New Zealand’s mining boom: Fabulous fortune or fool’s gold?

Sunday, 8 February 2026

Promised riches from new gold mines are as tantalising as they are dazzling. But are the numbers too good to be true? Mike White investigates whether the benefits of the new gold rush outweigh the costs.

Just after 9am last Monday, Central Otago’s District Council issued a press release announcing a multimillion-dollar deal with Australian mining company Santana Minerals.

The agreement meant Santana would pay the council $1.25 million every year when its proposed gold mine in the hills near Cromwell began production, in return for use of two public roads leading to its mine site.

Without access along these public roads, Santana’s controversial project was dead. Hence why it was willing to pay the council what will be close to $20 million over the estimated 14-year life of the mine, if it goes ahead.

The decision to do a deal had actually been taken five days earlier at a council meeting.

But, like the preceding negotiations with Santana, it had been done behind closed doors and kept secret from the public until joint press releases and a cheesy handshake photo between council and Santana CEOs had been arranged.

Reactions were as swift as they were divided.

Santana Minerals’ proposed gold mine has upset many in the Central Otago community.

Some saw it as fantastic news that brought the mine a step closer to starting, along with 350 promised jobs.

But others saw it as blatant bribery by Santana, and the council selling out to a foreign corporate by trading a public asset for “a nickel and a dime”.

And debate over whether the price was too cheap raised a bigger, more important question: Are New Zealanders getting a good deal from the mining boom, or are we getting ripped off?

Are we sitting at the table enjoying the banquet, or are we just a lurking cat being tossed an occasional titbit?

Cash or crash?

As the price of gold has skyrocketed, New Zealand has increasingly become an attractive target for mining companies.

Supported by a government determined to “turbocharge” the mining sector, and facilitated by Fast-track legislation that condenses the consenting process for things like new mines, New Zealand’s mining industry has suddenly woken from a slumber.

In the words of one mining company executive last year, Otago is the new West Africa when it comes to gold mining.

The numbers thrown around by mining companies like Santana are stupendous and dazzling.

Santana’s documents have included descriptions of its proposed mine as a “Cash Machine”, alongside a graphic of a piggy bank with coins being dropped in, and a promised “$2.5 billion free cash”.

As gold prices soared, projections of Santana’s profits also swelled, more than trebling.

Even at much reduced gold prices, Santana was promising to pay $1.5 billion in taxes and royalties over the mine’s initial life.

“A hundred million bucks a year - that’s a school or two, or a hospital,” exclaimed Santana CEO Damian Spring last year.

But Massey University mining expert Professor Glenn Banks warns the gold industry’s hype, much of it done to attract investors, isn’t as glittering as it seems.

And while the industry is flying high at the moment, this week’s 10% plunge in prices shows how predictions can be rendered meaningless in a moment, he says.

“So let’s not pretend this is a nice, stable sector where we know what the returns are going to be every year, because we don’t.

“It’s a classic boom and bust sector. And when it goes bust, these are not the stories the mining industry tells you when they come along with their big narratives about how wonderful this is going to be for the country.”

Banks, who has worked in the mining industry, says we don’t adequately question mining companies’ promised benefits, which are often just assumptions and optimistic estimates.

“People who’ve been involved in the mining industry will tell you that none of this is assured - there’s disasters waiting to happen at every turn. Things will go wrong.

New Zealand’s largest gold mine, OceanaGold’s Macraes mine, near Palmerston. It is only 90km from Santana’s proposed mine near Cromwell.

“And some years, companies won’t return a profit, and won’t pay any taxes.”

So, are new mines a fantastic deal for New Zealand Inc and the public?

“They’re certainly not the deal that the companies and Shane Jones make them out to be,” says Banks.

“At a national level, I think we’re going to be disappointed.

“I don’t think it’s going to give us the economic returns that they spruik.”

What do I get?

So, what are the ways that mining helps the country economically?

There are export receipts, as most minerals leave NZ without being processed.

There is corporate tax of 28% - but as Banks points out, companies’ costs can be written off against profit, leading to the country’s main gold miner, Canadian company OceanaGold, not paying any tax in 2021 and 2023.

There is also income tax from the 7470 workers in the industry, who are among the highest paid in the country, with wages generally well over $100,000.

OceanaGold's underground gold mine at Waihī.

There are profits for New Zealanders with shares in mining companies: Santana Minerals has about 22,000 Kiwi shareholders, who own about 43% of the company.

Then there are royalties.

Virtually all minerals in New Zealand, whether they are found on public or private land, belong to the Crown - to the public.

As Auckland University emeritus professor of economics Tim Hazledine says, mining companies “aren’t making better bubblegum or creating something, they’re exploiting something which belongs to us - it’s owned by all New Zealanders.”

To extract and benefit from minerals, miners must therefore pay a royalty to the government.

For gold mining in New Zealand, this has been set since 2013 at 2% of gold sales, or 10% of the company’s accounting profit, whichever is higher.

But the reality is, virtually all gold mining companies pay only half this (1% of the sale value or 5% of accounting profits) due to their operations being “grandfathered” by the previous 1996 royalty regime, because their mines are connected to the original permits.

Only one gold mine in New Zealand currently pays the increased 2013 rates.

This means that in 2024-25, royalties from gold mining were only $11.6 million. Royalties from coal were just $1.78 million.

While comparisons with other countries are difficult due to differing ways of calculating royalties, New Zealand’s rates appear low.

In Australia, gold royalties are 2.5% in Queensland and 3.5% in Northern Territory. Victoria is 2.75%; South Australia 3.5%; New South Wales 4%; and Queensland 5%.

Further afield, Papua New Guinea’s government has proposed increasing its gold royalties to between 5% and 10%.

