April 2018

A personal perspective on the resources industry in New Zealand

  • By Peter Hancock FAusIMM(CP)

Feast and famine at the coalface: a look back at some of the opportunities, challenges and lessons from a resources career in New Zealand from the 1960s-1990s

As a schoolboy in Northwest England in the 1940s and early 50s, I spent hours studying the map of New Zealand, dreaming that one day I might explore its varied and beautiful mountain landscape and discover mineral wealth. However, my plans were put on hold by military service in the RAF Mountain Rescue Team in North Wales and then university at Aberystwyth in Wales. This university had a significant geological pedigree – its first Honours Geology student graduated in 1891, just two years before the founding of the AusIMM. My passion for mountaineering and geology increased my determination for a career as a geologist in New Zealand. Upon graduating in 1962, the closest I could get to New Zealand was as a junior government geologist with the Australian Bureau of Mineral Resources, mapping 1:250 000 sheet areas in the deserts of Central Australia. Following this, I was an engineering geologist on the Ord River Scheme and a lecturer in Adelaide. This I hoped would be my stepping stone to New Zealand.

There was very little opportunity for employment in exploration in New Zealand and the best option I could find was a year of university extension geology lecturing for Otago University. New Zealand’s once significant gold mining industry had run down, and coal mining had been nationalised during the Great Depression and was monopolised by state coal mines, which only supplied the small local market but controlled all the known major viable deposits. As for metal mining, there was only the recently opened small Tui copper-lead-zinc quartz reef mine at the base of the Coromandel Peninsula, alluvial gold mining by the Kaniere Dredge and a few small parties and individuals working spasmodically on the West Coast and in Otago. Gold was only US$35 an ounce and returns were small. Uranium exploration in the 1950s, which led to recognition of the Hawkes Crag Breccia as a low grade small prospect, was no longer considered worthwhile in New Zealand. Thus from the mid-1960s jobs for geologists in NZ were scarce. Unlike Australia, there were no big regional mapping and mineral resource assessment programs recruiting graduates from overseas. The New Zealand Geological Survey had all the geologists it needed.

Towards the end of the 1960s, the dramatic surge in demand for nickel led to the base metal exploration boom in Australia, bringing a change of fortune for geologists. The effects spilled over to New Zealand. Major American, Canadian and Australian mining companies arrived to undertake greenfields exploration and re-assess known resources such as the ilmenite beach sands. Consultancy companies – both old and new – joined the fray, bringing to New Zealand their junior exploration company clients. These companies had ample funds from share market floats but could not get any (or enough) ground near the Nickel Triangle in the Yilgarn or prospective pastures elsewhere in Australia. Geologists were therefore in high demand in New Zealand. Kiwi geologists working overseas and ‘wannabe’ kiwis like myself flocked to New Zealand to work for them. The exploration teams of the large mining companies, such as Kennecott who set up shop in Christchurch, pioneered helicopter-supported exploration and worked with emerging local company Lime & Marble, which was already successfully identifying and mining agricultural and industrial mineral resources.

I gave up my lecturing job in Adelaide to manage the South Island operations for one of these consultancies. Our clients, in addition to the many Australian junior exploration companies, included both newly floated and well-established New Zealand companies. On behalf of these clients, Mineral Prospecting Warrants (MPWs) were readily obtained, on occasions in as little as two weeks, for ground considered to have potential for base metal mineralisation. MPWs gave priority to apply for a mining licence for minerals discovered thereon. With an exploration crew of field assistants and one or two junior and newly-graduated geologists, a helicopter and, in some cases, a fishing boat for coastal access and accommodation, we carried out rock chip and stream sediment sampling following good old Hawks and Webb geochemical survey practice, together with mapping of any possible mineralisation signatures. Following this, we would prepare a report – usually recommending further exploration – all within a few weeks. Almost half of the mountainous and pristine Fiordland National Park was explored under my own direction. There was scenery to die for, a helicopter at the ready and venison and blue cod for the taking – requiring discipline to focus on the job.

