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Zealandia: the idea grows

Suggestions and questions on NZ's mineral and energy opportunities

New Zealand is the visible part of Zealandia - the unofficial name for the sunken continent that surrounds us, and the fifth largest exclusive economic zone in the world (bigger than Europe). Robert Allen's book on the Industrial Revolution prompted me in 2009 to think about what major economic opportunities exist today, especially any hindered by complex technical challenges; (hard-to-solve opportunities offer rich rewards once solved).  I identified two - marine energy and submarine minerals, both of which New Zealand has in abundance.

I started talking to people about these ideas in 2010. I generally received positive reactions, and I learnt of others with similar views.  However, some inept political PR and and high-profile international incidents meant the environment was not conducive to taking the discussion to a general audience. But continuing economic turmoil has seen a shift in sentiment.  In 2011, more people were asking for some real strategy on economic development.  Like others such as Solid Energy's Don Elder, I felt the time was right to go public, and I wrote a short article titled "Zealandia - an untapped opportunity", including some suggestions for our government:
  • 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 mineral and energy resources.
  • Give IRL (our engineering research institute) a primary focus on technologies to discover, harvest, process and productize our mineral and energy 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.

Although the Zealandia opportunity didn't figure much in November's election, there were some promising initiatives announced by the government, especially the partial privatisation of Solid Energy and the repurposing of Industrial Research Limited into an advanced technology institute focused on key economic opportunities including marine energy and materials.  There's also an ongoing review of the Crown Minerals regime, with public consultation due soon. Phil O'Reilly from Business NZ has urged people to make submissions addressing key questions:
  • Which resources, how much and when, should we access?
  • Which offer most opportunity to grow high-tech industries with high-skill, high-paid jobs?
  • What level of royalties and taxes should be paid by enterprises wishing to access our resources?
  • How much transparency should we demand from those enterprises?
  • How can we best use the income earned?
  • How can we have world-best safety standards?
  • How can we ensure the environment is left the same or better afterwards?

Phil's questions are good, but they mostly focus on the extraction aspects. While extremely important, just being a mineral resource is not the whole answer.  Phil's second question is where much value lies: Which offer most opportunity to grow high-tech industries with high-skill, high-paid jobs?  Related to that, there's another question that should be asked (although the CMR consultation is probably not the forum): How do we grow NZ-owned businesses capable of discovering, harvesting, processing and productizing our mineral and energy resources, and providing the technologies to do so?  This is a not an area where angel investors can help much.