For comparison, large tourism operators in New Zealand are charged 7.5% of gross revenue for concessions to use conservation land such as national parks.

Parliamentary Commissioner for the Environment, Simon Upton.

The Ministry of Business Innovation and Employment is currently conducting a review of the minerals royalty regime, something Labour’s energy and resources spokesperson, Megan Woods, strongly supports.

“It seems absolutely logical that New Zealand would get a fairer share if we increased the royalty rates,” Woods says, adding that she wanted to see details first.

But the chief executive of mining industry group New Zealand Minerals Council, Josie Vidal, warns against changing current rates.

“I think it’s adequate and appropriate, and the money comes from companies doing well, and I’d reject any increase to that royalty.”

Vidal says royalty rates will rise with increased gold prices and profits, and lifting royalties would simply harm mining businesses.

“You can’t kill the golden goose before it’s laid an egg. The money that could come into this economy will be stripped out if there’s any ridiculous increase to royalties.”

Instead, Vidal says the government should concentrate on fostering companies’ success so they pay higher corporate tax, “and have happy workers earning lots of money, and paying tax, and contributing to their economy.”

Doing your homework

With mining proposals continuing to polarise communities throughout New Zealand, it’s easy to be seduced by extraordinary figures about profit, and tallies of projected jobs. Who doesn’t love something with the word “billions” threaded through its accounts?

But how do you put a dollar figure on the potential reputational damage to Central Otago’s wine or tourism or horticulture industries by having a 24/7 open cast mine as a neighbour?

How do you quantify the effect more workers will have on a region that already has extremely high house prices and rents?

How do you factor in the likelihood that mechanics, drivers, and agricultural workers will leave their current jobs for higher wages at the gold mine, and leave other industries and employers struggling to find workers in a region that already has the country’s lowest unemployment rate?

And how do you put a dollar figure on potential damage to the environment, or the risk to a population, when weighing up whether a mine should go ahead?

Parliamentary Commissioner for the Environment Simon Upton has repeatedly stressed a thorough cost-benefit analysis is required for mining projects.

In his submission on the Fast-track bill, Upton said a failure to do this would mean favouring a quick boost to consumption over the long-term wealth of the community.

If extensive cost-benefit analysis was actually conducted, Upton said, “I would expect projects that exploit public resources for private benefit, such as extractive industries, to deliver a positive result only in rare cases where their negative impacts are offset by exceptionally valuable outputs.”

Upton has also cautioned about the benefits of mining being exaggerated.

In his submission on OceanaGold’s Waihī North mine extension, Upton said the panel “should be wary of relying solely on an applicant’s economic analysis, given the incentives for applicants to overstate the benefits and underestimate costs.”

He pointed to companies highlighting increased jobs and tax-take, saying this was often irrelevant, as these people weren’t “sitting idle”, and would usually be coming from other jobs where they also paid tax, so there may be little net economic gain.

Show me the money

In October last year, Labour MP Damien O’Connor played grinch at the West Coast Minerals Forum in Runanga, quashing the room’s enthusiasm, questioning the industry’s vaunted promises, and labelling the royalties they paid “a disgrace”.

“If [mining] was that good [for the community], every one of us on the West Coast would be multi-millionaires.”

And while mining industry has the highest salaries of any industry in New Zealand, with a median weekly earning of $2407 (agriculture $1309; health $1343, manufacturing $1408), it hasn’t seen the streets of towns where it occurs paved with gold.

Stats NZ figures based on the 2023 census show the median personal adult income of the main mining areas remains well below the national median of $41,500.

Waihī is $25,500; Palmerston, where the country’s largest gold mine, Macraes, is based, is $32,600; and the West Coast is $32,700.

Opponents of a fast-tracked mining expansion on the Denniston Plateau, near Westport. Mining proposals have proved extremely divisive across New Zealand.

But mining’s role in these regions can’t be understated.

On the West Coast, it provides 760 jobs, about 5% of the region’s workforce (up 10% in the last year), and added $223 million (7.9%) to the Coast’s GDP in the year to March 2025.

Economist Shamubeel Eaqub, who contributed to OceanaGold’s Waihī North mine Fast-track submissions, says a question that needs to be asked is, what happens if such projects don’t go ahead?

“The choice is between having those resources that are dug out, with consequences, or those resources that are left there.”

Eaqub says while mining hasn’t been a big player in New Zealand’s economy since the 19th century gold rush, it was an important part of some communities, where there were few options if mines weren’t permitted.

“Would we really have these jobs being sustained in Waihī for another 10 years, paying over $100,000 a year? I don’t think so.”

On the West Coast, Eaqub said the alternative to mining jobs was no jobs.

How this was balanced against costs to the environment and other pressures that came from mining, was something the Fast-track panel had to weigh up.

“Is it easy to do? No. Has it ever been easy to do? No.”

The best of enemies

In debates as fractured and fractious as mining proposals frequently are, Eaqub points to the ultimate cost-benefit analysis and most difficult equation: How does a community cope when a decision is made that upsets some? How can you engage and consult with a community so people don’t become enemies?

Eaqub says those who oppose a mine for valid reasons don’t just disappear if the project goes ahead.

“And given where the political pressures are at the moment, it’s likely we’re going to see many more yeses than noes.

“But we’ve created divisions and animosity, which is not good for the community. Because the community is still going to be there after the mine’s gone.”

Glenn Banks agrees that those aggrieved by mining decisions “are still going to be pissed off in 20 years’ time” if the mining company and process alienate people.

“Mining tends to fracture communities in ways that aren’t particularly healthy,” Banks warns.

“It’s not the sort of activity that binds communities together.”