Iron Sand
Geology.
The North Island’s west coast is a unique marine ecosystem, with a shoreline of distinctive purple and black sand. The black matter is Titanomagnetite. It features a (so far unrecoverable) titanium component, along with an iron component. As well as being present on the shoreline, sand dunes and coastal hinterland, there is an even greater amount in the seabed.
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It was formed by the nearby volcanic cones of Taranaki, Pirongia and Karioi, which over the millennia, eroded vast quantities of black, iron-rich sand, down the streams and rivers on their flanks. Ocean currents then moved the sand north and southwards away from its source. The result is a series of deposits along 480 km of coastline from Whanganui to the Kaipara Harbour, and in nearly 20,000 km2 of the adjacent seabed. Many such deposits around the globe have been studied as potential sources of iron ore, but few are of commercial value.
The Seabed's Resource.
While the land based deposits are significant, the amount of iron sand in the seabed is far larger in scale. This has been described as New Zealand’s biggest mineral resource. It’s potential extent is difficult to quantify, as concentrations vary and insufficient research has been made public from across the extent of this sea area.
As a reference, TTR have indicated a resource of 4 billion tonnes of concentrate in their various permitted areas. It lies in layers up to 30 metres deep, in varying concentrations, from Whanganui all the way to the Kaipara Harbour.
Current seabed mining proposals.
Currently the entire sea area from Whanganui to the Pandora Banks near Cape Reinga, out to the 12 mile zone, is covered by either prospecting or exploration permits. Other permits extend from the 12 mile zone to the edge of the EEZ. These permits are held by a wide range of corporate entities, ranging from shelf companies to multinationals. Their primary target is titanomagnetite, though their permits are not restricted to this mineral.
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The company with the most highly developed proposals is Trans-Tasman Resources, who have been prospecting intensively for the last few years. They have indicated in a series of bullish media releases, and through announcements on their website, that they are expecting to apply for resource consent to mine the inshore waters in the Patea area, by the end of this year (2012).
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They have indicated a resource in the southern permitted area, that is recoverable at a rate of 30-50 million tonnes per year. The permits they apply for, if granted often apply for 35 or 40 years. At a recovery rate of 1/10, this means in excess of 300 million tonnes of sand being disturbed annually. The scale of this is difficult to fathom.
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In the absence of any overarching management plan for this coastline, it would be natural to also expect that other permit holders will follow in the wake of this first application over time, so we view the first few cases as of utmost importance. Precedents set in these cases will have long lasting implications for the integrity of the west coast.
Iron and steel production.
At BHP New Zealand Steel’s Glenbrook steel mill (Fig. 1), ironsand from the Waikato North Head mine is blended with Huntly sub-bituminous coal in the ratio of about 1.8:1, preheated in multiple hearth furnaces to about 650oC, and then fed into sloping rotary kilns 65 m long and 4.6 m in diameter. The kilns operate at a temperature of 1100oC and, during the flow-through time of about 12 hours, reduce the iron oxide to form sponge iron containing 70% Fe.
The sponge iron, known as reduced primary concentrate, is melted in an electric arc furnace to produce molten pig iron plus a vanadium-rich slag, which is separated as a valuable by-product. Steel is made using both the basic oxygen process and the electric arc furnace process. Molten pig iron is converted to steel in a KOBM oxygen steel making furnace, whereas an electric arc furnace is used for producing steel from scrap steel.
The steel is continuously cast as slabs up to 1.55 m wide x 0.21 m thick x 10 m long and then later processed by hot and cold rolling into pipe, rectangular hollow section and flat products.
Glenbrook Steel Mill, Waiuku
Dollars and Sense.
The West Coast Ironsands are a vast potential mineral reserve. We expect the demand for iron will continue to grow as the population expands and new applications are developed, such as the use of steel as a wood substitute in house frames.
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“New Zealand titanomagnetite has proven amenable to the production of high purity steels, but it is different from most other iron ores, requiring specialised technology and market development. Production of added-value iron and steel products in New Zealand rather than export of the raw material ironsand should be the goal.” from NZPAM website.
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NZPAM recognises that any scheme that offered significant employment benefits from mining activities would have to be seriously examined. It is hard to argue against the economic and social benefits of projects like the Glenbrook steel mill. But under the current proposals to mine the west coast seabed, land-based employment would be small, with sea-based activities even circumventing the need to use port or land storage facilities.
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NZPAM operate a regime of granting extraction licenses to the “first cab off the rank”, irrespective of the ownership structure of the company involved. This allows speculative foreign owned entities to lock up large amounts of New Zealand’s resources for little or no cost. TTR, the company currently looking at several large areas of the west coast is 85% foreign owned. Most of the revenue from their activities will go offshore. Central Government will absorb the royalties paid.
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To make matters worse, NZPAM charge the 4th lowest royalty rates in the world for mineral extraction. Taking 3 cents on the dollar for the value of this particular raw resource is maybe equivalent to taking one thousandth of its value when processed. When you consider we (the NZ taxpayer) developed the technology to turn this particular mineral into steel, and we have the other two key raw materials required in abundance (coal and limestone), the farce deepens.
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Exporting raw ore and the failure to add value to the resource in New Zealand almost forces the government into an environmental tragedy if it wants to harvest this resource. Because the returns are so small, it would have to allow large quantities to be mined to make it worthwhile.
“NIWA has analysed historic ironsand samples for two multinational companies, one of which has an exploratory drilling campaign underway. As yet, offshore reserves are still “poorly defined,” Dr Orpin says.
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“But, to be economic, it’s all about volume. The scale of extraction we are talking about is vast.”
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The scale of the current models being thrown around would almost certainly create an ecological wasteland in parts of the Tasman, with extensive down sides for the fishing and tourism industry, and no local benefits whatsoever.
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“While these are early days in ascertaining the precise scope of reserves, and the technical and economic viability for extraction, the potential value is immense. Numerous New Zealand and international companies and ventures are spending hundreds of millions of dollars a year on prospecting and exploration.”
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“Yet, here’s the sting. Just as nobody knows the full extent of reserves, nobody knows the full extent of the environmental risks of extraction, let alone how to mitigate those risks. There’s some knowledge about deepwater species and ecosystems, potential impacts, and steps to recovery, but the understanding is far from comprehensive. What is certain is that deepwater environments themselves have immense value, supporting sustainable fisheries and perhaps carbon sequestering, as well as holding their own intrinsic worth.”
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“Given the value of the mineral resources and how many companies are now interested, it’s time to ask some serious questions about how to manage them,” argues Dr Alison MacDiarmid, NIWA Principal Scientist, Marine Ecology.
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“We need to balance mineral extraction with the other benefits of the marine environments. Some degree of exploitation of the resources is probably fine. But what degree? What is the balance?”