If 1.2 million tonnes seemed a small 'benefit' for so much harm, what about 875,000?

Aggregate Industries' application for Straitgate talks about the extraction area containing "in the order of 1.2Mt of saleable sand and gravel" with further saleable mineral "anticipated" in the overburden 3.8; "the proposed ‘dry working option’ would avoid the need to excavate below the groundwater table" 3.37. 

After the Environment Agency confirmed that "Aggregate Industries have proposed to stop quarrying a metre above the water-table", a revised resource figure would have been expected, but a company spokesperson has claimed that this metre had already been factored in to its calculations and therefore it still has 1.2 million tonnes.

Whatever you believe, nowhere in AI’s application did it talk about leaving 1m of sand and gravel to safeguard groundwater. And AI would surely have broadcast the matter of charitably forsaking 500k tonnes gross, 400k saleable, to protect water supplies for people and ancient woodland; after all, it found space to talk about cutting back its own trees to mitigate 1.2 million HGV miles! Besides, if AI had factored in leaving 1m above the water table, it’s a mystery why statements like this were made:

Mineral extraction to the high groundwater level surface contoured from maximum groundwater levels from all data would be dry for the vast majority of time… 4.2

Fortunately, because we have the 1990 borehole data on which AI’s resource calculations are based, and because "an area of uniform shallow simple geology [covers] the western part of the site" 4.1, it’s relatively easy to estimate the available resource.

By combining AI’s geological map and AMEC’s groundwater map, with surface elevations (brown contours) overlaying maximum groundwater levels (blue contours), and taking a series of differences at 55 equally-spaced points across the site, the average depth over maximum groundwater was calculated to be 5.53m. Subtract from this, 2.28m (the average depth of topsoil/overburden - AI's figure) and 1m (the depth above the water table to be maintained), multiply the result across the 25.6ha (256,000m2 - AI's figure), and, assuming a density of 1.9 tonnes/m3 and 20% waste (AI's figures), we are left with about 875,000 tonnes, before any of the unproven "workable overburden".

The map of the combined contours is below; here’s the calculation:

(5.53-2.28-1.0)m x 256,000m2 x 1.9tonnes/m3 x 80% = 875,000 tonnes (saleable) 

Even assuming a margin of error of +/- 0.5m on each of the 55 differences, the resource figure falls in the range of +/-195k tonnes, or 680-1070k; i.e. still short of AI's '1.2 million'.

And of course, there won’t be 25.6ha by the time face angles, proper standoffs from the A30 - see Highways England’s response - and listed buildings are factored in; an area of 23ha, for example, could yield less than 800k tonnes. Bear in mind too, this submission in 2012 to the Competition Commission by Wardell Armstrong, ‘one of the largest teams of Chartered Minerals Surveyors in the UK’:

... no aggregates operator would consider (for example) trying to develop a sand and gravel deposit of less than one million tonnes. We have clients who have sites which have been turned down on this basis.

In 2012, DCC went to public consultation with an incorrect resource figure of 3.6 million tonnes for Straitgate Farm. This week, DCC's DMC committee will be asked to endorse the Pre-submission Draft of the new Devon Minerals Plan, before the start of a 12 week public consultation. This plan seeks to identify Straitgate Farm as a "specific site" for the future supply of sand and gravel, because there is "1.2 million tonnes of proven resource"; yet again, that so-called 'proven' figure looks incorrect before consultation even starts.

Given the ever declining and consistently overestimated resource, it’s time for AI to show exactly how it has calculated the recoverable resource at Straitgate, and exactly what assumptions have been made, so that we all know exactly what the damage to an East Devon farm and a site of European importance to nature is all for.

Landbanks - government guidance says they don't matter any more

At least when it comes to deciding if a new quarry should be permitted. Which is bad news for anybody looking to Devon's 15 year landbank of sand and gravel as a reason for denying Aggregate Industries permission to quarry Straitgate Farm.

The Government published Guidance on the Managed Aggregate Supply System in October 2012, and such advice was apparently considered when DCC prepared its LAA. However, the LAA did not allude to what surely every mineral operator will latch on to, and what was relied upon by AI in its submission to the Competition Commission (CC) released earlier this year, namely:

Moreover, as the CC notes, the new planning guidance issued by the Department for Communities and Local Government states that adequate landbanks should not be used as a reason for declining a planning application. (5.14)

Which goes some way to explaining why AI is merrily proceeding with Straitgate, despite the county having 8 years' supply of sand and gravel over and above what's required by the NPPF, and despite what DCC said as recently as 2011:

For as long as adequate sand and gravel reserves (i.e. a minimum of seven years’ supply) continue to be present at the existing quarries, there are no grounds to allow their further extension or new quarries. (5.1.4)

AI plainly couldn't care how DCC's landbank is calculated - weighted ten year average or otherwise. To AI it's irrelevant, since government guidance clearly states:

each application for minerals extraction must be considered on its own merits, regardless of the length of the landbank… an adequate or excess landbank is not a reason for withholding planning permission unless there are other planning objections which are not outweighed by planning benefits. (25,26)

Yes, such advice is but one of a number of material considerations by which a planning application would need to be judged, but government planning policy would tend be relied upon by the legal might of an aggregates giant. Straitgate would therefore have to be assessed on its "own merits" if AI were to advance an application, in which case there are a number of other substantive planning objections, as this blog has attempted to highlight.

