Will Hela be the next Bougainville?

Young men in Eastern Highlands, PNG engaged in tribal conflict walking to meet the opposing tribe (DFAT/Flickr/CC BY 2.0)

Matthew Allen | Devpolicy Blog | May 24, 2018

In the midst of the flurry of anxiety-driven commentary about the increasing influence of China in the Pacific and its security consequences for Australia, it is oddly refreshing to see some attention being given to what is arguably a far more pressing and immediate security challenge for many of Australia’s near Pacific neighbours: the pernicious social impacts of large-scale extractive resource industries.

Much of this recent attention – including a report by Jubilee Australia – has focused on developments in Hela Province in the PNG Highlands where the devastating February 26 earthquake has compounded the social tumult unleashed by ExxonMobil’s giant PNG Liquefied Natural Gas (LNG) project, giving rise to a downward spiral of violence, death and disorder. Throughout the commentary on the unfolding human disaster in Hela, a recurring question is being posed: could all this blow up into a protracted armed conflict akin to the Bougainville Crisis of 1989 to 1998?

This is precisely the question that forms the point of departure for the research presented in my recently published book Resource extraction and contentious states: mining and the politics of scale in the Pacific Islands.

The book’s focus is on the region known to geographers as the Solomons chain of islands, consisting of the autonomous region of Bougainville and the Solomon Islands. These islands have hosted the region’s two most serious armed conflicts since the Second World War: the Bougainville Crisis and the Solomon Islands “Ethnic Tension” of 1998 to 2003, which was largely confined to the island of Guadalcanal.

Large-scale mining was implicated in both of these conflicts, but much more so in the case of Bougainville, where most informed commentators agree that the Crisis would not have occurred were it not for the impacts of Rio Tinto’s Panguna mine, at the time one of the world’s largest copper and gold mines.

Given that these conflicts occurred on islands, the book sets out to ask whether there is something peculiar about islands — their “islandness” as it is referred to in the burgeoning island studies literature — that makes them unusually or exceptionally potent spaces for the contentious and frequently violent politics that attend extractive enclave economies.

More specifically, the book asks whether the Bougainville conflict would ever have occurred, or occurred to the extent that it did, if Bougainville had not been a sub-national island jurisdiction (i.e. an island-province) of PNG but instead a landlocked province within “mainland” PNG, such as Hela Province, or, for that matter Enga Province, which hosts the violence-plagued Porgera gold mine operated by Canadian miner Barrick Gold and the subject of a damning Human Rights Watch report in 2011.

Of course this is not a question for which there is a definitive answer: if there is anything we have learned from the vast corpus of research on intra-state conflicts in developing country settings, it is that such conflicts are always the outcome of a complex set of social, political, historical and ecological factors operating at multiple scales. When it comes to interpreting the “causes” of developing country conflicts, we have become acutely aware of falling into the traps of determinism, narrative simplification and mono-causal interpretation.

The book does suggest, however, that it is a useful question ‘to think with’, not least because it draws attention to the inescapabilty of geography, and, in particular, to how what geographers refer to as social-spatial relations – such as territoriality and the politics of scale – matter more than ever if we are to understand the violent ructions that are being engendered by contemporary forms of globalisation and what economic geographer David Harvey has described as “accumulation by dispossession”.

By territoriality I mean strategies to enclose and control geographical space; strategies that depend, crucially, upon the communication of territorial boundaries. By the politics of scale I mean struggles over the scales at which economic and political processes occur. Through these struggles, new, sometimes previously unimaginable, scales can be produced and the relative importance of existing scales reconfigured. Notable examples include the European Union, sub-national urbanised mega-regions, and globalised financial markets that transcend national regulatory systems.

Due to their unique geographic properties – their stark boundedness – islands have long been seen as paradigmatic settings for territorialising projects, including the nation-state and sub-national jurisdictions of various types. In the words of John Gillis, they are the “most clearly marked boundaries of all”. In the book I argue that as well as having these distinctive territorial properties, islands can also be produced as a powerful scale of political and economic contestation.

