Economic Implications for Tasmania of the Proposed National Heritage Listing of the Tarkine Area

Potential Socio- economic implications for Tasmania of the Proposed National Heritage listing of the Tarkine area

Tasmanian Government submission to the Australian Government - Minister for Sustainability, Environment, Water, Population and Communities

October 2011

Table of Contents

Section Section Heading Page Number Number

Executive Summary 3

Introduction 5

1 North-West Region – Economic Data 5

2 Sovereign Risk and Uncertainty 12

3 Existing Mining Projects and Developments 12

4 Review of Adverse Impacts on Future Value Adding 19 Projects (Mining)

5 Potential for New Mineral Discovery in the Area 20 Under Assessment for National Heritage Listing

6 Current Regulation of Mineral Exploration and Mining 22 in Tasmania

7 Tourism Overview 23

8 Forestry 24

Conclusion 25

Attachment Comments from Local Government Authorities 27 1

Potential Socio-economic implications for Tasmania of the Proposed National Heritage listing of the Tarkine area

Executive Summary

As outlined in the Tasmanian Government’s submission to the Australian Heritage Council on the Proposed National Heritage listing, the Tasmanian Government does not agree with the proposed National Heritage values and boundary listing of the area of North-West Tasmania referred to as the Tarkine. The Government has issues with the approach taken to identifying values within the proposed boundary. In addition, pursuant to section 324JJ (5)(b) of the Environmental Protection and Biodiversity Conservation Act, 1999, the Government wishes to draw to the attention of the Minister that it believes serious immediate and long term social impacts should be taken into account which would occur in an already depressed region of Tasmania resulting from the closure of key industries such as mining and forestry. This will impact have flow on effects to the rest of the State. Some of the key economic and indicators for the region are:

 The mining industry in this region represents 73 percent of the State’s total mining industry and is valued at $609 million;  The north-west region’s share of Tasmanian Gross State Product (GSP) has been estimated at $5,031 million, or around 21.6 percent of Tasmanian GSP;  The unemployment rate in the north-west has consistently been the highest in the State, and by a relatively wide margin;  Direct job losses over the last two years in forestry agriculture and manufacturing changes are estimated to be more than 1,000. The indirect impact is significantly greater;  The outcome of the ongoing process known as the Inter Governmental Agreement on forestry will have an ongoing impact on employment beyond recent job losses;  40.5 percent of households in the North-West earn $649 per week ($33,700 per year) or less, compared with 37.3 percent of Tasmanian households; and  The industries affected especially mining are a critical offset to the pressures on other industries such as manufacturing flowing from the high value of the Australian dollar.

The inclusion of the Tarkine area on the National Heritage list will not only directly affect mining developments in the area but also significantly increase the perceived level of sovereign risk in the Tasmanian minerals sector and damage the investment reputation of Tasmania. Evidence of this is provided by the annual Fraser Institute Survey of Mining Companies.

The Tasmanian Government has had discussions with the existing mining companies who are likely to be impacted by a listing. These companies clearly believe that both risks and costs will substantially increase due to increased approval times and other costs due to additional compliance requirements, and it clear that this will dampen, if not stop, much needed exploration and development in the area.

Some companies have indicated that they will cease current activities if the listing occurs in relation to their area of interest. Others have indicated they may seek compensation for investments in developments if new approval requirements are necessary and / or work has to cease. Mineral Resources Tasmania (MRT) providing advice from within Government, notes that there is a precedent for such compensation.

The general industry consensus is that in the medium term the Tasmanian mining industry will gradually decline as existing mines are exhausted and new mines or extensions to mines are inhibited by the wide ranging values of wilderness and aesthetics.

In terms of future alternative industries, the forestry sector is currently retracting and it will be sometime yet before the full impact of existing process are known. The tourism industry is often promoted as the replacement industry for other industries that have been impacted by environmental restrictions as it is viewed as many by being more environmentally neutral.

However, the Tasmanian tourism industry, like much of the non-mining export sector, is currently stagnating under the weight of the high Australian dollar and increased competition from alternative destinations. There are undoubtedly some specific tourism opportunities in the region, but it is highly unlikely that this industry would be able to replace the value of the existing industry, especially mining, in the short to medium term.

The Tasmanian Government does not support some of the values claimed for the Tarkine, given the long history of disturbance and human activity across the region and has already made its views plain. In addition, for social and economic reasons, the Tasmanian Government strongly opposes the placing of the Tarkine area on the National Heritage list. The Government believes it would have the effect of producing significant negative economic and social impacts on the community and economy of North-West Tasmania, an area already under major stress. There would also be significant impacts on the Tasmanian economy generally. The listing would seriously damage the future growth of the mining sector and will potentially see billions of dollars’ worth of economic activity and investment projects lost to Tasmania. In effect this action could mean that Tasmania would be prevented from enjoying any of the fruits of the national mining boom, while being left to suffer the negative high exchange rate consequences on its other engines of prosperity.

Potential Socio-economic implications for Tasmania of the Proposed National Heritage listing of the Tarkine area

Introduction:

The area of North-West Tasmania referred to as the Tarkine is currently under consideration for inclusion on the National Heritage List by the National Heritage Council. The National Heritage Council will assess whether the area meets the National Heritage List criteria.

In addition to heritage values, pursuant to section 324JJ(5)(b) of the Environmental Protection and Biodiversity Conservation Act, 1999, (EPBCA) the Tasmanian Government believes that any assessment of the Tarkine area by the Minister for the Environment and the Australian Government needs to consider the adverse socio-economic impacts that National Heritage Listing will have for the region, its communities, the Tasmanian mining sector and the Tasmanian economy as a whole.

Of prime concern are the direct detrimental impacts on the Tasmanian mining and minerals processing sectors. The mining sector forms one of the four economic pillars for the state, along with agriculture, tourism and forestry and is therefore immensely important to Tasmania’s economic prospects. The area under consideration for listing is one of the most highly-mineralised prospective areas in Australia.

The National Heritage assessment is occurring at a time of significant economic downturn in Tasmania. In particular, the North-West of the state has been hard hit by a number of economic factors including large job losses in the manufacturing and forestry sectors. Mining is one of the few bright prospects in a small regional economy hard hit by the Global Financial Crisis (GFC) and the high exchange rate for the Australian dollar.

