Economists clash over price of gold, likely benefit of controversial Central Otago mine
Thursday, 18 June 2026
The volatile price of gold has been highlighted as a reason why the promised economic benefits of a Central Otago gold mine have to be considered with caution, experts have told officials.
The Fast-track panel considering Australian company Santana Minerals’ planned mine near Cromwell heard from economists on Wednesday about the mine’s likely impact.
However, calculating the project’s benefits was complicated by what the price of gold might be over the mine’s 14-year lifetime.
Recent high gold prices have increased the potential value of Santana’s proposal, but some experts warned it was unrealistic that prices would remain high.
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Santana says its Bendigo-Ophir Gold Project is New Zealand’s most significant gold discovery for 40 years, and suggests it could reap more than $6 billion in gold sales and $1.25b in taxes and royalties for the Government.
Santana’s economist, Benje Patterson, provided a range of economic outcomes, based on average gold prices between US$2220 and US$4700 an ounce, suggesting the likely average for the mine’s life was around US$3100.
The current gold price is about US$4300 per ounce, and Patterson said there was strong international consensus that prices would remain reasonably high, well above his low-end projection.
Otago Regional Council economist Kirdan Lees accepted gold prices were “exceptionally volatile”. But he also believed prices would stay relatively high given factors such as central banks increasing the amounts of gold they held, with Lees saying the banks wouldn’t do this if they thought they would get burnt by the gold price falling sharply.
However, Richard Meade, an economic expert for Sustainable Tarras, a group opposing the mine, said it was “utterly implausible” that gold prices would remain as high as Santana was predicting.
He said at no time in history has gold stayed over US$3000 an ounce for a sustained period, and he suggested the long-term average price would be between US$1850 and the US$2220 Patterson suggested as his low estimate.
“People get stars in their eyes when gold prices spike, and this is where you get a whole lot of goldminers rushing in,” Meade said.
He urged “a degree of conservatism and sobriety” in assessing the mine’s economic benefits.
Meade pointed to the current price having dropped to US$4300 from a peak of US$5600 in January, and said if people believed it would stay above these levels, in line with Patterson’s high estimation, “you should be buying gold and sticking it in a vault and sitting on it for 16 years. Good luck with that.”
Uncertainty about the mine’s economic returns were also raised in relation to the tax and royalties Santana would pay.
Some experts warned Santana may defer taxes and possibly never pay them, depending on economic conditions and unforeseen negative events.
Another Sustainable Tarras expert, Edward Miller, said Santana had an obligation to its shareholders to reduce the tax it paid, “and they will try to use all the tricks in the book to do that”.
But Patterson pointed to another New Zealand mining company, OceanaGold, which is due to pay about $200 million in taxes and royalties from 2025.
However, Patterson didn’t mention OceanaGold only paid about $50m in corporate tax for the five years before that, including two years where it paid no corporate tax at all.
Patterson said Santana’s mine promised up to 370 high-paying jobs, and a significant contribution to gross domestic product through these.
And he said its economic impacts on nearby existing industries in the Bendigo area between Tarras and Cromwell, including tourism and viticulture, would be “negligible in scale”, if the mine adhered to consent conditions.
Several experts were critical that Patterson’s economic assessment wasn’t a full cost benefit analysis, and didn’t put a monetary value on things like cultural, heritage, ecological, and landscape aspects.
However, Lees said, while a cost benefit analysis may benefit the panel and help it weigh the project’s impacts, there was no requirement for Santana to do this under the Fast-track Approvals Act.
“It’s not my legislation.”
Environmental Defence Society expert Bill Kaye-Blake said Santana’s approach was “overstating the benefits, and understating the costs”.
He noted he had been “chastened” in the past by his experience with dotcom companies, which looked a good thing in 1998 but collapsed three years later.
Sustainable Tarras expert Geoff Bertram said it was likely Santana, which has never built a mine before, would eventually go into a joint venture with a larger mining company, or sell out completely during the project.
He said there were were obvious economic benefits of the project, but wasn’t persuaded these outweighed the negative impacts, and wished the panel well for trying to weigh these aspects.
The panel is due to make a decision on whether the mine will be approved by October 29.