19 June, 2011

Zealandia - an untapped opportunity

Governments around the world, including New Zealand, invest in education, infrastructure, civil institutions, etc. That's important and necessary, but it is not sufficient for national competitive advantage. Where are the massive untapped resources that New Zealand has in abundance; that, if developed, could lead to major new industries to rival our farm-based industries in scale. Answer: Zealandia, our continental shelf and the fifth largest exclusive economic zone in the world, bigger than Europe.

Many people do not know that New Zealand is ranked amongst the highest of all nations in its potential value per capita of mineral resources. We are a resource-rich nation, but simply licensing others to utilise our resources will do little to build long-term national wealth and capability. We haven't seized the huge opportunity that our onshore and offshore continental shelf offers. Only a small part of our academic and scientific effort is focused on it. Other than some limited mineral exploration and technology development, there is little new large New Zealand commercial investment and, aside from electricity generators, only one company (government-owned Solid Energy) of sufficient scale to make any.

Inaction or politically inept one-off moves have been the norm by successive NZ governments, but the recent announcement of a new regulatory regime holds some promise of a more supportive attitude. What other actions might government consider?
  • Announce that Zealandia is open for business; grab the attention of local and international investors, entrepreneurs, designers, and businesses.
  • Give resource licence allocation a bias* for creating local operations to discover, harvest, process and productize our mineral and energy resources. (*Bias does not imply giving away resource licence fees to subsidise jobs - that's a mug's game).
  • Ensure the regulatory regime encourages both resource development and environmental protection.
  • Significantly increase the proportion of government science funding allocated to discover, harvest, process and productize our marine biological, mineral and energy resources.
  • Give IRL (our engineering research institute) a primary focus on technologies to discover, harvest, process and productize those resources (in the same way that our pastoral, arable and forestry science institutes are focused on primary industries and downstream value chains).
  • Merge GNS (geology) and NIWA (water and atmosphere) to create an integrated resource science institute (possibly merged with the refocused IRL).
  • Mandate Solid Energy to become a broader minerals business, pursuing coal and non-coal opportunities.
  • Free Solid Energy from short-term dividend demands and allow it to raise new private capital and enter joint ventures to develop its most promising opportunities.
Tapping into our vast onshore and offshore mineral resources and energy potential (including renewable forms) will pose some hard challenges. But we are good at inventing solutions to difficult problems, we have an affinity with sustainability, and we have a rich heritage with the land and the sea. We can develop not only our own resources, but also new technology to sell to other countries, and even New Zealand-owned companies to exploit such resources here and elsewhere.

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