As the construction sector’s appetite for rock and aggregate continues to grow, farmers may find themselves sitting on the opportunity to invest in a second income source, in the form of a quarrying operation.
Television New Zealand recently reported on the burgeoning demand from the construction sector for rock fill, generated as much from the continuing growth in building construction as it is from earthquake repairs and roading development.
New Zealand is a heavy user of aggregate, at about 40-45 million tonnes a year it equates to almost one dump truck per person.
But heavy extraction from quarries near cities is pushing many to the end of their economic life, and gaining consent for new quarries in increasingly urbanised areas is proving more difficult to do. Due to aggregate’s low value and high bulk transport costs, councils, roading contractors and spreaders all prefer to source locally where possible.
“Heavy extraction from quarries near cities is pushing many to the end of their economic life, and gaining consent for new quarries in increasingly urbanised areas is proving more difficult to do.”
Earlier this year Templeton residents near Christchurch launched protest action at a planned quarry project they said would lower property values and affect lifestyles with its dust and noise emissions.
Steve Levet, Northland based president of NZ Rural Contractors is three years into operating a quarry business. He has welcomed the opportunity to find a second income source alongside his rural contracting business.
He is quarrying lime rock that is proving suitable for applying to farm and forestry roading around the region, and further field for Auckland City.
“There is a good supply there, and the dairy farmer we lease the quarry off is completely hands off, he receives a royalty cheque every month and we have a good resource with a good life span ahead of it to work with - so it is very much win:win.”
Steve says he has a farming friend further north who attributes a quarry operation on his property to helping keep his farm business going during a particularly tough downturn in 2008.
“When farming hit the doldrums for him, the quarry business allowed him to continue investing in the farm. He was able to maintain and even upgrade the fencing and races which he says he would not have had a hope of achieving otherwise.”
For Steve the quarry operation is also a win:win for his other business, rural contracting.
“It is a very volatile business to be in, and especially so in Northland given how the weather can swing quickly against grass growth, you don’t want to over-invest in gear. So the quarry provides us with a good year round income that is more stable, and good winter income in particular, when farmers are wanting rock and material for races.”
Farm-quarry operations often go hand in hand when the footprint of the quarry also includes some pastoral land around it. Sometimes that pastoral area provides the necessary buffer to reducing noise, dust and traffic impacts that can accompany quarry operations.
Steve cautions a quarry operation will always be dependent upon resource consent, which can be particularly onerous about the operation’s traffic, noise and dust impacts.
“You can be up for a considerable investment to get it over the line, and you need to be confident you have the size of the resource there to make it a commercially viable decision.”
His own operation runs on a 5ha footprint with three full time staff, and a moderate investment in diggers alongside a crushing plant he developed himself.
Bayleys Whangarei rural agent Alex Smits has a Matarau limestone quarry and transport business west of Whangarei listed and up for tender in the region at present that is attracting strong interest locally and further afield. He also has a farm listed that includes a valuable silica sand operation on it, near Tapora on the Kaipara harbour.
The simple Matarau limestone operation on a 4.15ha footprint is returning a profit of about $150,000 a year, providing high quality limestone to farms around the district for farm races.
“This operation has consent to run until 2035, with good equipment and machinery. If you have been farming and are seeking an alternative income, or maybe want to step off the farm but stay involved in the industry, this is a great opportunity.”
“If you have been farming and are seeking an alternative income, or maybe want to step off the farm but stay involved in the industry, this is a great opportunity.”
When it comes to looking for aggregate deposits on a farm, Alex says it is a resource that can add some intangible value to a property, even if it is not developed by the current owner.
“It may save you money if you just quarry for your own use. Or if you feel the resource is big enough, you could partner up with someone who is more experienced in quarrying, and earn a royalty for your efforts.”