UPDATED: Phosphate miner cries foul over 'premature' EPA report

Chatham Rock Phosphate managing director Chris Castle
Zealandia-Continent map
Chatham Rock Phosphate 12-month price history (NZX.com)

UPDATED: Chatham Rock Phosphate [NZX: CRP] is crying foul over the publication of a report by staff at the Environmental Protection Authority concluding it cannot recommend approval for the company's proposed seabed mining operation, saying the report is "premature" and that the government agency failed to take account of the NZAX-listed company's obligations to the market for continuous disclosure of material events. (See report attached)

CRP's managing director, Chris Castle, says in the statement first released late last evening that the report "should have not have been issued until the information requested of CRP was provided."

Shares of thinly traded CRP fell 10 percent to 18 cents a share in early trading of 5,500 shares of the company's 160 million issued shares on the NZAX this morning, its lowest level since January 2012.

The company had gained a two week extension to EPA deadlines to answer a range of additional questions from both the agency and submitters on the project, which seeks to mine phosphate nodules off the seafloor on the Chatham Rise, some 400 kilometres east of Christchurch, for up to 30 years.  CRP also halved the size of its initial marine consent application area and has delayed its planned listing on London's AIM exchange until after hearings on the proposal conclude. That is scheduled for late this year.

A decision-making committee (DMC) of experts has been appointed by the EPA to hear the application, the second for a marine consent involving seabed mining since a new regime governing economic activity in the Exclusive Economic Zone came into effect last year.  The first application, for ironsands mining off the coast of Patea, was rejected in June and is to be appealed by the applicant, Trans Tasman Resources.

EPA staff reports are an input to the DMC's process, but the CRP staff report is far tougher on the project than its first report on the TTR application.

It found the range of environmental uncertainties both from the mining itself and the sediment plume it would create were too great to be able to recommend the project "as it stands, but recognise that there is more information to be provided, which may change our view.”

Castle said CRP would "never expect a report at this stage in the process to recommend approval. Otherwise what is the point of all of the additional information, the caucusing of expert witnesses, and the weeks of hearings that are still ahead? 

“Of course there are uncertainties. That’s what this whole Marine Consent process is designed to identify and clarify.

“It was unnecessary for the staff report to come out prior to us completing the additional information that was requested. I understand the report should not be too late in the process (as it was with Trans Tasman Resources) but I think in this case it was too early," said Castle.

“My other key concern is the EPA issued the report without any reference to us, in the middle of a business day. We are a stock exchange listed company and need to ensure our investors are continually informed. We had expected that the EPA understood the issues that would be caused by their releasing a huge swathe of information without us having the opportunity to assess the information and advise our shareholders. 

CRP argues New Zealand agriculture's reliance on imported phosphate, used for fertiliser, could be replaced by phosphate from the Chatham Rise and potentially create a new export industry.

The bid is strongly opposed by the commercial fishing industry, which is prevented from bottom-trawling in a much larger zone that includes the mining permit application area.

(BusinessDesk)


EARLIER: Blow for Chatham Rise phosphate mining bid

The Environmental Protection Authority says it cannot recommend in favour of a proposal to mine phosphate nodules from the seabed on the Chatham Rise, saying there are too many uncertainties about the environmental impacts of Chatham Rock Phosphate's [NZX: CRP] plans on an important fishery.

The report, by EPA staff, becomes an input to hearings scheduled to start on Sept. 25 on CRP's proposal to mine an initial 820 square kilometre area in its first five years of operation at a site some 400 kilometres east of Christchurch. (See report attached)

It would seek to expand,to an area of 5,207 square kms over the projected 30 year life of the project, which CRP says would replace the country's reliance on imported phosphate from Western Sahara for its farm fertiliser needs and could create a new export industry.

The 175-page report published today concludes that "EPA staff are not currently able to recommend granting this marine consent on the face of CRP's application as it stands, but recognise that there is more information to be provided, which may change our view."

CRP had already sought a fortnight's extension to give it time to prepare additional answers to questions from the EPA and submitters, relating to its bid for a marine consent to mine the ocean floor in New Zealand's vast offshore Exclusive Economic Zone. It also halved the size of its application area, saying it could apply for more later.

The company has also delayed a planned listing on the London Stock Exchange's secondary AIM board until after a decision on its application, due late this year from a Decision-Making Committee of experts appointed by the EPA. NZAX-listed CRP has secured substantial investment from international investors, including Dutch seabed dredging experts Royal Boskalis, to fund commercial, engineering and environmental feasibility reports.

The application is the second under new law governing the EEZ, passed last year. The first application, by Trans Tasman Resources for permission to dredge ironsands some 22km to 36km off the coast of Patea, was rejected in June by a decision-making committee appointed by the EPA. TTR is appealing, but has laid off most local staff while it prepares for what could be a long legal battle.

The CRP proposal to remove up to half a metre of the seafloor using a "conventional drag-head", has the "potential to adversely affect benthic communities, pelagic species, marine mammals, human health, commercial fisheries and Maori/Moriori cultural interests," says the report, which unlike the first EPA staff report on the TTR application, comes to a clear, early conclusion about the project.

The mining would also "generate a suspended sediment plume, some of which would deposit on the seabed" and could travel beyond the mining permit area.

There would be "minimal recovery, (if any)" of species destroyed in the mining process becoming re-established. This is a major difference from the TTR application, where it was accepted the limited range of creatures living in the ironsands - mainly a kind of sea-worm - would re-establish successfully in time.

The seabed in the CRP mining permit area supported a "biologically diverse benthic community, including protected species, such as stony corals, other sensitive species including sponges, bryozoans and brachiopods, and unique species such as giant isopods and bivalve molluscs."

"The extent to which this destruction would affect the biological diversity of the Chatham Rise ecosystem and the protection of rare and other vulnerable ecosystems is the most significant uncertainty," the EPA staff report says.

The sediment plume also had "the potential to alter biogeochemical processes within the proposed marine consent area."

"Significant uncertainty remains with respect to the validity of many of the environmental models used by CRP, and the exact extent to which the sediment plume would impact on benthic communities and fish species beyond the mining block," the report says.

The proposal is heavily opposed by the fishing industry, which has been banned from bottom-trawling in a much larger area on,the Chatham Rise since 2007, when it became a Benthic Protection Zone. CRP has been able to argue for a mining operation because its activities are confined to a relatively small part of the total area of the protected zone and because the zone only regulates commercial fishing.

The EPA report says "significant gaps in the information remain, and there is uncertainty about the ability to avoid, remedy or mitigate the adverse effects of these proposed mining activities."

(BusinessDesk)

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