THE PRESS THURSDAY, AUGUST 4, 1977. The Kanieri dredge

Press, 4 August 1977, Page 16

THE PRESS THURSDAY, AUGUST 4, 1977. The Kanieri dredge

The writing is on the wall for the Kanieri gold dredge, judging by the figures in the annual report of Amoil N.Z., Ltd. The company finds it “difficult to be optimistic regarding the future of Kanieri” and hints that the dredge will not survive unless it recovers more gold each month than it has recently. Since the dredge began working a new area on the Taramakau River a little more than a year ago. the amounts of gold recovered have been below expectations and well below the amounts being recovered before the shift. At the same time, while the costs of running the dredge have been increasing steeply, the world price for gold has been fluctuating rather than steadily increasing.

The question which these figures raise is whether, if the company cannot run the dredge profitably while receiving a price for the gold recovered which is reasonably close to the world price, the Government should agree to buy the gold at a considerably higher price than the price it would have to pay if it bought the gold overseas. The Government agreed to pay an official base price for Kanieri gold in 1966 when mining costs moved ahead of the then-pegged world price. At that time, the dredge was recovering sufficient gold to ensure a real benefit to the economy by making the importing of a significant amount of gold unnecessary. Guaranteeing the dredge s profitability.

however little gold it is recovering and whatever the world price for gold, is a more dubious proposition. The poor performance of the dredge on the ground it is now working suggests that a wiser move might have been to shift it further to the richer ground which is supposed to be offering in the Grey valley. This shift was being considered three years ago, but even then it would have been beyond the resources of the company alone. Government assistance to transfer the dredge might be a better proposition than paying a price for the gold high enough to enable it to continue working its present ground, but only if there is a firm assurance that at the new site the dredge will indeed recover sufficient gold to justify its continuing in operation.

Government support for the dredge, in the form of a high price for gold won in New Zealand or in the form of direct assistance to enable the company to transfer the dredge to richer ground, could perhaps be justified on the grounds that it spares the country having to buy overseas some of the gold it needs, and that it helps to sustain the economy of a region with uncertain prospects. But no Government assistance for the dredge should be forthcoming unless definite benefits either to the West Coast or to the economy would result from such assistance.