The Chatham Rise phosphorite resource, offshore New Zealand : risks associated with development and implications for policy

Abstract

The Chatham Rise phosphorite nodules have significant resource potential in terms of their distribution and concentration on the sea floor, and their end use as a phosphatic fertilizer. The most effective use of the nodules is as a direct application fertilizer which, at present, could assume a 10% share of the New Zealand market, expanding to at least 25% depending on its agronomic success.

Technology for recovering the nodules has been only recently developed and commercial deep ocean mining is unprecedented worldwide. The mine site, in depths of about 400 metres and 600 kilometres from the mainland, presents many unknowns. Two options for mining are proposed and examined:

1) the lease of a mining ship for operation 4-5 months of a year, and 2) the purchase of a mining vessel for year-round operation.

The first option appears to be cheaper overall at $45-70/tonne phosphorite delivered to a New Zealand port. A pronounced economies of scale effect tends to halve operating costs if production rate is doubled.

The net present value of the mining venture is subject to various constraints (the most significant of which is risk. There is risk associated with resource potential, mining technology, economics, and the legal and administrative framework governing operations. Risks are identified for each investor: Fletcher Challenge Ltd., West German interests, and New Zealand. It is determined that conflict exists among their various objectives for developing the phosphorite.

Mining will cause stress to the marine environment. The nodules provide substrate for many benthic organisms which in turn are food for some demersal fish and other species. It is difficult to determine how the environment will recover from mining or if effects will be contained within the mine area. Long term impacts such as the cumulative effect of large amounts of fine sediment dispersed over much of the Chatham Rise, are also difficult to predict. This and the destruction of the habitat of ling may have adverse consequences for the Chatham Rise fishery.

Risk is a significant consideration in novel, high technology developments such as the proposed Chatham Rise mining and as such, must be accounted for in policy. Policy must, therefore, be flexible and designed to cope with the unexpected. Recommendations are made for policy that is adaptive; continuously assessed as new information is acquired and operations proceed.