Chatham iwi may acquire stake in seafloor phosphate project
Chatham Islands iwi groups may invest in a project to mine seafloor phosphates in the region if they can agree on a marine consent application for the project 450 kilometres east of Christchurch.
Developer Chatham Rock Phosphate has executed an information sharing and collaboration agreement with the asset holding company of Ngati Mutunga O Wharekauri. The pair have agreed to work together to develop an application that meets the environmental, economic, social and cultural objectives of both parties.
If they can do that, Ngati Mutunga will support the application. If the consent is granted by the Environmental Protection Authority, the parties agree to work together to mitigate any environmental impacts from the project and ensure that the Chatham Islands community “realises tangible benefits” from it.
Chatham Rock chief executive Chris Castle says the agreement is a “very significant” milestone. The community, represented by Ngati Mutunga o Wharekauri, Moriori, and the Chatham Islands Enterprise Trust, would be the most directly affected by the operations and also have major fishing interests in the waters surrounding the Chatham Islands.
“We are also gratified that Ngati Mutunga o Wharekauri is proposing to make a significant future investment in Chatham Rock Phosphate if the agreement proceeds and the marine consent is obtained. In those circumstances, Ngati Mutunga o Wharekauri and possibly Moriori and the CIET would receive options that are in total equal to 15 percent of the number of shares on issue,” he said.
“The exercise price of these options will reflect and recognise the accumulated investment made to that date by our shareholders.”
Chatham Rock shares last traded at 16 cents apiece, valuing the company at $2.95 million. About $37 million has been invested to date.
The company has spent more than a decade advancing a US$200-$300 million project to mine phosphate from the seafloor of the Chatham Rise, about 450 kilometres east of Christchurch.
It would be used as a low-carbon, low-cadmium and low run-off alternative to imported fertiliser.
Chatham Rock is aiming to submit a new marine consent application in the third-quarter of 2020. Its first, which followed about $33 million of investment and research over seven years, was rejected by an Environmental Protection Authority-appointed panel in 2015.
That proposal, which Ngati Mutunga and major South Island iwi Ngai Tahu had opposed, had proposed mining 30 square-kilometres of seabed annually using a suction dredge to produce about 1.5 million tonnes of phosphate nodules in water depths of up to 450 metres.
The decision-making committee rejected the application, in-part because of the lack of scientific knowledge about the Chatham Rise marine environment, and uncertainties about what would be the world’s first seabed mining project undertaken at such depths.
The mining the company had planned was also in an area of “potentially unique” stony corals, and the return of waste material to the seabed would have also had an adverse impact on the benthic community in the wider marine environment, the committee found.
Chatham Rock and Ngati Mutunga say the collaboration agreement will lapse if mutually agreed ways of addressing “reasonable community concerns and aspirations” can’t be found.
If the consent is granted, Ngati Mutunga, and possibly Moriori and the enterprise trust, will each have an option to acquire a 5 percent stake in the business.
Tom McClurg, chair of Ngati Mutunga’s asset holding company, cited the “innovative agreement” as evidence of Chatham Rock’s willingness to consider community perspectives.
“We consider this project to be one that can potentially work for the benefit of our people, our economy and the environment,” he said.
“We look forward to working closely with the Chatham Rock Phosphate team to ensure that commercial, social and cultural benefits are realised by this project and that these benefits are not at the expense of the marine environment that is so important to us all.”