Report slams accuracy of seabed mining project financial modelling

Saturday, 25 October 2025

The chairman of a company proposing to mine the seabed in the South Taranaki Bight is standing by its financial modelling despite a report claiming the economic benefits have been overstated.

The Financial Model Assessment of the TTR Taranaki VTM Ironsand Project report was submitted to the Fast Track Expert Panel considering the project, which has been met with widespread local opposition mostly based on concerns it will cause unprecedented environmental and ecological impacts.

Report author Dr Neil Loftus is chairman of the Auckland-based Sanofex Group, an independent provider of commercial financial reports and models for the offshore mineral mining industry.

He claimed to have produced the report out of concern “regarding the TTR project and their claims of economic and financial benefit to the Government, Treasury and public of New Zealand”.

It was presented to the panel in Hāwera on Tuesday in collaboration with the Whanganui District Council, which has submitted against the mining project.

The panel was in Hāwera this week for a conference to hear from iwi and hapū, councils and groups invited to comment on the seabed mining project application proposed in the South Taranaki Bight.

Loftus concluded TTR’s revenue claims were significantly inflated due to unrealistic assumptions about iron ore and vanadium pricing, freight costs and operational efficiency.

In the report, it claimed the revenue from vanadium was deemed implausible due to the lack of a viable metallurgical process, high operational and capital costs, and market conditions.

He said TTR’s iron ore was overvalued due to low grade iron content and impurities.

Loftus wrote that he wanted to provide an independent assessment of the project, because Siecap NZ Ltd, the specialist project management and advisory firm which conducted TTR’s pre-feasibility study financial model, had close ties to TTR.

“Siecap is not a valid independent assessor for the purposes of presenting an arms-length report, and in assuming TTR’s inputs to the TTR cashflow model are valid has caused the New Zealand Institute of Economic Research (NZIER) to further assume these inputs are valid for its own assessment of income-related outcomes such as GDP, royalties and taxation.”

TTR executive chairman Alan Eggers said the company “stands by all our Fast-Track Approvals Act expert reports and the information contained within them”.

TTR had responded to the Sanofex Group report as part of the Whanganui District Council’s application, in its comment to the expert panel.

“Our response is available on the Taranaki VTM Project Fast Track website. We have nothing further to add.”

The TTR response to WDC comments on the Fast-Track website, said: “Independence is not a requirement for preparing the Pre-Feasibility Study (PFS),” and that “the PFS was prepared under industry standards governed by the AusIMM (Australasian Institute of Mining and Metallurgy)”.

“Both Siecap and TTR personnel are members of the AusIMM and have the qualifications and experience required to undertake such assessments as Competent Persons.”

In summing up the complicated financial benefits of the project TTR has in the past stated the region would see hundreds of jobs, a $250m operational spend, upgrades to Port Taranaki and a charitable grants trust.

It estimated the project would annually generate $55m in royalties, $136m in corporate tax and $855m in foreign exchange earnings.

However the report estimated royalties over the 20 year project would be about $10m a year, with corporate tax between $9m and $17m annually and tax revenues just $120m a year, on average.

Whanganui district councillor Charlotte Melser said the report showed that “the claimed national benefits are exaggerated, and the local benefits are near non-existent”.

“When you strip out the inflated assumptions, the project goes from promising profit to a likely loss,” she said.

Melser said the council did not commission the report, but was offered it by Loftus to assist its submission to the Fast-Track Expert Panel.

“It was incredibly good timing, as his review of the economics aligned with what we knew was the case for our district, but his report provides an incredible amount of detail, a line-by-line review by someone who has an in-depth understanding of the industry.

“Whanganui District Council is not opposed to development, quite the opposite. But we are opposed to bad economics and bad environmental, social and cultural outcomes.”

She said the council had not had any significant consultation with TTR, yet in its response to comments from New Plymouth District Council, the company stated that “the project’s geotechnical and environmental monitoring facility will be based in the Port of Whanganui (condition 85)”.

Mesler said there had been no engagement from TTR with the Whanganui Port Company, which was currently undertaking a substantial redevelopment.

“We suggest this would be a sensible time for TTR to enter into active consultation with WDC and the Port of Whanganui, but there has been none to date,” she said.

Meanwhile, the Sanofex report was also mentioned by mining expert Jill Cooper, in her affidavit on behalf of comments by KASM and Greenpeace.

Cooper, who had worked in the mining industry in Australasia for over 40 years, said there were significant operational and commercial risks that were not adequately addressed in TTR’s application.

“In my opinion, revenue from vanadium extraction is entirely speculative and should not be included in the financial model used to assess the project’s economic viability.”

There was also a glut in global iron ore reserves, with China producing steel well beyond overall global requirements, and current market analysis presented a poor outlook for new iron ore projects, she said.