By Christmas Eve 1971, the effect of the Poseidon exploration bubble bursting (or more accurately exploding, as the once $0.80 Poseidon shares collapsed from over $200 back to a few dollars) reached us in New Zealand – bringing famine after the feast. Funds suddenly dried up and the end to our employment was swift. At the same time, the major mining companies’ exploration activity wound down. A period of alternative employment was essential for most geologists. With a wife and newborn baby to support, I resorted in desperation to a school term of teaching remedial reading at a District High School. After this I secured temporary geology lecturing contracts while gradually establishing my own contracting and consultancy business. The expression ‘if you want to find a geologist, catch a taxi’ was more than a joke – geologists were driving them!

In addition to the proving up of the titano-magnetite and ilmenite beach sands, what did the exploration boom produce for New Zealand besides a burst of local employment for geologists? For me, it confirmed a rather depressing conclusion that compared to Australia with its extensive and older geological terranes, the closely faulted much younger rocks and small terranes of New Zealand would be unlikely to host any major base metal deposit, other than in the lower levels of epithermal systems. New Zealand’s geology and mining history made it clear that gold and silver would be a very different kettle of fish, if only the gold price was not locked to the pre-war $US$35/oz. Prospects for this looked grim, because the post-WWII Bretton Woods agreement for monetary stability were tied to the US dollar and gold at US$35. It would take a mega tonnage Carlin-type deposit to be economic, and such cordilleran terranes were not present in New Zealand. The huge quantity of geochemical samples that we collected during the boom were unfortunately thus not assayed for gold – even where there was evidence of epithermal systems.

From 1973 governments and central banks gave up holding gold to what had become an artificially low US$35 because the United States broke away from the Bretton Woods agreement. De Gaulle started a massive French buy-up of such cheap gold. As the price of gold rose, so did interest in New Zealand’s significant Miocene-Pliocene epithermal gold mineralisation in the North Island and older mesothermal mineralisation in the South Island. My career in New Zealand, like many other fellow geoscientists, consequently took a turn for the better. While the major companies looked for new discoveries rather than extensions around historic gold mines, a small New Zealand company, Mineral Resources (NZ) Ltd (which survived the 1971 collapse in exploration) was funded by Fletcher Holdings to purchase the assets of Norpac in receivership that owned not only the now uneconomic Tui Mine, but all the mineral properties of the old Waihi Gold Mining Company of London – in essence the old Martha Mine, New Zealand’s major gold producer from the 19th century until the 1950s.

As Fletchers’ consultant geologist, supported by their influential and prescient Director and Coolgardie-born Rhodes Scholar, Dr John Watt, it was a thrill of a lifetime to be in the right place at the right time in 1974 to assess the Waihi tenements. With access to the 1900 to 1918 assay plans (in pounds, shillings and pence with gold rated at four guineas an ounce and silver at two shillings an ounce!) and re-entering the old workings for channel sampling, the stunning discovery was made that the stock work of splayed minor veins, too narrow for past underground mining and their associated veinlets down to less than a millimetre, generally carried the same grades as the largely mined-out quartz reefs for which assay values were so well recorded. Realising that the fanning out of the system made it amenable to open pit mining, I proposed a basic open pit model in light of recent advances in the use of hydraulic excavators and mine haul trucks. This revealed a strong potential for at least two million ounces at 2 gm/t or better and which has now been substantially surpassed with mining being continuous since 1988. After all the disappointing years of unproductive base metal exploration during the nickel boom, it was hard to believe, and perhaps just too good to be true, that with the enthusiastic support of Fletchers and Mineral Resources I had identified New Zealand’s first significant post-WWII metal mine. So hard to believe that even with further underground and surface channel sampling, further modelling and a very large trial pit in 1975-6 with >2 gm/t recovery, the major companies invited to farm-in still could not believe it. Some only wanted greenfields and advised ‘not interested’ because our project incorporated an old underground mine on 16 levels. However, one company, Amax, jumped in with enthusiasm. The New Martha Mine opened in 1988 – 14 years from our recognition of economic resources. The success at Waihi encouraged similar gold mining projects in New Zealand at Macraes and Golden Cross, and at many locations in Australia leading to the Kalgoorlie’s Fimiston which evolved into the Super Pit.

