Ann: GENERAL: CRP: Major economic benefit for NZ

• Release Date: 05/09/12 10:30
• Summary: GENERAL: CRP: Major economic benefit for NZ from Chatham Rock Phosphate
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CRP
05/09/2012 08:30
GENERAL

REL: 0830 HRS Chatham Rock Phosphate Limited

GENERAL: CRP: Major economic benefit for NZ from Chatham Rock Phosphate

5 September 2012

Major economic benefit for NZ from Chatham Rock Phosphate project

New Zealanders will be $1.3 billion better off as a result of developing the
Chatham Rock Phosphate resource, a study by the New Zealand Institute of
Economic Research says.

The highly respected economic research agency was commissioned by CRP to
study the economic impacts of its project to develop a seabed phosphate
resource on the Chatham Rise.  The report is supporting the company's mining
licence application to New Zealand Petroleum and Minerals.  An environmental
analysis by NZIER is underway.

"Implementing the mining project over 16 years is equivalent to the country
becoming $1.3 million richer today," the report said.  "At least $800 million
of that welfare will accrue to people with no ownership in CRP."  On an
annual basis it represents a wealth injection of $180 million a year, of
which $115 million benefits non-owners of CRP.

The company will be applying for a mining licence within a few weeks to
develop a 25 million tonnes rock phosphate resource located at a depth of 400
m on the Chatham Rise, 450 km from New Zealand and 150 km from the Chatham
Islands.  A marine consent, covering environmental issues, will be sought
once the regulations are completed for the newly enacted EEZ legislation.

 CRP expects the project to increase New Zealand's exports of rock phosphate
by $230 million a year and substitute for $110 million of domestic imports
annually.  CRP's injection of wealth creates flow on effects that generate
another $80 million in other non-phosphate exports.  "The increase in
household incomes generated by the extra wealth allows imports to rise by
$170 million over and above the direct impact of CRP."

The project will generate $300 million of export revenue for each of the 16
years of production, boosting GDP by $380 million.  It will also remove New
Zealand's dependence on imported rock phosphate, of which New Zealand imports
at least $185 million annually.

"The economic cost of the operation is primarily in the penalty our exporters
pay from an appreciation in the dollar.  However that penalty is small and
the appreciation allows New Zealanders to obtain cheaper goods from
overseas."

The report notes the benefits are sensitive to world demand for rock
phosphate.  The scenario does not include the investment or environmental
costs of the project (which is being assessed separately) and assumes that
the increase in domestic production does not reduce the price of rock
phosphate.

CRP managing director Chris Castle said the economic benefits of the project
speak for themselves: "The project will reduce imports and increase exports
of rock phosphate.  It will also mean we reduce commodity price risk, foreign
exchange fluctuations and security of supply from politically unstable
countries and promote a new industry for New Zealand with skilled technical
and support roles.

"While our shareholders will benefit, other New Zealanders benefit even more.
 Not only are there significant economic benefits, there are also strong
environmental advantages."

The NZIER report looks at the direct and flow-on effects of the project
including $105 million in annual profits for CRP, $32 million in tax and
royalties, $38 million in transport and $190 million in costs, as well as
downstream spending by households.

Chris Castle,

Managing Director,  Chatham Rock Phosphate

021 558 185, [email protected], www.rockphosphate.co.nz
End CA:00226919 For:CRP    Type:GENERAL    Time:2012-09-05 08:30:11