The Government has provisionally declined an application to reopen an existing underground coalmine that would have generated $60 million a year and added 3% to the West Coast economy.
Government agency NZ Petroleum and Minerals last week signalled to Terra Firma Ltd it will not allow the Spring Creek mine behind Dunollie to reopen.
Terra Firma did not intend to dig coal for burning, but for silicon extraction to build the likes of solar panels.
The news has horrified the mining industry.
The former Solid Energy mine was closed in 2017 and almost all of the infrastructure remains in place.
The Greymouth mayor, National Party MP and Development West Coast today united to express their frustration at the decision, and Opposition leader Christopher Luxon has also been briefed.
Minerals West Coast said it was a missed opportunity, and the mining company said it was "frustrated and bewildered".
Former State-owned Solid Energy put the mine into 'care and maintenance' in September 2012, making 222 mine staff and 130 contractors redundant.
It was closed altogether five years later, and the pit was partially flooded.
Birchfields kept the above-ground site and infrastructure.
Terra Firma proposed draining the mine and reopening it with a smaller operation, targeting the specialist market of silicon manufacturing. It would employ 60 staff when in production.
The minerals permit application was lodged with NZ Petroleum and Minerals in July 2020, but last week the word was not good.
Terra Firma spokesman Lincoln Smith said today he was "extremely frustrated and bewildered by the Government's intention to decline".
"Having reviewed our application, and the reasons for proposing to decline it, I can't see any justification for this other than a philosophical opposition to mining".
It had intended to operate the mine on a smaller scale using what it considered was a simpler and safer method.
Mr Smith said they "remain hopeful we can work with New Zealand Petroleum and Minerals to ensure this permit is granted".
Minerals West Coast manager Patrick Phelps said it was a missed opportunity that would have created 60 jobs, paying on average well over $100,000 a year.
"You'd need about 150 jobs in retail or accommodation and food service to achieve the same wage injection,"
Mr Phelps said.
"The mine has been conservatively planned to run for a minimum of 10 years, although is expected to have a life beyond 40 years. I understand at the current value for the specialist coal at the forecast rate of production, the resource would be worth $60,000,000 a year over 10 years - an increase of the West Coast's annual GDP by close to 3%."
Mr Phelps said the resource consent process through the Resource Management Act could have addressed any environmental considerations.
He understood that Work Safe NZ had advised it had no safety concerns about the permit being granted to Terra Firma.
The coal would have been largely for silicon production, with perhaps some fines as a by-product being put to steel production.
"Solid Energy ran the mine for 17 years under various governments. Genesis Energy burns the best part of a million tonnes of coal a year generating electricity, providing the Crown with the best part of a billion dollars in dividends, not all of which come from coal of course, but many do. We're hardly allergic to the stuff."
Without a minerals permit, Terra Firma could not apply for resource consent.
Mr Phelps said as far as he could tell, most people in the West Coast community were supportive, and Terra Firma was a competent operator.
An MBIE spokesman said no final decision had been made.
"The application remains under active consideration. New Zealand Petroleum and Minerals (NZP and M) does not comment on applications while they are being assessed."
Terra Firma said the majority of the infrastructure was still in place.
Final funding arrangements and agreements with critical service providers would follow the granting of the permit. DWC, Te Runanga o Ngati Waewae and numerous other local stakeholders had expressed strong support for the project. DWC was a potential cornerstone investor.
Mr Smith said it had essential senior management and technical staff and the mine had a potential life of more than 40 years.
Disappointment at decision
"There is still a small window open to the applicants for Spring Creek to convince NZP and M to grant this permit," Mrs Pugh said.
Spring Creek mine had a permit from 1994 to 2017, so it was not a new operation breaking new ground, and the world needed the resources that would come from this mine with its internationally scarce coal type, she said.
"The irony is that in order to 'go green' the world still needs the silicon that will be produced from this coal to make solar panels. If it doesn't come from New Zealand with our strict environmental controls, it will come from other less regulated countries," Mrs Pugh said.
Greymouth Mayor Tania Gibson said it was disappointing that Terra Firma had to wait 28 months to get this point.
The company had submitted a comprehensive application and the council had backed it from the start.
The mine already had a very small surface footprint and would have minimal impacts on the flora and fauna without the need to clear any new land.
"It would be immensely positive for our economy and employment in our region and have significant offshoots to local businesses in the sector," Mrs Gibson said.
"I am meeting with representatives this week from MBIE and will be expressing my disappointment at the intention to decline.
"I do have confidence in Terra Firma that they will address the concerns raised in great detail and we will be advocating on their behalf. I do hope that this is seriously reconsidered."
Development West Coast chief executive Heath Milne said DWC supported the Spring Creek mine project in principle as it would bring significant economic and social benefits to the West Coast.
"In addition to bringing much needed high-paying jobs, it will also generate corresponding activity for local contractors and service providers, resulting in long term economic benefits for the region.
"It is widely accepted that the use of coal for process heat will be phased out over coming years. The quality of the coal at Spring Creek mine means the target market will be the high value silicon industry rather than traditional thermal uses. It is expected this product will continue to be in high demand in the future as New Zealand transitions from fossil fuel to renewable energy."
West Coast-Tasman MP Damien O'Connor said today he knew of the decision, but had not been briefed on the details of the proposal. He would be seeking further information.
"I would be surprised if they've rejected it without good reason," Mr O'Connor said.
Coalmines were on their radar he said, though this was not a new mine.
He noted that Spring Creek production had been "up and down" in the past under previous owners.