1. North-West Tasmania Region – Economic Indicators

The North-West region of Tasmania covers an area of 22, 496 square kilometers (around one third of the State’s total land area). As at 30 June 2010, the region’s population was 112, 789 persons - 22.2 percent of the State’s total population.

Economy

The North-West manufacturing sector accounts for 27 percent of the total State industry, but its mining industry is estimated to represent 73 percent of the State’s total mining industry. This demonstrates not only the importance of the mining sector to the north-west region, but the importance of the north-west to the State as a whole. The north-west’s mining industry is valued at $609 million.

The north-west region’s share of Tasmanian Gross State Product (GSP) has been estimated at $5,031 million, or around 21.6 percent of Tasmanian GSP.1 The following chart estimates each industry’s contribution to the region’s total value added:

Labour Force

Labour force participation has been low and unemployment high in comparison to the national average. The participation rate in the North-West region fell sharply in late 2009 and it remains significantly below the participation rates in the other regions and for the State as a whole.

Total employment in the North-West region was estimated at 50,200 persons in the year to June 2011 (year-average, original terms), which was 21.1 percent of total State employment.

As the chart below reveals, employment growth in the region has generally lagged behind that of the State and even further behind the nation as a whole since early 2008. As well as this, the region suffered a sharp fall in employment in the aftermath of the GFC.

1 Estimate from Compelling Economics’ REMPLAN model of regional economic analysis program.

Source: ABS, The Labour Force, Australia, Detailed, Quarterly, Cat No 6291.0.55.003

The unemployment rate in the North-West has consistently been the highest in the State, and by a relatively wide margin. The situation is even worse when comparison is made with the national numbers and the effect of the low participation rate considered.

The impact from the GFC, and more recently from the appreciation of the Australian dollar, has impacted on the Tasmania’s manufacturing sector. The North-West region of Tasmania has in particular been affected by this with several manufacturing business closures. These have included:

 Australian Paper’s Tasmanian operations at Burnie and Wesley Vale in 2010, which provided approximately 650 direct jobs and 2 400 indirect jobs, and were linked to 300 suppliers;  McCain Foods’ mixed vegetable processing operation at Smithton in 2009, resulting in the retrenchment of up to 115 full-time employees and 85 casual staff with around 100 farmers across north and north-west Tasmania being directly affected;  The liquidation of Tascot Templeton Carpets Pty Ltd in 2011, involving its textile manufacturing plant in Devonport. The company’s closure affected 150 Tasmanian employees;  The cessation of Gunns’ sawmilling activities in Tasmania from 2010 to the present, which in the North-West has involved the closure of the Hampshire Woodchip mill, the Massey Greene mill, the Smithton green mill, and its Burnie Port operations. Further closures are expected at the Gunns’ Smithton facilities, and at Somerset. The total workforce directly affected will be approximately 135 employees; however the indirect impacts will be much higher.

Total employment in the manufacturing sector in the North-West was estimated to be 7 500 persons in the year to the August quarter 2008. By the May quarter 2011, this had fallen to an average of 4 600 persons.

The mining industry in the North-West region is estimated to have employed 2 000 persons in the year to the May quarter 2011 (four-quarter average original terms), compared to a State total of 3 200 persons in the same period.

The proposal to list the Tarkine is also occurring at a time when there has already been a significant reduction in employment as the result of recent changes and economic impacts within the forestry sector, including the recent Federal-State Intergovernmental Agreement.

A recent report by the CRC for Forestry highlighted the impact that the downturn is having on local communities. The CRC found there are now only 3 500 jobs in the forestry industry state-wide, down from 7 000 in 2008. Within the three municipalities that would be most affected by any listing - Circular Head, Waratah-Wynyard, and West Coast - employment declined in line with this trend, from 600 workers in 2008, to 375 when recently surveyed.

Circular Head and Waratah-Wynyard were identified as two of the eleven municipalities most exposed to this downturn given its high dependence on the forest industry. Circular Head was also identified as least likely to experience out-migration of forest industry workers who lose jobs, which may lead to long-term unemployment if new employment opportunities are not found within these communities.

Population

Tasmania’s population is ageing and the median age of Tasmania is the highest in the nation. At the time of the 2006 Census, the median age for Tasmanians was 39 years, while the median age for those in the North-West was 40 years.

The ageing problem is exacerbated by the net outflow of those in the key age brackets of 20 to 34 years. This trend is more apparent in the north-west, as shown in the following population pyramids:

North-West Region, Population by Age and Sex, as at 30 June 2010

Females 85+ Males 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 -8.0 -6.0 -4.0 -2.0 0.0 0.0 2.0 4.0 6.0 8.0

Share of total population (%)

Tasmania, Population by Age and Sex, as at 30 June 2010

Females 85+ Males 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 -8.0 -6.0 -4.0 -2.0 0.0 0.0 2.0 4.0 6.0 8.0

Share of total population (%)

Source: ABS, Population by Age and Sex, Regions of Australia, 2010, ABS Cat No 3235.0

Income

The following chart depicts gross household income and the proportion of households in each income bracket for the North-West and Tasmania. This shows that, compared to Tasmania as a whole , a higher proportion of households earned lower incomes, with 40.5 percent of households in the North-West earning $649 per week ($33,700 per year) or less, compared with 37.3 percent of Tasmanian households. That is, two in every five households earning less than $34,000 per year.

The median household income for the North-West was $735 per week, compared with $801 per week for Tasmania.

Negative/Nil income $1-$149 $150-$249 $250-$349

$350-$499

$500-$649 $650-$799 $800-$999 $1,000-$1,199 $1,200-$1,399 $1,400-$1,699

$1,700-$1,999 Grosshousehold incomeperweek $2,000-$2,499 North-West $2,500 -$2,999 Tasmania $3,000 or more Partial income stated All incomes not stated

0.0 5.0 10.0 15.0 Share of total households (%)

As can be seen by this snapshot of regional economic data, North-West Tasmania has, and continues to face, a number of significant economic challenges. In this context any decision by the Australian Government in relation to placing the Tarkine area on the National Heritage list will exacerbate already challenging economic conditions.

