Forestry
When Europeans arrived in New Zealand, much of the country was covered in native forest. This is despite clearance of significant amounts of forest by Māori through hunting activities. Europeans continued the deforestation trend, both to use the wood for house and shipbuilding and to clear land for farming purposes.
It was recognised as early as the 1870s that the amount of wood produced from these clearances was unsustainable, and the government took steps to reduce deforestation and create plantation forests. Initial efforts were largely ineffectual, but this changed with the creation of the State Forest Service in 1919. Large-scale government planting took place in the 1920s and early 1930s, predominantly of pinus radiata, a species imported from California.
Much of the afforestation of the 1920s and 1930s took place on the pumice lands of the central North Island, which had been found to be unsuitable for agriculture due to stock developing “bush sickness”. With the discovery of a cobalt fix for this problem in 1937, this land became suitable for farming, and large-scale afforestation ceased.
The government kick-started planting again in the 1960s, with the wider aim of expanding and diversifying New Zealand’s export production. Expansion was driven both by Forest Service planting, and by both direct and indirect financial incentives for private planting. Planting took place on increasingly marginal land, with planting decisions influenced by a range of factors other than profits, including regional employment, Māori economic development and land stabilisation.
Forestry exports expanded through the 1960s with increasing sales of logs to Japan, plus pulp and paper to Australia and the Pacific. Financial incentives for planting remained in place until the mid-1980s, by which time the size of the plantation estate had tripled, from 352,000 hectares in 1960 to over one million hectares in 1984 (Rhodes and Novis, 2002).
The government took steps in the late 1970s to manage and protect native forests on public land, with this approach extended to private land in 1989. Under the Forests Act there are restrictions on the felling, milling and export of native forests.
Forestry did not escape the wider economic reform that took place in the mid-1980s. The financial incentives for private sector planting ceased, and changes were made to how forestry was taxed. The Forest Service was split up; commercial forests were largely corporatised and then sold through the late 1980s and early 1990s. The management of native forests became the responsibility of the Department of Conservation.
The forest industry has seen significant plantings since 1990, responding to wood commodity price movements and the declining returns from other uses of the land. However in the last few years, a combination of increased international competition, low commodity prices, an unfavourable exchange rate and increasing transport costs have stifled growth.
There have been important new technologies applied in forestry – mechanisation in harvesting and processing leading to reduced labour requirements, improved breeding stock for trees, and improvements in forest management, including forest health and fertiliser application.
New Zealand remains a price-taker on the international market for forestry products, and is vulnerable to commodity price and exchange rate fluctuations. The industry is dominated by radiata pine, which has advantages as a species (it is very fast growing and it is suitable to our climate) and disadvantages (it is not as reliable as a building material when compared with some other woods). Some attempts are being made to diversify into other species and into more processed products.
Mining
Mining was an extremely important early industry for New Zealand, with coal and metals, particularly gold, being mined from 1850 onwards. Sizeable coal deposits were found on the West Coast and in the Waikato. Discoveries of gold deposits in Otago, the West Coast and the Coromandel led to gold rushes with associated large-scale immigration to New Zealand throughout the second half of the nineteenth century.
Mining also played a key role in the economic development of the country from an early stage by providing inputs to other production – for instance aggregates for roads, limestone for fertiliser, and coal for fuel. Production fluctuated throughout the nineteenth and twentieth centuries, based on discoveries of deposits and the development of new extraction and processing techniques.
New Zealand has extracted petroleum from the mid-nineteenth century, though serious production did not begin before the 1960s with the discovery of gas condensate fields in the Taranaki Basin at Kapuni (1959) and Maui (1969). While several other fields have been discovered and brought into production, Maui and Kapuni provide the bulk of New Zealand’s oil and gas production. Total gas and oil production has fallen since a peak in the late 1990s, largely as a function of reduced output from Maui. At the start of 2004, it was estimated that Maui and Kapuni had used about 86% of their reserves (Ministry of Economic Development, 2005).
As was seen above, mining production has been growing slowly in recent decades: an average annual growth rate of only 0.1% over the period 1978-2005. Included in this performance were periods of rapid growth in the early- and mid-1990s as a result of increased exploration investment in the 1980s. Following this, overall mining output has reduced. This masks differing performances within mining: for instance, over the period 1996-2001, gold production decreased by 15%, whereas coal production increased by 8%.
Key constraints on the mining sector in recent years have been the lack of sustained and large-scale investment in exploration, access issues, the increasingly large-scale and capital-intensive nature of mining, and environmental constraints. The Resource Management Act, through the resource consent process, has made firms more accountable for any environmental impacts that may result from their mining operations. According to Crown Minerals, the international mining industry views New Zealand as prospective, but seems to have negative perceptions about some of New Zealand’s policies, especially around land availability and environmental management.
Mining output contributes around $1.1 billion (1995/96 prices) per annum to New Zealand’s Gross Domestic Product, made up of aggregates, metals, industrial minerals, petroleum and coal. The bulk of production comes from Taranaki, Waikato, the West Coast and Otago. New Zealand has an in-ground coal resource of 15.5 billion tonnes, of which 55% is considered to be recoverable, large metallic mineral stocks, and large resources, though not well quantified, of non-metallic minerals and aggregates.