Secondary vs. Primary

The left pile: secondary aggregate - a by-product from china clay (kaolin) operations dumped for over 250 years as waste in huge amounts across Cornwall and Devon; the right pile: primary aggregate - a finite virgin resource sitting under Straitgate Farm. Two different materials we are told; different properties - physically, chemically, economically.

Whilst DCC in its Local Aggregate Assessment said "Devon has the capacity to support increased production of secondary... aggregates", it also said that "limited spatial occurrence" and "technical requirements" may constrain their use.

In evidence to the Competition Commission, however, Aggregate Industries said that whilst "in Cornwall and Devon alone there was about 600 million tonnes of secondary aggregates already available with about 40 million tonnes more being generated a year", its customers were "increasingly able, willing and prepared to use secondary and recycled aggregates". AI added "secondary and recycled aggregates now accounted for between 25 and 30 per cent of the current market and were a substitute for primary aggregates in the vast majority of cases. AI used secondary aggregates in its own production of [ready mix concrete] and other products."

The aggregates levy, currently £2 per tonne, was introduced by the government in 2002 not only to "address the environmental costs associated with quarrying" but also to support "the use of alternative materials such as recycled materials and certain waste products". Encouraging local use of secondary aggregate would have the advantage of extending reserves of sand and gravel whilst also reducing the 'mountains' of tipped waste across Cornwall and Devon. Is Devon's Mineral Planning Authority doing enough to achieve this?

Admittedly, not all china clay waste is suitable - nine tonnes of waste are generated for every tonne of china clay produced - but for the right quality of granite fraction (stent) there has been a "long history of satisfactory use in ready mixed concrete over much of Cornwall and Devon". In addition "An assessment of the specifications and standards available demonstrates that there are a significant number of applications available for the use of China Clay waste derived aggregates. While many secondary materials are used in low value applications such as fill, China Clay waste derived aggregates are suitable for a number of higher value applications including use in concrete and bitumen bound products."

Furthermore, it's now finding applications elsewhere. In 2006 the construction of One Coleman Street, a prestigious commercial building in London, was "the first major use of china clay stent coarse aggregate outside the locality of its production in the South-West" and "demonstrated the feasibility of using 100% secondary coarse aggregates in a large scale project remote from the source of aggregate". The stent aggregate concrete "cost a little more" due to the "transportation and testing costs" but this was partially offset by the stent being "exempt from the UK aggregates levy" and "if used more often for future projects there would be less need for extensive testing". The project won the 2007 Concrete Centre Award for Sustainability. AI will know about it since it supplied the aggregate. It will also know about the construction of the Olympic Park, where it supplied "secondary aggregates arising from the production of China Clay".

So, if the economics can work supplying London, why not Devon?

With existing supply agreements coming to an end, "IMERYS Minerals Ltd are actively developing the growth of their secondary aggregates (china clay waste) products from Cornwall and are currently seeking partners to realise the full potential of the materials in the markets they serve". With its new Minerals Plan, maybe DCC should work with Cornwall to facilitate and encourage this. And how about Devon's own levy too, on primary aggregate extracted from the Budleigh Salterton Pebble Beds?!

Can Straitgate produce a ROI of 8% for Holcim?

Naturally, the question of financial return is central to whether Aggregate Industries and parent Holcim ultimately take Straitgate forward to a planning application. We have argued before that the commercial viability of a quarry here can only be marginal at best, and is a factor not yet assessed by DCC despite the NPPF saying "Pursuing sustainable development requires careful attention to viability and costs in plan-making and decision-taking. Plans should be deliverable." Holcim is now however working to a new financial benchmark.

A summary of the initial hearing held with AI on 16 May 2012 for the Competition Commission makes clear that "Holcim had recently publicly announced a new cost-cutting plan in order to improve the group’s profitability. Holcim needed to achieve an overall return on investment (after tax) of 8 per cent, while AI’s operations were only currently achieving a 2.7 per cent return (before tax)."

Yet "there had also been significant increases in the production costs, particularly for fuel and energy, for these products. Increased taxation such as the aggregates levy and carbon taxes had also raised costs." In December Holcim announced it was "to accelerate a restructuring program and write off 410 million Swiss francs of fixed assets in Europe". 