2. Sovereign Risk Issues and Uncertainty

The inclusion of the Tarkine area on the National Heritage list will significantly increase the perceived level of sovereign risk in the Tasmanian minerals sector and damage the investment reputation of Tasmania. Direct evidence of this is provided by the world’s most influential and authoritative survey of industry sentiment on mineral exploration, the annual Fraser Institute Survey of Mining Companies. The Fraser Institute, an independent Canadian public policy research organisation has rated Tasmania, in the 2010-11 survey, the worst of the Australian jurisdictions for “Uncertainty concerning environmental regulations” and “Uncertainty concerning which areas will be protected as wilderness areas, parks or archaeological sites.” The issue of sovereign risk in Tasmania has been raised by individual mining and exploration companies in discussions with the Department of Economic Development, Tourism and the Arts (DEDTA). One exploration company that is progressing a project in the area and has mining assets in Africa, has informed DEDTA that it believes Tasmania has a higher level of sovereign risk than Mozambique. The Tasmanian Minerals Council also views with serious concern the state’s sovereign risk reputation.

It is highly likely that National Heritage listing of the Tarkine will damage Tasmania’s sovereign risk reputation as a jurisdiction that welcomes and facilitates resource extraction and processing projects and have economic consequences beyond the Tarkine.

This uncertainty and its dampening effect on investment are echoed by other comments taken up below from many of the companies seeking to develop mines or increase exploration in the region, and from local government authorities.

3. Existing Mining Projects and Developments

This outline of key existing mines, and companies in the advanced stages of developing mines provides an insight into a complex matrix of major contributions to the regional and State economy.

DEDTA has prepared a summary of a number of mining and mineral exploration companies who have leases and operations in the Tarkine area. This focuses on how any listing would affect their current exploration/mining activities and future investment plans and the feedback is as follows.

3.a. Shree Minerals is a multi-commodity exploration and development company that is listed on the ASX.

The company has exploration interests in iron, gold, and base metals. Shree Minerals is currently focused on developing its Nelson Bay River Iron Project for which it has mining and exploration licenses. Situated in the proposed Tarkine area, the leases contain a diversity of high-grade deposits. Recent exploration drilling suggests there will be further increases to these resources.

Shree’s proposal for a three stage development of a mine at Nelson Bay to recover magnetite and hematite would at operating capacity employ the equivalent of 125 Full Time Employees (FTEs). Capital and investment expenditure on the project by the company is estimated at $103.5 million. Shree also estimates that the project would result in a direct and indirect annual regional business turnover of approximately $70-$80 million per annum. Shree estimates total revenue based on current resources for the life of the project to be $1.5 billion. Mine life is estimated to be 20 years. The company has expressed concerns about the time required to secure approvals, also stating that they need prompt and timely approval to start the project in early 2012 to capture the current iron ore price cycle which will facilitate raising funds for the capital expenditure required for the project.

Shree has informed DEDTA in unequivocal terms that, should the Tarkine area receive National Heritage listing over its mining lease area, the company will not proceed with the Nelson Bay project. Shree believes the environmental regulatory approvals that will be triggered under the listing will introduce a level of risk and uncertainty that will make proceeding with the project untenable.

3.b. Beacon Hill Resources (BHR) through its Tasmanian subsidiary Tasmania Magnesite is currently focused on the Arthur River Project which is now covered by a Mining Lease. The company is currently completing a scoping study to confirm the economics of a mining operation.

The Arthur River deposit has a defined compliant measured magnesite resource of 13 million tonnes (Mt) and an inferred resource of 10Mt. Exploration of the Lyons River deposit has identified an inferred resource of 15Mt.

BHR envisages that the capital expenditure required in establishing the mine will range between $10 million and $20 million, including the construction of transport and bridge infrastructure. The company is already employing local exploration drilling and civil engineering firms. The mine is anticipated to employ around 20 people.

The company intends to develop, in parallel with the mine, a joint venture calcine plant in the Burnie/Wynyard Region with an anticipated workforce at full production in the order of 120 people.

The workforce for the mine and future calcine plant would be drawn from the local area, and BHR has already received interest from potential employees.

The estimated capital expenditure for the calcine plant is approximately $100 million.

3.c. MagSonic project

In addition to the Arthur River project, BHR has been engaging with the CSIRO on the company’s involvement in the MagSonic project. Under the MagSonic program, CSIRO has been developing a process involving the reduction of magnesium oxide by carbon to produce magnesium metal.

BHR is currently considering contributing towards the $10 million commercialisation project that would see the establishment of a 50 to 70 tonnes per annum pilot plant. Should BHR involvement be confirmed, it is expected that the plant would be built in Tasmania and would be fed by the resource from the Arthur River Project. The pilot plant would employ 15 people.

The next stage of the MagSonic program would involve the development of a commercial scale plant with an estimated capital expenditure of $150 million and a workforce of 60 people.

The establishment of a viable, downstream focused, magnesium industry within the state has long been recognised as a potential investment opportunity and a strategic economic development objective of the Tasmanian Government.

To this end, the Tasmanian Government has continued to support the engagement of Tasmanian based operators with the CSIRO on the MagSonic Project, including the financial assistance for the research necessary to develop the underlying technology.

The development of the Arthur River Mine, the proposed Calcine Plant and the MagSonic project are all potentially affected by a listing of the Tarkine area. The area encompassing the company’s mining Leases and retention licenses is currently included in the area under consideration according to the Tarkine Might Have Values Area Map recently released by the Australian Heritage Council. DEDTA has spoken at length with the company on the ramifications of the proposed National Heritage Listing. It is understood that the regulatory burden placed on the company would increase dramatically should the Tarkine region be listed. There are concerns that new projects within the Tarkine area may be assessed for the potential impact on wilderness values. If this were to be the case, a relatively small area of disturbance could potentially affect the wilderness values for a considerable distance around it. It is not known at this stage whether or not wilderness values will be considered in any assessment under the EPBCA.

Further, should the National Heritage listing go ahead, there is concern that ultimate authorisation of any development within the area will be made by the relevant Minister, rather than a statutory authority independent of government, as would be the case under the existing arrangements.

Given the increased regulatory burden, and the greater risk of environment approval processes being at Ministerial discretion, the management of Tasmania Magnesite have told DEDTA that the Board of BHR may withdraw the company from the state if the National Heritage listing of the Tarkine takes place, depending on the final boundaries.

