil back on the ocean floor will create plumes of sediment that could affect the health of the surrounding ocean - a main feeding ground for juvenile hoki (one of the industry's most valuable fisheries).

Castle argues he is targeting a relatively small 30 sq km of seabed every year for 15 years, whereas the fishing industry is bottom-trawling about 119,000 sq km in unprotected areas of the Chatham Rise annually, in perpetuity.

Both sides claim they are misunderstood. The fishing industry says bottom-trawling is really only "bottom-skimming". CRP says its multimillion-dollar investment in understanding local ecology and environmental impacts means the two should be able to co-exist.

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Environmental lobbies that are fans of neither bottom-trawling nor deep sea mining are automatic winners in this corporate tit-for-tat.

While Hughes has lined up with fishing interests against CRP, they are, at best, fairweather friends - especially as Hughes' biggest concern is reportedly the destruction of sea floor corals.

This concern appears better founded than fears for juvenile hoki.

For a start, mining would kill everything that lives on the sea floor in the sea floor mining blocks.

After all, that is what mining does, wherever it happens. Fish can move away. Coral can't.

And while the mining blocks are small total areas, CRP's modelling shows sediment can drift up to 80km on ocean currents, although it should settle at a thickness of half a millimetre or less for most of that area. Anything above 1mm could be bad news for corals but not for fish stocks.

Most of that sediment would settle in the 820 sq km mining licence area CRP will apply for - close to 10 per cent of the benthic protected area where the phosphate is located.

The fact that CRP's proposal is inside an area protected from bottom-trawling creates a serious perception issue for Castle. The Deep Water Group's executive director, George Clement, likes to describe benthic protected areas as "underwater national parks" and "parts of the conservation estate", and says the fishing industry made "the difficult call" to stop bottom-trawling in these areas.

None of these claims are strictly true.

The benthic protected areas are fisheries exclusion zones - chosen because the fishing industry did not fish there anyway.

In principle, seabed mining is not prohibited. However, it gives both concerned fishermen and environmentalists a big hook on which to hang their objections, long before CRP's formal consent application gets in front of the Environment Protection Authority, the new agency regulating the exclusive economic zone.

CRP is a small, lightly capitalised company, which has done well to bring aboard its joint venture partner, Dutch seabed mining experts Boskalis, but it needs to keep tapping investors to fund its plans. These could scatter like reef fish at enough signs of trouble.

That would be a shame. CRP's plan is bold and potentially valuable to New Zealand. It deserves the opportunity to be considered with formality and care by the authority, not decapitated in the court of public opinion by a commercial competitor for resources.

 

Statement to TV3

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1 September 2013  

Chatham Rock Phosphate will not be entering into a public  debate with third parties concerning its proposal to recover rock phosphate nodules from the Chatham Rise.

The appropriate forum to consider our proposal is the Environmental Protection Authority under the auspices of the EEZ and Environmental Effects Act.

This forum will involve people with the expertise to evaluate our application and the dozens of scientific reports we will be submitting in support of that application.

Any party is entitled to make their own submission as part of that process.

Recent comments made by the Deep Water Group and Sanford Limited have been largely incomprehensible and reflect that either they have not read our plans and modus operandi, or do not understand what we propose.

In either scenario it’s pointless attempting to debate the matter through the media.

Chris Castle

Managing Director

 

Chatham news story in NZ Herald

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The following article appeared in the New Zealand Herald on 13 August.  We prepared it in response to an article published on 6 August, by Sanford Managing Director Eric Barratt. We also provide a link to the original Sanford comment.

Seabed mining claims red herrings

By Chris Castle, 5:30 AM Tuesday Aug 13, 2013, Photo / Janna Dixon

Let's get one thing straight. Chatham Rock Phosphate wouldn't be considering extracting phosphate nodules from a tiny fraction - less than 1 per cent - of the Chatham Rise if we thought it was going to have adverse environmental impacts.

Our proposed environmental footprint is minuscule relative to the fishing industry's. But while bottom trawling requires no environmental consents, we need both a mining licence and marine consent, costing millions of dollars and years of research, consultation and official process, and involving full public scrutiny.

We're up for it because we know our proposal is - to borrow Sanford's Eric Barratt's quote in his Herald article - both good for the environment and good for New Zealand's economy.

Like fishing, our industry will be of significant economic benefit. New Zealand will be $900 million richer as a result of our developing this new industry and we'll be generating exports or import substitution of $300 million each year.

Our draft environmental impact assessment (EIA) - involving 30-plus scientific and other reports (produced by Niwa and other independent experts) - has identified no long-term impacts affecting key spawning, juvenile and young fish habitats on the Rise.

In contrast the EIA notes bottom trawling has a significant impact on the environment. Total areas trawled on the Chatham Rise (an area of 188,000km2) were estimated to be 125,744km2 for the 10 years from 1989/90. The annual trawl footprint on the Rise during the 2009/10 fishing year alone was 19,051 km2.

In contrast, Chatham's phosphate extraction means any particular area of the seabed will be affected only once, affecting about 30km2 of seabed each year and about 450km2 over 15 years.

Our operations simply temporarily lift the top 30cm of sandy silt and redeposit 85 per cent of it after extracting the nodules - the net effect on the sea floor is it's lowered by about 5cm. There's no "open pit" as a result of our activities.

The economic value of the phosphate resource is more than 500 times greater on a square kilometre basis than fishing.

Our product is expected to yield $9.1 million per km2. Bottom trawling yields less than $20,000 per km2.

Our extraction process is designed to minimise the environmental impact and includes exclusion zones to protect representative areas of benthic habitat.

The fishing industry has ignored the scientific evidence Chatham has provided about the environmental effects of our proposed operations.

Barratt makes many staggeringly inaccurate claims. Among these is his wild overstatement that our extraction "is the equivalent of a small mountain like Mt Victoria in Wellington every day". The material extracted each day would actually cover a quarter-acre section to a depth of 1.5m.

Nor are our processes untested. All the techniques proposed for our extraction are routinely used in dredging around the world. The only new thing is undertaking this work at 400m.

This project is important to provide fertiliser security for New Zealand's farming industry. Most rock phosphate fertiliser is imported from Morocco. It is high in cadmium, involves high transport costs and has a significant carbon footprint.

Chatham Rise rock phosphate, as an ultra-low cadmium direct-application fertiliser, has also proven to be at least as effective as processed fertilisers while drastically reducing the run-off effects on New Zealand waterways.

Chris Castle is managing director of Chatham Rock Phosphate.

Here is the link to the Sanford article:

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10908554