In the context of large islands in the western Pacific, such as Bougainville and Guadalcanal, island-wide identities and socio-political movements were, in the first instance, a product of the introduction of capitalist social relations in the form of the colonial plantation economy. The plantation experience, buttressed by the Christian missions and the colonial delineation of sub-national administrative units that were often coterminous with islands, united the culturally and linguistically heterogeneous populations of the large Melanesian islands in ways that were previously unknown, effectively producing the island as a scale of accumulation, dispossession and resistance.

And just as Melanesian islands were socially produced during the colonial epoch of globalisation, so too have they emerged as a critical, albeit problematic, scale of struggle in contemporary contestations around globalised extractive resource capitalism; demonstrated, most spectacularly, by the advent of island-scale armed insurgencies first on Bougainville and then on Guadalcanal.

I say problematic because the island has been an ephemeral and elusive scale for collective action: it has only emerged at particular moments and conjunctures, and it competes with forces that constantly work to fracture it, not least of which in the context of Melanesian resource extraction is another relatively recently produced scale of contestation: customary landownership.

Indeed, it is the scale of customary landownership that has, in the first instance, been most productive of violence in the encounter with extractive industries as powerful individuals, invariably men, have captured economic benefits (such as rents, royalties and compensation payments) at the direct expense of other members of their landowning groups. These processes of exclusion have had salient gender and intergenerational dimensions, and, in the context of Melanesian socio-cultural norms of reciprocity and obligation, they have produced intense social disintegration and conflict.

However, ethnic or indigenous claims to resource-rich territories have also been an important and analytically distinct feature of resource-related violence in Melanesia. This appears to be especially true when the territory or scale in question also happens to be a relatively large island; or, in other words, when it is possible for the scale of ethnicity/indigeneity to be coterminous with the territorial boundaries of an island.

Which brings us back to the question of whether Hela, or for that matter, Enga, could become the next Bougainville? Setting aside (critically important) specificities of history, culture and social organisation, my analysis suggests that the distinctive geographical characteristics of islands can indeed make them exceptionally potent platforms for armed conflicts over natural resources, at least in the context of the Melanesian Pacific.

To be sure, many of the same spatial tensions are also evident around extractive projects in the PNG mainland: the social disintegration of landowning groups and benefit-sharing tensions between the local, provincial and national scales. Indeed it is worth recalling that the creation of Hela Province in 2012 was in large part driven by the desire of the 300,000 strong Huli-speakers, who had long been marginalised from the Highland’s lucrative extractive projects, to capitalise upon the advent of the LNG project, which is located squarely in Huli territory.

However, while new provinces can be created, and while their borders may even be conterminous with language and cultural boundaries, there are no ready-made geographical platforms for sub-national collective political action in these mainland areas. Put simply, territory and scale can be coproduced in islands in ways they cannot in mainland settings.

Of course only a fool would entertain ironclad predictions about social and political developments in Melanesia, but an unabashed geographical interpretation would suggest limits to the potential for localised tensions around extractive enclaves on mainland PNG to escalate into large-scale armed conflict with a distinctive ethno-nationalist or separatist character such as we witnessed in the case of Bougainville.

That said, as demonstrated in the Jubilee Australia report, the current social chaos and disorder in Hela is clearly linked, at least in part, to the PNG LNG project, once again reminding us of the socially corrosive and frequently violent character of Melanesia’s extractive economies.

Resource extraction and contentious states: mining and the politics of scale in the Pacific Islands will be launched at the University of the South Pacific today at 5.30pm and at ANU in late July. The research reported in the book was funded by the Australian Research Council.

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New Zealand’s blue whales under threat from seafloor mining

SCUBA News |  23 May 2018

A group of blue whales that frequent the South Taranaki Bight between the North and South islands of New Zealand appears to be part of a local population that is genetically distinct from other blue whales in the Pacific Ocean and Southern Ocean, a new study has found.

Hydrophones deployed in the region recorded blue whale calls on 99.7 percent of the days between January and December in 2016.

“There is no doubt that New Zealand blue whales are genetically distinct, but we’re still not certain about how many of them there are,” researcher Dawn Barlow commented. “We have generated a minimum abundance estimate of 718, and we also were able to document eight individuals that we re-sighted in multiple years in New Zealand waters, including one whale seen in three of the four years with a different calf each time, and many others we saw at least once.”