It is further understood that BHR would examine the possibility of legal redress from the State Government for losses associated with the abandoned project. The company has estimated that economic loss attributed to the National Heritage listing could reach upwards to $70 million. Whilst the outcome of any such litigation would rest with the Courts, it should be noted that the lodgement of a claim (whether ultimately successful or

14 not) will have a substantial negative effect on investment in Tasmania as the perceived sovereign risk will be increased. It is also worth noting that in the three previous instances where actions of the Commonwealth have resulted in mineral exploration or mining being curtailed in Tasmania, there has been compensation offered.

The company stressed to the DEDTA representatives that it was supportive of environmental protection over the broader Tarkine region, but oppose the mechanism of National Heritage listing and National Park status to achieve this aim.

3.d. Bass Metals Ltd is a mining and a mineral exploration company that has mining operations at Que River and Hellyer (the new Fossey mine) and exploration tenements around the mines, just within the eastern part, and others in the central and southern parts of the proposed area.

Bass Metals has spent $17 million developing the Fossey project, which was officially opened on 1 April 2011. Ongoing exploration is locating further deposits that may not be exempt from assessment under the EPBCA should the area be included in a National Heritage listing. The operations employ 120 people and will process 500 000 tonnes of ore a year to produce approximately 50 000 to 55 000 tonnes of zinc concentrate, 27 000 tonnes of lead concentrate and 5 000 tonnes of a copper-precious metals concentrate each year. The operation’s main customers are LN Metals and Nyrstar, who own the Nyrstar Hobart Smelter.

Bass Metals voiced strong objections to the previous granting of emergency National Heritage listing. The company raised concerns regarding the area granted and the process adopted, including that: the area designated is extensive and includes areas of diminished national heritage due to human activities; that natural drainage systems have not been adequately considered; and that there was inconsistency in the treatment of existing mining leases, as Grange Resources’ mining lease was excised from the proposed area, yet Bass Metals’ leases were not.

Bass Metals noted in its submission to the Australian Nation Heritage Council, in February 2010, that the inclusion of such a large area into the National Heritage Register introduced considerable uncertainty as to land use status and was likely to impact on commercial decisions made by exploration and mining companies looking to invest in the region.

3.e. Grange Resources Ltd (Grange) is the owner of the Savage River iron ore (magnetite) mine in North-West Tasmania, as well as a magnetite processing and shipping facility at Port Latta. The company was formed by a merger between Grange Resources and Australian Bulk Minerals in 2009. It is headquartered in Perth, with offices in Burnie.

The company spends between $36 million and $53 million annually on salary, wages, and contract personnel and in 2009 provided nearly $3.2 million in royalties to the Tasmanian Government, and $2.3 million in payroll tax.

Grange employs a total of 581 people in the operation, including 103 contractors. These are split between the mining operation (320), Savage River concentrator (65), Port Latta plant (105), services (71), and finance (20). These employees and contractors are predominantly local.

Grange has stated in is submission to the Australian Heritage Commission on 18 August 2011 that listing will cause the premature closure of the Savage River operation as it will prevent Grange from changing the nature of its operations in response to market or environment conditions.

Grange does not support the listing of the Tarkine as a National Heritage. The areas covered by the proposed listing include many significantly disturbed sites, active mining operations, exploration licences, transport corridors, and areas subjected to logging over several decades.

As the major energy consumer in the areas in which they operate, Grange Resources contributes significantly to the energy supply infrastructure in North-West Tasmania. In particular the supply of gas through the Tasmanian gas pipeline network is likely to be significantly affected if Grange ceased operations. Grange estimates it uses 10percent of the gas network’s capacity.

3.f. Grange Resources Ltd and the Savage River Remediation Project (SRRP)

The SRRP is a partnership between the State Government and Grange to remediate the Savage River. At the time the agreement was entered into, upon the acquisition of the mine from a previous owner, the Savage River was degraded for 30 kilometres downstream.

Under the agreement, Grange is required to repay the State Government debt incurred in purchasing the mine by funding remediation activities. The Government accepted responsibility for the historical environmental problems at the mine and the incoming company that Grange now owns took responsibility for environmental management of its own operations.

The company is remediating environmental damage caused by acid rock drainage from past mining operations, coordinated by the Tasmanian Government.

The early closure of Grange would have a significant effect on the SRRP and the duration that the available program funding would last. If Grange is forced to withdraw from its support of the SRRP at the present time, the ability of the SRRP to undertake future remediation works will be severely curtailed over the longer term and cost the Tasmanian Government an estimated $78 million.

3.g. Venture Minerals Limited

Venture Minerals’ Mt Lindsay project is one of the world’s largest undeveloped tin projects. Venture Minerals (Venture) is Tasmania’s largest exploration company which has invested $23 million to date into its Mt Lindsay Tin-Tungsten Project in North-West Tasmania.

Work to date has confirmed the potential for a project delivering eight years of mine life with the currently defined resource, at an annual production of 1.3 million tonnes, and involving capital costs of $162 million (including an additional downstream processing plant). The company anticipates that production from the site may begin as early as 2013, the project having an expected mine life of 20 years. Venture has also recently announced an Inferred Resource of 2.2 Mt of Direct Shipping Ore grading 58 percent Fe at the Livingstone deposit, about 3 km west of Mt Lindsay. Venture has announced that mining on this site could commence in late 2012 and could generate net revenue of $92M for a capital cost of less than $3M.

Venture has informed DEDTA that the potential listing of the Tarkine region has already inhibited the company from increasing its exploration activities. The company had been negotiating possible Joint Venture arrangements with existing lease holders on up to three different leases.

However these proposals have not been pursued due to the uncertainty surrounding National Heritage issues. Furthermore the company is now looking at projects internationally in an attempt to diversify its holding and mitigate the sovereign risks associated with mining projects in Tasmania.

Venture also expressed concern that listing would substantially increase the time required to obtain environmental approvals for drilling programs. A third concern expressed by the company was the subjective, esoteric, nature of some of the criteria that would need to be evaluated during an environmental assessment. The ‘aesthetic’ component of natural heritage assessment was particularly seen as problematic as there were no clear guidelines on what would constitute an ‘aesthetic’ area, or what criteria would be used to assess a significant impact on such a subjective value.

