23 March 2010

The property rights of mining conservation areas

For any new Government policy, Robin would probably have asked "what property rights are involved? Who holds them? Who is trying to change them?"

So looking at Brownlee's conservation-mining proposal through a property-rights lense, I note that:
1. The property rights are initially held by the Crown as the land is public conservation land. Conservation areas are 'public common goods'.
2. That initial allocation does not change if a conservation area is mined. The miner never has full freehold title. The asset, and any liabilities, remain with the Crown, when mining ceases. For example, the Crown has ended up with a $NZ10 million liability for the Tui mine.
2. The Crown's property rights are restricted by statutes such as the National Parks Act 1980 and the Conservation Act 1987 which provide generally that such public land is to be managed for conservation purposes.
3. However, Section 61 of the Crown Minerals Act 1991 provides the exception; a statutory access process for mining within conservation areas.
4. Section 61(2) provides the specific matters that the Minister (of Conservation) must consider.
5. Schedule 4 of the Crown Minerals Act 1991 prohibits mining access via the Section 61 to certain high value conservation areas.

So, the 'property right' to mine in a conservation area is a privilege to be applied for, not an exclusive right. And it is 'prohibited' from even a case-by-case assessment under S 61 of the Crown Minerals Act 1991 in some conservation areas by Schedule 4 of the Crown Minerals Act 1991.

So Schedule 4 and Section 61 act as an 'allocation plan' for a restricted subset of property rights, the right or permission for a private company to mine, subject to conditions, within a conservation area.

But miners don't need exclusive property rights to mine and will want to avoid ownership liabilities such as orphan mines like Tui mine. Also, the relevant case law, the Buller Electricity case says that the Minister of conservation cannot dispose of conservation areas for social or economic reasons.

So the Crown Minerals Act provides a Crown guarantee for mining Crown land, as well as providing a process that gets round the obvious inconsistence of mining with 'management for conservation purposes' statutory objective.

National is proposing to change this 'allocation plan' by increasing the conservation areas allocated to 'access-on-application'. The minerals, once mined, are certainly private goods owned by the miner.

The Brownlee conservation-area-mining plan is therefore a transfer of property rights from the public to private interests.

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