The study, led by Oregon State University’s Marine Mammal Institute, is important because the South Taranaki Bight has several oil and gas extraction rigs and the New Zealand government recently issued its first permit for mining the seafloor there for iron sands. Churning up the sand could muddy the sea and disrupt the natural food chain. The sand will be sucked up to a floating production vessel, the valuable iron content removed and shipped away for further processing while the sandy remains are pumped back to the seabed.

The blue whales found off New Zealand are not quite as large as Antarctic blue whales, which scientists believe to be the largest animals to have ever lived on Earth. Antarctic blues, when they reach adulthood, can range from 28 to 30 meters in length (nearly 100 feet). The other blue whales, though slightly smaller, are still formidable at about 22 meters in length (or 72 feet).

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Call To Gazette LNG Clan Vetting

Post Courier | May 24, 2018

PETROLEUM Minister Fabian Pok has been called on to immediately authorise gazettal of the completed landowner clan vetting exercises that have complied with the legal requirements.

This is to ensure they are not unnecessarily being penalised by the State from receiving and delaying benefits from the LNG project.

Chairman of Benaria Gas Pipeline Landowners Association Gibson Walabe made the call yesterday claiming vetting exercises had already been completed for certain LNG pipeline segment landowners in Hela and Gulf provinces.

Mr Walabe is chairman of the Benaria Gas Pipeline Landowners Association covering segment 2.

Mr Walabe said Mr Pok and his departmental secretary should not delay gazettal of the clan vetting results as they had taken it upon themselves to initiate the process and had done it twice already.

“The results of the clan vetting exercise are with the minister and his secretary and they should immediately ensure they are gazetted,” Mr Walabe said.

“The vetting exercise has been undertaken and completed for pipeline segments, 2, 3, 4 and Gulf landowners.

“All ILGs have also been certified and the process should not be hampered by maybe legal action taken by other infighting landowners which have no bearing on us.

“We should be given what is due to us so that we can also assist in our earthquake devastated areas restore normalcy.

“I call on Mr Pok and his departmental secretary to quickly facilitate the due process and ensure we are given the benefits due to us.”

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Rio Tinto about to offload stake in Grasberg mine for $3.5 billion

Grasberg mine on the island of New Guinea, one of the world’s biggest sources of copper and gold. (Image: Google Earth)

Commentary from SkyTruth: “News that Rio Tinto is negotiating to sell out its stake in the massive Grasberg Mine in West Papua (Irian Jaya). We’ve written about this mine before: uncontrolled dumping of tailings into rivers flowing past the mine has caused the deposition of tailings across a broad swath of former rainforest downstream, creating a moonscape 30 miles long and up to 2-1/2 miles wide. By selling out, Rio Tinto might be able to dodge any liability for that damage — although their partner Freeport McMoRan may still be on the hook, and apparently the “tailings issue” is holding up the sale”

Cecilia Jamasmie | Mining.com | 23 May 2018

World’s No.2 miner Rio Tinto confirmed Wednesday is ready to sell its stake in the giant Grasberg mine, the world’s second largest copper operation, to Indonesia’s state mining holding company Inalum for $3.5 billion.

The move could mark the end to a long-drawn-out, three-way dispute over the mine, which has been centered on bringing local ownership of Grasberg up to 51%, a main requisite set by the Indonesian government to allow Freeport-McMoRan to keep operating in the country.

Discussions with  PT Indonesia Asahan Aluminium, known as Inalum, and Freeport — the other two companies engaged in talks — were ongoing, Rio said, “including as to price,” noting that no agreement had been reached.

Rio’s deal with Freeport was struck in 1995 and entitles it to a 40% share of production when certain output levels are hit. But as a result of strikes and other disruptions and as the open pit at Grasberg nears the end of its life, the Melbourne-based miner hasn’t seen any benefit since 2014.

Chief executive Jean-Sebastien Jacques publicly questioned Grasberg’s place in Rio’s future back in February 2017. He followed in June with a remark about the mine being a world-class copper deposit, which might not be a world-class mining investment.

“There is a fundamental difference between a world-class resource and a world-class business,” he said again last week at the Bank of America Merrill Lynch Global Mining, Metals & Steel Conference.

