How coal is regulated in NZ

The coal sector in New Zealand is heavily regulated, with an eye to the environment, workplace health & safety, access to land, and property rights to coal. This is as it should be - society has a right to know that resources such as coal are mined responsibly. The principal legislation governing the coal sector are briefly discussed below, and a snapshot of other legislation provided.

Resource Management Act 1991

The mining of coal (and any other mineral) typically requires resource consents covering a wide range of matters. They include:

  • Occupation of land
  • Disturbance of ground
  • Removal of vegetation
  • Effects on biodiversity
  • Any other effects on the environment, such as landscape
  • The taking of freshwater
  • Discharges to freshwater
  • Noise, dust, blasting (the use of explosives), and vibration

At issue for any mining project are its merits, the other values in the land, the likely environmental impacts on them, and proposals for their management, including site rehabilitation. Mining is a temporary use of land, and resource consents will cover the development of the mine, production during the life of the mine, the process of closure, and management of the site post-closure.

Environmental bonds, payable in the event of a breach of resource consents, are a common condition of resource consents.

Recent evidence, including trials being carried out by the NSW Department of Primary Industries 1, suggests cattle may thrive better on rehabilitated farmland than on unmined land.

A number of environmental groups, such as Forest and Bird, consider there are still adverse environmental impacts from modern coal mining in New Zealand. You can read Forest and Bird's views here.

The industrial use of coal, via coal-fired boilers, may require resource consents for discharges to air, subject to requirements in RMA plans, and the National Environmental Standard on Air Quality. That is in addition to resource consents required for other aspects of the operation, as would be the case for any business.

Climate Change Response Act 2002

The responsibility for carbon emissions arising from the burning of coal lie with the industrial and commercial coal users, whether they are using New Zealand coal or imported coal. In paying a price on carbon - through the NZ Emissions Trading Scheme - emitters are offsetting their emissions with carbon credits accruing to foresters from the growth of trees, which capture and store carbon.

Coal producers must account for the emissions arising from the mining process, for example the use of diesel in machinery and vehicles, and for the emissions arising from methane, a greenhouse gas, which naturally escapes from coal seams as these are being mined (fugitive methane). When paying a carbon price for these emissions, coal producers will pass on most of these costs to coal users.

At present industrial emitters pay only half the ambient carbon price, under an industry protection scheme, with taxpayers covering the other half. This two-for-one emissions reduction unit surrendering obligation is being phased out in stages to zero on 1 January 2019. The carbon price currently exceeds $18 a tonne of CO2-e, and this has been gradually increasing in recent years. The Government has confirmed a price cap of $25 a tonne, noting this can always be reviewed.

A degree of free allocation of units is awarded to New Zealand's most emissions-intensive and trade-exposed industries, including NZ Steel, and exporters of cut flowers. This policy is under review.

Health and Safety at Work Act 2015

Since the Pike River coal mine tragedy of November 2010 the Government has carried out sweeping reforms of legislation and regulation covering workplace health & safety. This has occurred with active participation and engagement from the New Zealand mining and quarry industries. The focus is on identifying the principal hazards in mining, developing plans for their management, with a much more active role being played by the WorkSafe mining inspectorate. This includes new training requirements, and new health & safety roles at workplaces.

The use of hazardous chemicals is now regulated by WorkSafe under this Act. This would typically apply to explosives used in breaking up rock during the mining process.

Access to land

Mining can only be carried out with the permission of the land owner. If this is privately owned land, the mining company will need to come to an arrangement with the owner. The fact that mining is the highest-value use of land means that a commercial arrangement is almost always reached.

Coal mining companies may purchase the land in which the resource is located, and, so, may skip this step.

If the land is Crown-owned, for example is public conservation land, conditions apply under the Crown Minerals Act 1991. In this case, the coal mining company would negotiate with the Department of Conservation safeguards for the conservation of biodiversity and heritage, consistent with conservation legislation.

Property rights to coal

For coal that occurs on land currently or previously owned by the Crown, the Crown is the owner. A coal mining company will apply for a mining permit under the Crown Minerals Act 1991. Criteria for decision-making include the company's technical and financial capability, that it will apply good industry practice in mining the coal, and that it has systems to meet responsibilities under other legislation, in particular, towards the environment, and for workplace health & safety.

A royalty is payable to the Crown for the right to mine Crown-owned minerals.

Where the Crown is not the owner, the coal will be privately owned. That ownership would normally rest with the private land owner, and, on occasion, with some other person. The coal mining company would always consult Land Information New Zealand on the minerals ownership status in respect of a piece of land. Where land ownership and minerals ownership is split between two persons, the company will have to reach a separate arrangement with the owner of the coal.

Other legislation

Here is a snapshot of other natural resource management legislation that a coal mining company will have to, or may have to, comply with:

  • Wildlife Act 1953 - if the company has to move individuals of some native species, such as kiwi, geckos, a wildlife permit will be needed

  • Animal Welfare Act 1999 - in some cases, the exercise of a wildlife permit will need approval from an animal ethics committee 

  • Heritage NZ Pouhere Taonga Act 2014 - most mining today is done where miners worked in the past; their leavings are now heritage. An authority is needed to modify heritage