The key effect of any listing, according to the company, has been to further increase regulatory uncertainty in the minds of potential investors. Already there is a perception internationally that it is difficult to secure environmental approvals for mining leases in Tasmania. This perception has a direct impact on the ability for an exploration company to raise capital for Tasmanian projects. The possibility of a National Heritage listing will only exacerbate this situation.

3.h. Stellar Resources Stellar Resources Ltd (Stellar) is a tin development and exploration company with its main focus being the high grade Heemskirk Tin Project located near Zeehan in Tasmania, in which it has a 60 percent stake. The company also has a number of tin exploration tenements within north-western Tasmania, five of which are in the area identified in the Might Have Values map provided by the Australian Heritage Council.

Stellar has already invested $500 000 over 18 months in exploration work to date that has included geophysical surveys, surface sampling, and geological assessments. It currently is employing, directly or indirectly through contractors, 10 people.

Stellar believes that the current system of environmental protection functions well and adequately safeguards environmental standards, and therefore questions what additional value the listing of the Tarkine would add.

The company raised concerns about increases in regulatory duplication between the Australian and Tasmanian Governments that may result from such a listing; as well as concerns about the length of time a new assessment process would take. The company has told DEDTA that it is certain that the listing of the Tarkine will mean that the company will scale down its future plans, leading to less drilling activity, and less investment in exploration and mining activity.

3.i. Tasmanian Advanced Minerals Pty Ltd extracts silica flour from mineral tenements at Corinna and Blackwater which is processed at its plant near Wynyard, constructed in 2007-2008. The company’s southernmost mining lease, at Corinna, is surrounded by, but excluded from, the proposed area. The company has two further mining leases and 2 exploration licences at Blackwater and Hawkes Creek, to the north of the proposed area .

The project to commence silica flour processing in Tasmania, including the processing plant, cost approximately $15 million. The company currently employs 37 personnel at its mine sites and processing plant. Its contribution to the Tasmanian economy includes $2.2 million in wages, over $140 000 in payroll tax, and approximately $36 000 in royalties in the last calendar year. Additional direct employment is also provided to mining and transport contractors.

The company does not support the broad-brush approach to the proposed listing which it believes includes large tracts of land in which heritage values do not exist and while convenient to get a contiguous boundary will discourage exploration. To ensure the company’s future resource security the company is active in finding new deposits. Current mine resource volumes are sufficient for approximately the next 15 years at the current level of production. However, in supplying an industry which is growing in excess of 10 percent per annum, further resources are essential for long term stability of operations.

3.j. Minerals and Metals Group (MMG) operates the MMG Rosebery Mine. The operations directly employ 226 people. Also, there are between 200 and 250 contractors working on the mine site at any point in time, giving a total workforce of between 450 and 500.

In 2009-2010 the operations at Rosebery required capital expenditure that totalled $29.4 million, including $11.2 million on underground development, $5.62 million on the ventilation upgrade, and a $1.4 million exploration drilling campaign. The Rosebery mining operation earns revenues of $US 204 million per annum and pays royalties to the Tasmanian Government of $US 10.2 million per annum (in 2009).

The Rosebery mine provides 23 percent of the feedstock required by Nyrstar’s Hobart Smelter. A recent announcement by the company revealed that through new ore

18 discoveries and subsequently planned open-cut operation it can supply Nyrstar's Risdon smelter for at least 15 more years.

According to MMG, should the listing of the Tarkine region go ahead, the MMG Rosebery mine will likely not be able to operate beyond 2016-17, despite the fact that the Mine Plan, given currently identified resources, anticipates operations for another 15 plus years.

Whilst the main Rosebery mining lease is adjacent to the proposed Tarkine area, the Tarkine area includes a Mining Lease needed for an additional Tailings Storage Facility. Should the region be listed as National Heritage, MMG has told DEDTA that it would likely not be able to proceed with the construction of this dam, which would be essential for the continuing operation of the mine.

Further, listing would also likely lead to the cessation of the company’s exploration activities. It has been predicted that the costs for environment assessment after listing may exceed the costs of the actual exploration activities. The company’s exploratory activities each year employ, directly and through contractors, between 16 and 60 personnel, depending on the number of drilling rigs that are in operation at the time. The areas under the company’s exploration licences have been variously disturbed by forestry, mining, Hydro, and recreational activities over the past 100 years.

DEDTA is aware that MMG has already written to the Australian Heritage Council suggesting that the boundaries of the Tarkine be redrawn to exclude all existing mineral tenements (exploration licences and mining leases) that MMG holds, and that existing land uses and reserve rights be retained on these tenements, and that separate Australian Government Environmental Impact Assessment not be needed for an exploration licence.

4. Review of Adverse Impacts on Future Value Adding Projects (Mining)

The proposed listing of the Tarkine has the potential to negatively impact on future value adding projects in the Tasmanian minerals sector. The Tasmanian Government has a policy encouraging the development of new investment in downstream processing industries that value-add to commodities extracted from Tasmanian mines. Heritage listing of the Tarkine area will lead to significant reduction in the potential future growth of the mining sector in general which will impact commercially on the viability of establishing value adding processing facilities. DEDTA has been in negotiations for a number of months with a major Chinese tin producer Yunnan Tin Group (YTG, who also are a JV partner in Tasmania’s Bluestone Tin Mines and also hold exploration licenses in the Tarkine area) about the proposal to build a tin smelter in Tasmania. YTG is also assessing other potential sites in Asia.

It is estimated that the facility would produce around 10,000 tonnes of product per annum. An investment of this size could be in the region of $100 million and could create 120 FTEs.

A critical issue is scale. The most likely type of smelter would be an Ausmelt smelter which would also have the capacity to smelt other base metals. Clearly for such a long-term investment certainty in relation to adequate supplies of feedstock ores is essential. Obviously should exploration and investment activities be scaled back or curtailed, and future growth in the sector shut off, the economics of such projects become extremely challenging.

DEDTA has been informed previously that YTG has had concerns in relation to sourcing enough tin ore in relation to the tin smelter proposal. Tasmania has Australia’s largest reserves of tin, however much of it is still undeveloped (for example Venture Minerals Mount Lindsay Project). The listing of the Tarkine area has the potential to negatively impact on projects such as Venture’s proceeding which would have flow on effects for potential value adding projects such as YTG’s tin smelter.

