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NZ aggregate producer sets its sights on rebuilding Christchurch

The 6.3 magnitude earthquake that devastated Christchurch in February and claimed upwards of 240 lives will reverberate through the New Zealand economy. The Government will shoulder a third of the quake costs, including losses of up to $5 billion of its regular tax income over the next five years to pay for the rebuild. The rest of the costs will be shared between private insurers, local government and businesses.

New Zealand?s Finance Minister Bill English did not rule out a nationwide tax to fund the rebuild but cautioned that the Government?s immediate focus was on the recovery. ?It?s important that we get started now without getting too hung up about the cost,? he said.

One of the beneficiaries of the reconstruction effort will be Fletcher Building, the $5 billion company which is dominant in New Zealand?s building materials and construction sectors and which recently joined the ASX200 Index. Through its various subsidiaries, including Winstone Aggregates and Golden Bay Cement, Fletcher Building commands 15 per cent of New Zealand?s aggregate markets, 55 per cent of its cement market and 34 per cent of the readymix concrete market. It has already been proactive, with Fletcher Building?s chief executive of infrastructure, Mark Binns, confirming that the company is liaising with New Zealand?s Earthquake Commission to evaluate claims and assess the damage.

In a presentation to the New Zealand Stock Exchange in March, Fletcher chief executive Jonathan Ling forecast that the Canterbury earthquake repair work would be ?unprecedented?, with immediate infrastructure repairs totalling $1.9 billion in the near term, followed by house repairs of at least $5.8 billion. Another $1.9 billion of non-residential remediation would be undertaken from 2012 to 2016.

Numerous buildings in Christchurch, including the 26-floor Grand Chancellor Hotel, are earmarked for demolition. while several heritage buildings damaged beyond repair have already been brought down.

A likely outcome of the reconstruction effort and of a Royal Commission into the disaster announced by Prime Minister John Key will be a review of New Zealand?s building codes. Although the country?s building standards before the September 2010 and February 2011 quakes in Christchurch were considered amongst some of the most comprehensive in the world, there were still too many masonry buildings in the city?s CBD that were vulnerable to earthquakes.

Win Clark, chief executive of the New Zealand Society for Earthquake Engineering, said that engineers had warned New Zealand politicians for many years that more should be done to shore up older buildings that pre-dated New Zealand?s current standards. He argued that engineers had recommended older earthquake-prone buildings be upgraded to 67 per cent of the standard for new buildings but that the New Zealand Government in 2004 had legislated that they satisfy 33 per cent of the modern standard.

An American earthquake recovery specialist Lon Determan, whose company Miyamoto Associates assists earthquake recovery efforts worldwide and sent a team to Christchurch, added that local authorities would have to order buildings to be substantially upgraded when rebuilt.

?You always have to balance cultural integrity with life safety,? he said, ?and the costs of a full upgrade with some degree of life safety and reduced hazards. In other cases, it may be signs of inadequate quality control in construction. Generally you have code cycles that address the lessons learned from each subsequent earthquake. How you get those addressed is through updating codes and activating some certain city ordinances to require upgrades on buildings such as historical heritage buildings.?

Sources: 3 News, New Zealand Herald, Sydney Morning Herald, ABC News, Industry Search, Australian Mining

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