Investigations by AI and its consultants will uncover more about Straitgate's commercial potential, but here's a list of some of the other costs that AI will need to consider, over and above operating costs, before breaking the ground at Straitgate Farm once again:

Cost of preliminary work: surveys, consultants, boreholes, test pits, material testing

Cost of planning permissions and appeals; legal costs; professional fees

Cost of public relations: exhibitions, local liaison

Cost of site infrastructure: weighbridge, offices, etc.

Cost of access modifications: road modifications, land purchase required for access

Cost of a 15 mile round trip for each load of as-dug material transported to Blackhill, if permitted. If not

Cost of moving and constructing new plant at Rockbeare if permitted

Cost of acceptable standoffs from homes thereby reducing the recoverable resource

Cost of protecting the setting of the listed Straitgate Farmhouse thereby reducing the resource

Cost of restricting excavation to 1m above highest water table as enforced elsewhere

Cost of downstream flooding mitigation - in perpetuity

Cost of preserving stream flows to wetland habitats in Ancient Woodland - in perpetuity

Cost of protecting private water supplies

Cost of restoration (if it were to ever get that far)

Cost of a community fund for local projects in compensation to local people

Less of course what AI can sell the site for afterwards, which could be significant if industrial development were to be permitted, or not, as in the case of Foxenhole where 38 acres sold for £300k last year - no more than the going rate for farmland.

Would Holcim accept a lower return in order to maintain local sales control? Would a Swiss-based multinational care? In the end the limited resource and the cost burdens may well undermine the commercial rationale for proceeding, particularly if Holcim's 8% target is to be met. 

Aggregate market investigated by Competition Commission

Is now the time for DCC to be promoting a site belonging to Aggregate Industries when they and others are the subject of a Competition Commission investigation, the result of which will not be known until 2014?

In January 2012 the Office of Fair Trading referred the aggregates, cement and ready-mix concrete [rmx] markets to the Competition Commission (CC) having "concerns regarding structural features of these markets and reasonable grounds for suspecting that these are preventing, restricting or distorting competition." The confidential parts of AI's response have been removed, and whilst acknowledging that what they say to the CC in answer to their concerns might not correspond exactly with what they would say to DCC to justify the need for a brand new sand and gravel site at Straitgate Farm, from what remains there are some interesting snippets.

Firstly AI bemoan their economic situation: "2.22 This is an industry suffering from a substantial fall in demand, increasing costs and significant pressure from customers. These are not the market conditions that favour suppliers seeking to profit to the detriment of consumers."

A couple of relevant themes come out: On the subject of demand:

"1.3 A fundamental change in building techniques and preferences meant that as the UK economy improved during the 1990’s the demand for aggregates did not return to pre-recession levels. More recently a sharp downturn in demand since 2007 has resulted in an unprecedented contraction in house building and infrastructure  expenditure." "2.1 A significant contribution to the lack of recovery in the 1990s was a  change in the design of buildings. Steel, glass and timber, for example, are increasingly used as a replacement for rmx.  Improvements in the design of buildings and houses, as well as better concrete specification, have also significantly reduced the demand for aggregates and concrete." "2.6 Forecasts for the future provide little encouragement for a recovery until at least 2015: (a) the Government’s austerity measures mean that any increase in public spending on infrastructure projects in the near future is highly unlikely."  

On the subject of secondary and recycled aggregates:

"3.10 The increase in the levy on primary aggregates, new recycling technology and changes in product specifications over the last 15 years have supported the growth in sales of recycled aggregates. Whereas primary aggregates suffered a fall in demand post 1989, recycled and secondary aggregates grew throughout the period from 1989 to 2007. Secondary and recycled aggregates have, according to the [Mineral Products Association], grown from constituting 9% of all UK aggregates in 1989 to accounting for 28% in 2010." "3.11 Secondary and recycled aggregates are a substitute for primary aggregates for a significant proportion of the use of aggregates in the UK. For example: (a) secondary and recycled aggregates are entirely substitutable with primary aggregates for general construction purposes and produce a highly similar product with comparable integrity;... (c) some secondary aggregates, china clay by products from Devon and Cornwall, are used as complete substitutes for primary aggregates across all applications;" But AI complain that "6.5 As noted above AI is strongly of the view that aggregates taxes and credits distort efficient production. AI agrees that the landfill tax and latterly the aggregates levy have been a barrier to the expansion of primary aggregates and results in the favouring of secondary and recycled aggregates over primary aggregates" and "6.7 The aggregates levy has given producers of secondary and recycled aggregates, primarily independents, a significant cost advantage....(a) The 2009 BDS report found the “Introduction of the aggregates levy has changed the economics and distorted the market. It is now possible to economically supply china clay sand into the south east, and slate wastes into the midlands. […] Untaxed aggregates have a cost advantage over taxed aggregates. This distorts the market”.

So when AI themselves accept that the economic outlook for aggregates is bleak, and that secondary and recycled continues to displace primary aggregate, it is not the time for DCC to go designating new greenfield sites when there are still over 9 million tonnes and 20 years of reserves in the County.