National heritage listing with its impacts on mineral exploration/mining activities, including YTG’s own leases, would obviously be viewed as a negative in relation to Tasmania as a competitive investment destination and would seriously damage the case for attracting this value adding investment.

Similarly as previously discussed, BHR plans to build a calcine plant to process magnesite. This is unlikely to proceed should the Tarkine area receive listing. National Heritage listing of the Tarkine area will have the effect of making the investment environment more difficult in relation to attracting large scale minerals processing investments.

There is therefore a real danger that Tasmania's mining sector will be primarily limited to the mining and exporting of unprocessed ore rather than expanding further into value adding processing.

Clearly the preference of both the Tasmanian and Australian governments is to see as much mineral processing occurring on shore in Australia as possible rather than shipping ore overseas for value adding.

5. Potential for New Mineral Discovery in the Area under Assessment for National Heritage Listing

Mineral Exploration

Tasmania has traditionally had a share of national mineral exploration expenditure well above the 0.86 percent of its share of the area of the Australian continent. From the mid 1970’s to mid 1980’s the state’s mineral exploration expenditure ranged between 4 and 5 percent of the national total. With the collapse of the world tin and tungsten markets in the mid 1980’s Tasmania’s share declined to 1.3 percent in 1986-87 and it has remained at below 2 percent ever since, with the exception of 1996-97 when it reached 2.26 percent.

In recent years, the market for tin and tungsten has been rejuvenated largely by demand from China, which has changed from a significant exporter of these metals to a net importer. Significantly improved prices have driven a resurgence in exploration and development projects for these metals, as evidenced by seven projects which are currently under feasibility or scoping studies, including two from within the area proposed for National Heritage listing:

 Tin-tungsten-iron mine at Mt Lindsay by Venture Minerals Limited, now under feasibility study; and  Recovery of tin and copper concentrates from tailings at the Cleveland Mine, Luina, by Bright Phase Pty Limited, plus proposed exploration of remaining hard rock resource.

There are also active exploration projects for these commodities within the area.

According to ABS data, Tasmania’s mineral exploration expenditure in the 2010-11 year ended 31 March 2011 was $37.3 million, 1.26 percent of the national total, up from $20.7 million or a share of 0.93 percent in 2009-10. Tasmania experienced the highest rate of increase of expenditure both in relative and absolute terms of any Australian jurisdiction over the year. Exploration expenditure has recovered to levels above the peaks experienced before the Global Financial Crisis. Additionally, over the past three financial years the share of Tasmanian expenditure directed to the search for new deposits has been 54.1 percent, well above the national average of 36.9 percent demonstrating the exploration has been driven to a greater extent by industry perception of the potential of Tasmania than for the nation as a whole.

Much of the recent exploration is on licences within the proposed area of National Heritage listing. Mineral Resources Tasmania data indicates that over $48 million has been spent on current exploration licences potentially affected by the listing. It is also noteworthy that four of the eight potential mining projects at an advanced state of assessment in Tasmania lie within the area under consideration for National Heritage listing.

Within the boundaries of the “might have values” area, there are currently:

 21 mining leases  54 exploration licences  3 retention licences  1 special exploration licence

The mineral resource potential of the ‘Tarkine’ area was jointly assessed by geoscientists of the Commonwealth (Bureau of Resource Sciences, now part of Geoscience Australia) and the State (Mineral Resources Tasmania) in 1996. This work was published in two volumes (Tasmanian-Commonwealth Regional Forest Agreement, Social & Economic Report Vol III, Background Report Part D and Social & Economic Report Vol VI, Supplementary Appendices to Volume III). The report demonstrated that there was considerable potential for the discovery of new economically viable mineral deposits in the region. Further this

21 work was assessed and substantiated by an independent panel of experts from industry and academia, who put the report into additional context by comparing the potential worth of different mineral deposit styles and enabling the construction of Weighted Mineral Resource Potential maps.

Not only do the broad conclusions of this work remain valid today. but, the argument for significant mining potential is reinforced by new discoveries in Tasmania, including that of a new type of nickel deposit in western Tasmania hitherto unrecognised in the world, Avebury-style nickel. In addition, advances in geological knowledge in the interim and renewed interest in the commodities in which Tasmania is well endowed, such as tin, tungsten and magnetite (all well represented in the Tarkine area), underline the future importance of the area as a mineral province.

6. Current Regulation of Mineral Exploration and Mining in Tasmania

Mining and mineral exploration is controlled under the Mineral Resources Development Act, 1995, which is administered by Mineral Resources Tasmania (MRT). The Land Use Planning and Approvals Act, 1993, and the Environmental Management and Pollution Control Act, 1994, also apply to all mining activities.

Exploration

Exploration licences are exempt from the Land Use Planning and Approvals Act, 1993, but are granted with conditions to minimise environmental disturbance, have specifications for reporting and include performance and environmental bonds. One of the conditions under which Exploration Licences are granted is that all work will be conducted according to the Mineral Exploration Code of Practice.

Mineral exploration activity ranges from research, airborne geophysics, field mapping, stream and soil sampling and more intensive work such as drilling and bulk sampling which require access tracks for equipment. All on-ground work programs in Regional Forest Agreement derived Reserves are assessed by MRT, the Mineral Exploration Working Group and the land manager and approved with site-specific conditions. Field inspections take place for all major earthworks and follow up monitoring continues until rehabilitation is successful.

Conditions will typically be drafted to:

 minimise the area cleared of vegetation;  control the spread of weeds and Phytophthora cinnamomi;  ensure there is little or no impact on threatened species;  ensure rehabilitation of disturbed areas;  limit access; and  ensure adequate drainage.

Should a mining operation or a change of scale of bulk sampling be proposed a Mining Lease is required under the Mineral Resources Development Act, 1995. MRT sets the lease conditions and environmental bond. A permit is also required from the appropriate municipal council under the Land Use Planning and Approvals Act, 1993, and assessment under the Environmental Management and Pollution Control Act, 1994, before commencement of work. This requires advertising so that public comment can be considered.