On the old alluvial gold mining areas of the West Coast and Otago, locals and then New Zealand small companies hastened to open new alluvial workings on auriferous gravels and beach sands. These works were helped by the development of hydraulic excavators feeding skid and pontoon-mounted screen trommels and riffles designed and first built by local John Acker (Acker Built!). With gold soon reaching US$500/oz, there were over 200 such plants operating and my own consultancy expanded to service them with prospecting, licensing and mine-planning services, plus a local laboratory for testing bulk samples.

At the same time, the Middle East oil crisis and the Muldoon Government’s ‘Think Big’ program yielded exciting exploration and evaluation opportunities for resource and engineering geologists.

Engineering geology/geotechnical work had always been a fallback in times when mineral resource work was scarce. With ‘Think Big’ the two came together. My consultancy practice expanded dramatically with the following projects that often combined mineral resource, mining and geotechnical work. Mining and civil engineers, engineering geologists and resource geologists were recruited, including many new graduates, giving them their first professional employment. The more experienced, longer-serving individuals became shareholder partners. Such was the demand for our services that we had to resort to advertising and recruitment in Australia and South Africa.

The Muldoon 1975-84 era in New Zealand today receives much criticism for ‘intervention’ to drive economic development, diversity and self-sustainability in fuel resources. Some of the government-driven projects that my practice worked on were unrealistic, such as the proposal for a titanium metal-producing and manufacturing plant on the West Coast for Boeing aircraft undercarriages based on the ilmenite sands, production of oil by pyrolysis from Chatham Island peat, and a detailed assessment of every known New Zealand coal deposit for liquid fuel potential funded by a levy on every litre of liquid fuel sold at the pump.

Other government-driven or funded projects such as the building of high pressure gas pipelines, including through the challenging unstable country from Kawerau to Gisborne, construction of the Clyde Dam, expansion of the Glenbrook steel works and regional hydro-electric schemes for Tauranga and Rotorua have created value enjoyed today.

Private industry joined in with collaborative projects including Energy International (ExxonMobil) to assess potential for underground coal gasification of every coalfield in New Zealand and Australia, leading to an unsuccessful trial extraction on New Zealand’s Huntly Coalfield. Some of these projects, such as Southland quartz gravels for production of lump silica and ferro-silicon, had potential for economic benefit, but failed to get beyond investigations. They were based on the cheap excess electricity expected from the planned Clyde High Dam, which would also support a new aluminium smelter at Aramoana near Dunedin. That was drowned by citizen protest resulting in no smelter and a lower-wall version of the dam.

Fletchers, jointly with ICI, proposed production of mercury from Northland cinnabar hosted in soft tertiary greensand, which we investigated and found very easily recoverable by gravity separation. This endeavour was thwarted early on with recognition of mercury as the cause of illness in Japan (Minamata disease), leading to abandonment of mercury globally in the production of caustic soda and consequent collapse of market price.

All these projects provided interesting and rewarding assignments for my company and its competitor at a time before today’s large domestic and multi-national engineering companies entered the New Zealand market. However, the feast ended as confidence, funding and interest in New Zealand’s resources ebbed in the wake of the ‘Black Tuesday’ 1987 stock market crash.

After three feast-to-famine cycles over a diverse 30 years’ intensive experience at the coal face of exploration and
project development, which involved increasing need for conflict resolution between development and environmental and social interests, I felt that something needed to be done to better address the conflicts. I sold my New Zealand consultancy in 1992 to take up a Visiting Fellowship at the Australian National University. There, in the swirling currents of Prime Minister Bob Hawke’s determined drive for consensus on sustainability between industry, environment and society, I did my bit by researching and writing my book, Green & Gold: Sustaining mineral wealth, Australians and their environment, about finding and building common ground for sustainable development. The book aimed to expose perceptions and dispel misconceptions to undo hardened positions of both industry and the environmental movement. The book had a pleasing, ameliorating impact and led to a second career in conflict resolution and dialogue facilitation on resource and social issues.

Returning to New Zealand after 20 years away, mainly in Australia, I found that New Zealand, with its strong environmentalist lobby, huge ‘conservation estate’ and lesser dependency on mineral resources, seems generally to have less community will, comprehension and openness for common ground on mineral resource development. There is still much to be done!

Image: kyrien/Shutterstock.com.

 

Share This Article