Jemima Garrett | ABC Radio Australia
A dramatic drop in 2013 profits have compounded the woes of Papua New Guinea’s giant state-owned Ok Tedi gold and copper mine.
The company reported an after tax profit of just $US17 million, well below its 2012 profit of $472 million.
Low gold and copper prices, major flooding in its pit, low river levels affecting shipments and a typhoon which caused extensive damage to its major customer in the Philippines were only the beginning.
Ok Tedi also had to contend with a multiple major equipment failure and high fluorine levels in its copper concentrate.
While the company made progress in cutting costs, coming in $70 million ahead of budget, it spent $80 million on redundancy payments as it shed over 700 staff.
Even before Prime Minister O’Neill’s takeover of the PNG Sustainable Development Program, the PNG government relied heavily on Ok Tedi dividends and taxes.
PNG commentator Martyn Namorong says the profit downgrade will have a significant impact on the government’s budget.
“Not just dividends but tax has contributed about a quarter of the national budget so the drop in profit obviously means that could have an impact on the national budget and the delivery of goods and services in Papua New Guinea,”.
Martyn Namorong says questions need to be asked about new procurement contracts let by the company.
“My concern is for instance that we do not know what impact some new contracts may have had on operating costs,” he said.
“We are not really familiar with that and we need some answers from Tabubil about the costs of operating and whether they are justified or inflated.”
On a much larger scale is the continuing battle for control of the Papua New Guinea Sustainable Development Program the independent trust set up to look after the wealth created by Ok Tedi after BHP Billiton pulled out over a decade ago.
Its long-term fund holds $1.4 billion is assets.
PNGSDP Chairman, Sir Mekere Morauta, describes the O’Neill government’s legislation appropriating the trust as theft of an asset belonging to the people of Western Province.
Prime Minister O’Neill is adamant that the government will look after the asset better than an Sir Mekere’s board.
Late on Friday, Mr O’Neill issued a statement saying his eminent persons group led by former Prime Minister Sir Rabbie Namaliu, has been unable to broker a solution to the dispute.
“Lengthy and detailed work by the Eminent Persons Group I appointed has sadly failed to reach a resolution on the differences between the National Government and the PNG Sustainable Development Program on the structure and operations of the PNGSDP,” Prime Minister Peter O’Neill said.