The Environment Protection Authority (EPA) drafts guidelines for a Development Plan and Environmental Management Plan (DPEMP), where an assessment of the proposal and conditions to be incorporated in the permit are considered. The proponent's DPEMP provides the basis for assessment, public comment, approval and permit conditions under State and, where applicable, Commonwealth legislation. A mine extracting more than 1,000 tonnes of mineral per annum, a crushing plant processing more than 1,000 cubic metre per annum or a quarry or extractive pit processing more than 5,000 cubic metre per annum, are level 2 activities and require a DPEMP. Quarrying is regarded as mining and is also subject to a mining lease and permit conditions following environmental assessment. The Quarry Code of Practice outlines the requirements and expectations for sound environmental practices and progressive rehabilitation.

7. Tourism Overview

Tourism is a significant industry for Tasmania. Tourism directly contributes about 5 percent to Tasmania’s Gross State Product and direct jobs account for 6.2 percent of Tasmania’s employment.

An important segment of this industry is nature based tourism particularly focussing on landscapes, coasts and forests. The North-West area has a range of these attractions and has long been a destination for Tasmanians attracted to the coastal and riverine environments. The area is somewhat remote from the key entry points to the State: Devonport, Hobart and Launceston and is less known to interstate visitors, although finding strong reasons for visitors to travel to different parts of the State has always been a critical part of the State’s tourism strategy.

Access which is crucial to growing tourism to the Tarkine area is limited and at times difficult and time consuming. This will be a major factor in the critical fly-drive tourist market in exploring more remote areas. However, infrastructure for access is highly contentious. Improvement of access to just a small section of the area has recently been a source of controversy with a State proposal to construct some additional road linkages. This proposal has now been substantially modified as it resulted in conflict over the status of the Tarkine and resulted in an emergency heritage listing which has since lapsed.

Apart from its remoteness, the Tarkine does not have the same level of visitor awareness and iconic status as some other natural and heritage attractions in the State around which significant tourism infrastructure has been developed. These are places such as Cradle

Mountain, Strahan – Macquarie Harbour, Port Arthur, and Coles Bay – Freycinet. The region is not as well developed, although in recent times a new lodge has been established on the Pieman River at Corinna. There are local areas of interest which attract some tourism and there is the through traffic heading to Strahan and Queenstown to generate some passing tourist trade, however to this point the area has generated a much lower level of interest than other parts of the State.

It is possible that a heritage listing, based around wilderness and aesthetics may in fact be problematic for development of higher levels of tourism in the region. As was noted on page 160 of the DEDTA submission to Mr Bill Kelty, the Independent Facilitator for the forestry Statement of Principles process, “Land management should be carefully considered and land tenure issues should be focussed on creating tourism friendly outcomes”. Land with high level conservation reservation status is difficult to establish tourism ventures on. National Heritage listing is not a national park, but it does impose higher levels of review and the subsequent additional burdens of process which may serve to inhibit and restrict development of new ventures. This is much the same issue as faced by the mining industry, where even a small footprint may be incompatible with listed wilderness or aesthetic values.

There will be ongoing tourism development in the region, but indications from other locations show that without significant marketing, infrastructure for access and the development of contemporary and varied tourism experiences it seems unlikely that heritage listing alone will significantly increase the level of tourism in the Tarkine. If as seems probable it inhibits the development of access and tourism infrastructure it may well impinge negatively on tourism. This would add to challenge posed by the high exchange rate and competition from other destinations. Current tourism statistics indicate both a drop in overall holiday tourist numbers to the State and also a significant drop in visitors to National Parks over the last five years.

8. Forestry

Forestry has a long history in the North-West region of Tasmania. The main forest resources in the Tarkine are eucalypt and rainforest species. The environment in some parts of the region is quite variable and challenging the result of both poor soils and fire regimes. This had lead to a variable mosaic of vegetation, although the eastern part of the Tarkine has significant areas rainforest.

Since the 1980’s, a significant amount of forest, especially rainforest has been withdrawn from production forest areas. This has been placed in the formal reserve system. The main commercial native forest area is now on the northern end of the Tarkine and towards the coast, however significant patches of rainforest with value for Special Species timber important to the fine furniture and craft industries are embedded in the proposed listing. There is also some concern with the boundary at the northern end of the proposal, where it intersects with the main eucalypt supply zones for the North-West.

There is currently a process in place under the recent Tasmanian Forests Intergovernmental Agreement (The IGA), which is reviewing the conservation status of forests across the State, including the North-West. This process is trying to achieve a new balance across the State between commercial harvest (including that of special species) and new reserves. For this reason that it has been suggested in other correspondence that the listing process be delayed until IGA process is complete.

Conclusion

The Tasmanian Government strongly supports the protection of Australia’s environment and natural heritage. However the Tarkine area being assessed for natural heritage listing contains large areas that have been impacted by human activity that have reduced the wilderness quality and ‘undisturbed’ nature of the area.

Given the history and tradition of mining and forestry across the proposed listing area, it is extremely difficult to support the proposition that the whole area has heritage values.

A more accurate and focused approach would be to identify areas of unique high quality wilderness which have been undisturbed by human activity as opposed to a blanket claim for a huge area of Tasmania which includes economic and resource assets essential to Tasmania’s economic prosperity and of special importance to the North-West with its particularly severe economic and social challenges. Any listing should be informed by a full and comprehensive socio economic impact study by an independent reputable expert.

Claims that job losses in the mining and other sectors can be replaced by jobs in the tourism sector are unsubstantiated appear highly unlikely. Any large-scale tourism developments would face the same environmental regulatory challenges as any other development. It should be noted that that in relation to the proposed area to be listed, the activist group, Tarkine National Coalition, has called for any tourism developments, private accommodation and facilities etc, to be placed outside of the Tarkine areas and that only existing infrastructure and facilities be used to accommodate tourists.

It can reasonably be assumed this will be the in-principle position for the wider environmental movement and the majority of those advocating heritage listing for the area and adds weight to the issues raised previously in relation to access and tourism infrastructure. The proposition that large numbers of tourism jobs would be generated is highly questionable.

The impact of National Heritage listing will be to impose wilderness values criteria on any new economic activities (including required business expansion for existing mines) which in essence have the practical impact extending to a wide radius within which any proponent would need to show that no wilderness values would be affected.