Indonesia and Freeport have been negotiating the terms for the company to give the government a majority ownership in Grasberg for over a year. But until today, it wasn’t clear what would happen to Rio’s interest in the mine.

Grasberg, the world’s second-largest copper mine and fourth largest gold operation, has transitioned to a fully underground operation, set to reach full capacity by 2022, when it will produce 160,000 tonnes per day of ore.

The additional Deep Mill Level Zone block cave mine, currently under construction, is projected to contribute an additional 80,000 tonnes per day of ore once at full capacity, expected in 2021.

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Call to review the unjust, primitive and self-harming laws of Papua New Guinea

Resource Owners Federation of PNG | 22 May, 2018

The PNG Chamber of Mining and Petroleum made statements last week claiming that the PNG mining laws are uncompetitive, in view of the government’s recent amendment to the Mineral Resources Authority (MRA) Act of 2005 and the proposed amendment to the Mining Act 1992. Their statements are untrue and are designed to scare off the National Parliament from amending the laws so that the mining companies can continue to reap all the benefits of mining in the country, whilst keeping the landowners and citizens who own the resources poor, as they have been successfully doing for decades.  The Resource Owners Federation of Papua New Guinea believes that, although the Mining Act 1992, needs to be reviewed, it should not be reviewed for the benefit of the mining and petroleum companies, but for the benefit of the country and its citizens.

The United Nation’s High Commissioner of Human Rights, during his visit to Papua New Guinea, in early February 2018, observed among others that; “Papua New Guinea was a resource-rich country but much of its population lives in abject poverty, with acute malnutrition rates in some areas comparable to Yemen, and minimal access to quality healthcare and education”.

The UN High Commissioner’s observations are an accurate assessment of Papua New Guinea, being a country that was “so rich, but yet so poor”.  Such assessment, is yet another official condemnation of the country’s state of affairs, in relation to the social and economic conditions of the country and its people. A significant reason for such condemnation is that, our natural resources have been managed in a way that all the benefits of the mining and petroleum projects are transferred to foreign shareholders, with nothing or very little being left for the country and its citizens. Such an official negative assessment from the United Nations must therefore, result in significant corrective actions to be taken by the State and its representatives, by way of reviewing the country’s inappropriate laws and policies.

The High Commissioner further went on to observe that; “it has strong civil society activists but there is little room for them to influence Government Policy“. The Federation and citizens have been calling on the National leaders of the country and the government over many years to review the Mining Act of 1992, on the basis that the country and its landowner citizens were not receiving a fair share of the profits from the mining and petroleum projects. The Mining Act 1992, proclaims the State’s ownership of all minerals found in any land, including and especially customary land, which land are owned by the traditional landowners throughout the country. The Federation is of the view that the State’s compulsory acquisition of minerals held under any traditional or customary lands without paying just compensation, as required by section 53 of the Constitution of Papua New Guinea, is unlawful. It is also in breach of the Article 17, of the Universal Declaration of Human Rights, which states that; “everyone has the right to own property alone or in association with others and no one shall be arbitrarily deprived of his property.”

The Mining Act 1992, as it stands and for the above reasons, is a primitive, unjust and self-harming law, which must be reviewed in its entirety, so that ownership of minerals is retained by the customary landowners. Minerals can still be mined only after development agreements are reached between the landowners and mining companies. Such arrangements have and are already in force, in many states of the United States of America. Under such an arrangement, the State stands to collect taxes from both the landowners and the mining companies. All parties then benefit from a project, in contrast to Papua New Guinea in the past and today, where the landowners are the ultimate losers.

The recent amendment of the MRA Act 2005, was justified in that, the mining industry members were regulating themselves from 2005 to 2018, after having gained a significant number of seats on the Board of the Authority.  The MRA was therefore seen as an organization that was run by the mining industry for its own benefit and against the interest of the country and its citizens. The Chamber of Mining and Petroleum now calls the amendment uncompetitive, because of their exclusion from the Board that they controlled for many years to their benefit but to the detriment of the landowners, the country and its citizens. The Federation challenges the Chamber of Mining and Petroleum to identify any government in the western world that would allow the mining industry to take over the enforcement of its mining laws against itself. We would think that such a practice, if allowed, would be deemed to be corrupt and therefore unlawful.

