CAE Article: Chatham Rise rock phosphate – a resource of national significance

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Chatham Rise rock phosphate - a resource of national significance

by Chris Castle

Chatham Rock Phosphate (CRP) will soon apply for a marine consent to undertake seabed mining at 400 m water depth, about 450 km from New Zealand.

While in some ways it will be a ground breaking first, CRP’s business plan is founded on using existing technology – but in an innovative way. The project has captured wide interest in science, mining and capital markets communities in New Zealand and internationally.

New Zealand scientists discovered the phosphorite resource on the crest of the Chatham Rise in the 1950s. It was studied in detail over the next three decades, including by Fletcher Challenge in the early 1980s, spending an estimated $70 million in today’s dollars to identify its scope and potential uses. However the price of phosphate was then relatively low and the economics of developing an offshore resource could not compete with more accessible sources.

Fast-forward another two decades and the price of phosphate soared from $US40/ton to more than $US400/ton and the economics of the seabed deposit looked much more attractive, especially given advances in marine technology. CRP, a small New Zealand mining company, saw the opportunity, secured a licence and identified a resource of at least 35 million tonnes – at least a 20-year supply at expected production rates.

The first reaction from people is usually “you’re going to do what… where?” when I explain the idea. But when we took the proposal to the world’s largest dredging companies in the Netherlands and Belgium, we received three serious proposals for how the resource could be extracted.

CRP chose Royal Boskalis Westminster’s concept. It proposes using a conventional dredging mechanism attached to a flexible pipe to suck the top 30 cm of sandy silt up to a 230 m mining vessel. Mechanical sieving will separate the phosphate nodules (2 to 150 mm in size, about 15% of the total sediment layer) from the finer material, and then discharge the finer sand and silt from another flexible pipe onto or near the seabed.

Boskalis proposes mining in 2x5 km blocks, with each block taking four months to complete. GPS and other underwater navigation systems enable accurate tracking of the mining path, giving significant operating flexibility.

From the outset CRP has focused on using the best scientific and engineering resources possible. In particular we have built a highly skilled technical team (including three scientists who collected and interpreted most of the data in the 1970s and 80s) and have spent $20 million-plus on scientific research to complement and update previous work. CRP is using information gathered on the voyages of the 1960s, 70s and 80s, along with six CRP-funded surveys in the past couple of years, including NIWA scientists’ analysis of the seabed and water column environment in our permit and surrounding area.

The principal focus has been to:

• evaluate the likely environmental impact of the project

• identify ways to minimise and monitor effects

• gather geotechnical and environmental data to guide the engineering design of the mining system, and

• develop a resource model for a mining plan.

The wealth of information now gathered has prompted CRP to expand its area of interest and, having gained a mining permit covering the richest phosphorite concentrations, we have applied for prospecting permits over areas west and east where there is more resource. A larger area may not significantly expand the area of seabed mined, but it will enable more flexibility in how the areas are mined and what areas of environmental value can be left as reserves.

An active stakeholder engagement process has been central to the project. By talking to any organisation or individual with a potential interest in the project (including environmental groups, industry, iwi and imi, media, etc) we’ve been able to identify and investigate their concerns and come back to stakeholders with more information and often with mitigation options.

We also have ongoing contact with government entities responsible for science, business, agriculture, conservation and environment, at both a departmental and political level.

The Chatham project will have local environmental effects on the seabed but it will also have significant environmental benefits. Some of these will arise from the ability to substitute the Chatham Rise product for phosphate now sourced from Morocco and other distant locations.

The benefits of using local phosphate include:

• It is an organic New Zealand-origin product

• It will reduce the carbon footprint by lowering transport costs

• It has the lowest known concentration of cadmium of any phosphate rock

• It reduces water pollution from run-off when used as a direct application fertiliser. Run-off is reduced because it releases slowly, requiring less frequent applications than conventional fertilisers, further reducing its carbon footprint

• The rock is highly reactive, heightening its effectiveness as a fertiliser, and has strong liming qualities.

The project also has significant economic benefits, including making New Zealand $900 million richer, according to the New Zealand Institute of Economic Research.

It will have particular benefits for the Chatham Islands. We will be able to supply the islands with fertiliser at a much cheaper price; little fertiliser is applied on the islands because of prohibitive transport costs.

Federated Farmers representatives on the Chathams estimate fertiliser could increase farm production up to 10-fold and add as many as 350 new jobs. Given the islands’ current population is lower than 600, that increase in farm production could transform the local economy and make the cost of infrastructure such as power and transport more affordable.

Side benefits for the islands include employment opportunities on the mining vessel and using island resources for support services such as rescue, monitoring, etc. CRP has also committed to supporting local causes and providing scholarships as part of its desire to be a good corporate citizen.

Our mining area – which covers less than 1 per cent of the Chatham Rise – is not a fishing area.

The research predicts any seabed sediment effects will be confined to a few kilometres of our mining area, which is about 250 km from the Chatham Islands.

We will destroy organisms in our limited mining area, but they are widely distributed and we are working with marine biologists to identify reserves in our permit area to preserve representative communities.

The Deep Water Fishing Group is concerned about possible impacts of our activities on commercial fishing. The key environmental effect, apart from disturbing areas of seabed, will be the sediment plume from the return of the fine material to the sea floor.

The modelling of the impacts on the seabed and in the water column predicts there will be no material effect on commercial fish. Sediment of sufficient thickness to harm organisms on the sea floor (5 cm or more) is predicted to be restricted to the immediate mining area. Sediment more than 1 mm thick is predicted to extend no further than 8 km from the mining area.

Silt and clay concentrations so small they are not visible (1 mg per litre) could drift tens of kilometres in the water. The immediate mining area is the only location concentrations higher than 100 mg per litre are predicted to last for more than a day.

Scientists say these low levels of suspended sediment won’t affect organisms. The models predict the sediment won’t rise more than 50 m above the seabed – well below the most biologically productive part of the water column.

CRP’s business case assumes it will sell the rock phosphate to New Zealand and Asia-Pacific markets. Strong interest is being shown by at least eight countries as there are few sources of phosphate in this part of the world.

Boskalis’ mining plan is based on an 8-10 day mining cycle, with 50,000 tonnes of rock extracted in three days, 5-7 days for sailing to a yet-to-be-selected New Zealand port for unloading and the return to the mining site. The plan builds in generous allowances for maintenance and down time caused by inclement weather.

Having gained the mining permit last year, 2014’s focus is to raise enough capital ($6 million) to complete the marine consent process. Capital-raising is currently underway in London.

The marine consent process has a six-month prescribed timeframe. After CRP lodges its application and environmental impact assessment – hopefully in late March – interested parties can make submissions and be heard at public hearings.

The Environmental Protection Authority will manage the process, including appointing a panel of experts who base their decision on scientific evidence. The process ensures environmental considerations are balanced against economic benefits, and is also designed to avoid the delay tactics used by opponents of land-based mining projects under the Resource Management Act.

Assuming Chatham receives a favourable decision later this year, we could be mining by late 2016.

Chris Castle is Managing Director of Chatham Rock Phosphate