The effect of this regulatory requirement would be to make it immensely difficult for any proponent (especially a mining operation) to demonstrate that wilderness values would not be impacted.

Additionally, any new mine or development would need to be assessed under the EPBCA and this would require Ministerial approval. This Ministerial approval requirement, according to a number of proponents, adds an unacceptable level of risk which few developers would be prepared to take given the time and expense required to progress a proposal to approval stage.

The Tasmanian Minerals Council has raised strong objections to the listing of the Tarkine, expressing the concern that the listing will stymie proposed mining developments in the region, and inhibit future exploration activities, in an area which is one of the most prospective in Tasmania, the Arthur Mobile Belt.

The Council believes that if mineral explorers are precluded from searching for ore bodies through exclusionary land tenure that would accompany the declaration of the Tarkine as a National Heritage area, the mining industry itself will decline and die over a decade or two as existing mines are mined out or become uneconomic.

The Tasmanian Government therefore strongly opposes the placing of the Tarkine area on the National Heritage list as the government believes it would have the effect of producing significant negative economic and social impacts on the community and economy of North- West Tasmania, and on the Tasmanian economy generally. The listing would also significantly damage the future growth of the mining sector and will potentially see billions of dollars’ worth of economic activity and investment projects lost to Tasmania.

Attachment 1. Comments from Local Government Authorities

Local Government is well placed to comment on the community level socio economic costs and benefits of initiatives in their regions and hence comment has been sought from the Mayor or the General Manager from local councils that would be most directly affected by the listing of the Tarkine: the West Coast Council, Burnie City Council, and Circular Head Council.

The Burnie City Council has stated it does not support the listing of the Tarkine as National Heritage, and would be concerned about the impact that such a listing would have on economic development in the region.

Burnie City Council was concerned that there is a range of opportunities within the mining sector that would be put at risk if the plans to turn the identified area into a National Heritage Area (NHA) go ahead. The council has estimated that these projects would have the potential to create between 200 and 300 jobs for a period of 10 years, and that the potential socio-economic effects of any potential listing would need to be carefully considered.

One of the representatives contacted felt that the area identified as Tarkine by the Australian Heritage Council was too ambitious, and was larger than the area traditionally thought of as the Tarkine, covering too many areas that would not contain heritage values, further noting that a substantial proportion of the area currently defined as ‘Might Have Values’ by the National Heritage Council has been subjected to mining, agriculture, and forestry activities over the past 100 years.

Also highlighted was the fact that emerging mining projects in the West Coast municipality may be put at risk if environmental regulations are inappropriate or too restrictive. Particular attention was drawn to the development of the Mt Lindsay Tin-Tungsten Project by Venture Minerals. Venture Minerals has been actively engaged with the local community of Tullah and development of this project will be vital to the continued prosperity of Tullah as a community.

As well as the impact that the listing would have on the mining sector there would also be adverse social impacts, recreational activities such as fishing and camping could be restricted, negatively impacting on the local tourism sector.

It was pointed out to DEDTA that the tourism season in the North-West runs from roughly the end of October through to the Easter break. It then drops off sharply. Many tourism venture and accommodation operators close down for two to three months over the winter period. While tourism is claimed as a benefit of listing, it is unlikely that promotion of the Tarkine in any form is going to bring people to the area during the off- season.

The issue of the listing of the Tarkine region as a NHA has not garnered the same level of interest in the Waratah-Wynyard municipality as it has in other municipalities. However, the

Waratah-Wynyard council would not be strongly supportive of changes to land use regulation that would further restrict future mining activities in the area.

The Waratah-Wynyard council believes that it is likely that the establishment of a NHA that covers the Tarkine would have an effect on employment levels. However, without a detailed economic impact study it would be difficult to determine what this impact would be.

Whilst employment in the mining sector could decline if mining and exploration activity is restricted, there could also be additional opportunities for tourism. However the Council raises the issue that there has been no clear demonstration of the social or economic benefits that the establishment of a Tarkine NHA could bring to the region by the proponents of a NHA. Furthermore, there remain questions as to the extent of the area that is being assessed for heritage values.

The community of Waratah-Wynyard has enjoyed access to the area identified as the Tarkine, for both recreation and economy activities, ever since the settlements of the municipality were established, and the Council believes it would be a matter of courtesy that the community be consulted before a final decision is made on the status of the Tarkine region, especially if there will be changes that will affect the community’s access to this area.

The Waratah-Wynyard Council recognises that the Tarkine name is a brand that may be able to be used to develop opportunities in Tourism. However, any decision should only be made after a full socio-economic study that that would allow for an assessment of likely future social, and economic, impacts.

Circular Head Council, whose municipality covers some 50 percent of the land mass under assessment, has considerable reservations about Heritage Listing. It is the view of Council that Heritage Listing would, by perception, close the area off for development of any kind, be it an eco-tourism lodge or mine. It is also of the view that the methodology used to assess areas for national significance ignores the on-ground realities of past and present use.

The Circular Head Council has made it clear that it is opposed to the current proposal to list the Tarkine, and has offered extensive documentation outlining the case against the proposed listing, including the social and economic impacts that such a listing would have.

The Council has been involved in the Tarkine issue for more than five years, and during that time has met with political representatives at both a state and federal level to express their community’s views on the matter.

Circular Head Council has also published the book ‘A Peopled Frontier’ and produced a series of interviews of local people who use the Arthur Pieman Conservation Area on the west coast for recreational purposes.

The book provides detail on the region’s extensive mining history, and the enormous physical impact on the Tarkine landscape that prospecting and mining have had which means

28 that there are virtually no undisturbed river catchments left in the area, as well as other economic and social activities such as hunting and forestry.

Research by the Council has indicated that the Arthur-Pieman region plays an important role in the sense of place and identity of the local Circular Head community. The Arthur Pieman region has been used by the local community for a variety of economic and non- economic activities including cattle droving, mining, fishing, and the establishment of small shack nodes. It is also used for a range of recreational activities such as vehicle based recreation, recreational fishing, surfing, diving, horse riding and bushwalking by local residents and other visitors.

Circular Head Council is of the view that the Arthur Pieman Conservation Area should remain separate and keep its own name should any listing go ahead. There has been extensive information gathered on the potential social impact on the local community that would occur should the Arthur Pieman region be included in a National Heritage Area.