The UN High Commissioner further went on to say that; “the government urgently needs to build a stronger nexus with its people, so it can better serve their needs in this vast and diverse land.”  He saidthat it was unacceptable that many businesses had been granted licenses to engage in the extractive industries without the free, prior and informed consent of the people living on the affected lands…

 The Federation believes that the amendments to the Mining Act 1992, the MRA Act 2005 and the Petroleum Act 1998 are three laws which must be amended so that those citizens who are owners of the land under which any mineral or petroleum are found, are recognized by law, as the owners of those resources. This then will be the beginning of a new era, where the State will be building a stronger nexus with its people going forward.

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PNG Wants a Bigger Slice of Exxon’s Gas Profits

Hides Gas Conditioning Plant in Papua New Guinea. Photographer: Richard Dellman via Exxon Mobil Corp.

Dan Murtaugh and Aaron Clark | Bloomberg |May 23, 2018

  •  Papua New Guinea seeking bigger cut of gas-export revenues
  •  IMF says country got ‘quite limited’ benefit from initial deal

The tiny, impoverished nation of Papua New Guinea came out on the short end of a $19 billion development with Exxon Mobil Corp. to build one of Asia-Pacific’s biggest energy projects. But as the company pushes to expand the venture, the government is vowing that round two may require a much bigger payday for the locals.

By most accounts, the liquefied natural gas business that Exxon and partners built from scratch is an engineering and commercial success. The PNG LNG venture, which started operating in 2014, is delivering more fuel than expected to Asian economic giants Japan and China. It’s so promising that the U.S. company — with annual revenue 10 times larger than Papua New Guinea’s economy — declared the Pacific island a key building block for its future growth and plans to double output.

Trouble is, the original deal reached a decade ago has failed to deliver the windfall to Papua New Guinea that the government and an Exxon-commissioned study predicted. An International Monetary Fund analysis showed “quite limited benefits” for the country, which granted Exxon generous rights to recover certain costs before paying taxes or fees. While the initial investment was welcome, the government has formed a new team to negotiate better terms before it approves the proposed expansion.

“There is a general view that Papua New Guinea gave away too much for the first LNG project,” said Peter Koim, a member of the negotiating team who is also director of the country’s Gas Project Coordinating Office. For the next round “the country will not give away concessions as was the case in the PNG LNG project,” he said.

PNG LNG produces gas from wells in the forested mountains known as the Highlands, and sends it 700 kilometers (435 miles) southeast via pipeline to a processing plant on the shores of Caution Bay, near the capital, Port Moresby. The gas is super-chilled to liquid form and loaded onto special tankers for shipment overseas. Originally designed to process a maximum of 6.9 million metric tons a year, the plant produced more than 8.2 million in 2017.

Exxon last year spent as much as $3.9 billion buying access to additional reserves and drilling rights in the country and is working with partners including Australia’s Oil Search Ltd. and France’s Total SA on a separate $13 billion venture known as Papua LNG. The development would add 8 million tons of additional annual processing capacity at the existing PNG LNG plant, but tap gas deposits in a different part of the country and require a new pipeline.

The country will negotiate separately with Exxon and Total on the different projects that will contribute to an overall expected rise in the nation’s gas exports, Koim said.

Demand for the gas has been strong. Long-term supply contracts were signed with buyers including chemical makers and utilities that are as much as 4,500 kilometers across the sea from Papua New Guinea, which is located on an island just north of Australia’s Queensland state. With global consumption booming, analysts see a shortage of LNG coming in the early part of next decade, right when an expansion project would come online if work were to start soon.

Prospects are so promising that Exxon’s Chief Executive Officer Darren Woods said as recently as March that he is counting on Papua New Guinea and several other countries to help reverse declining output at the company, one of the world’s largest energy suppliers. Irving, Texas-based Exxon plans about $200 billion in capital expenditures through 2025, including in Mozambique, Brazil and Guyana, as well as America’s Permian Basin.

A more demanding Papua New Guinea could pose a hurdle to Exxon’s plans. Already, the company has been forced to defend its contract in Guyana, a small South American country that signed a deal two years ago to develop the world’s biggest new deep-water find in a decade. The IMF described that agreement as “favorable” for Exxon, compared with global norms. The company has said there’s no need to renegotiate because the contract already included several concessions to the government.

The Papua New Guinea government isn’t seeking to revise the old contract. But the tenor of talks over the expansion will be influenced by the public perception that the massive project simply didn’t deliver the benefits that were promised.

Unfulfilled Expectations

An April 2009 version of an economic impact study by ACIL Tasman (now ACIL Allen Consulting) for Exxon said the project “has the potential to transform the economy of Papua New Guinea, boosting GDP and export earnings, providing a major increase in government revenue, royalty payments to landowners, creating employment opportunities during construction and operation, and providing a catalyst to further gas-based industry development.”

And before production began, the government estimated PNG LNG would boost its revenue by 2 billion kina ($613 million) a year through 2021, the World Bank said in a December report.

Instead, the project’s partners paid only about 495 million kina in taxes, royalties, dividends and other payments in 2016, data from the Extractive Industries Transparency Initiative show. A “complex web of exemptions and allowances” effectively mean that little revenue from the project goes to the government and landowners, the World Bank said.

“It’s an extraordinarily low level,” said Paul Barker, executive director at the Papua New Guinea Institute of National Affairs. “If you are not getting much in the way of revenue, there is something a bit screwed up.”

A research and advocacy group, Jubilee Australia Debt & Development Research Centre, had an even harsher take, noting in a detailed report last month that by “almost every measure of economic welfare,” Papua New Guinea “would have been better off without the PNG LNG project.”

Of the total paid to the government in 2016 by PNG LNG partners, Exxon’s share was about 216 million kina, more than half of which was income tax, according to EITI data. By comparison, the company’s revenue from the project was more than ten times that, at about 2.56 billion kina, according to Bloomberg estimates using production figures and annual averages for crude prices and foreign exchange rates.

Papua New Guinea has a stake in the venture through its state oil company, Kumul Petroleum Holdings Ltd. It’s portion of the revenue was 1.28 billion kina in 2016, according to Bloomberg calculations. It contributed about 100 million kina to the treasury and gave the government an advance of 200 million kina, according to an EITI report.

Exxon says it is honoring all contractually required payments and that the project delivers more than just government revenue. PNG LNG has contributed about 14 billion kina to local businesses and the government, and employs 2,600 workers and contractors, about 82 percent of whom are locals, an Exxon spokeswoman said by email.

PNG Liquefied Natural Gas Plant near Port Moresby, Papua New Guinea.Photographer: Richard Dellman via ExxonMobil Corp.

To be sure, it’s not unusual for a country without its own natural gas industry or infrastructure to make concessions to secure the huge investments needed to develop untapped reserves. But often, citizens of poor or underdeveloped countries see little or no benefit from commodity extraction by foreign companies because their governments were inept, corrupt or both — a symptom of what economists call the resource curse.

Royalties and development levies came under particular scrutiny by the World Bank and IMF. That’s because the payments are calculated after deductions for operating costs, debt repayments and capital expenses. As a result, when LNG prices fall in line with oil, as they did when crude prices crashed shortly after the project started, the biggest impact is on the amount going to the government. In some cases the project can claim losses that offset future royalty payments, according to the World Bank.

The government’s “current level of revenue from the PNG LNG project is not sufficient due to the heavy concessions granted, loan repayments and subdued oil prices in the recent past,” Koim said.

Highlands Unrest

The distribution of royalties from the project have already caused unrest in the Highlands. Residents threatened violence against gas plants and pipelines in late 2016, after they didn’t receive payments. The government said the distributions were delayed because of a review of clan records and property rights to make sure the money went to the right people. The first 15 million kina in royalties was paid to villagers in late 2017, according to Exxon and Port Morseby-based The National newspaper.

Papua New Guinea has been through similar challenges before. Three decades ago, disputes over royalties from one of the world’s largest copper mines helped fuel an independence movement on Bougainville Island. The autonomous region is planning an independence referendum next year.

During the original negotiations, Papua New Guinea recognized that it needed to sweeten the deal with Exxon by allowing for things like tax breaks on infrastructure spending, according to Koim, of the Gas Project Coordinating Office, and Fabian Pok, the nation’s energy minster.

“Some incentives were given” during the original negotiations, Pok said. “These incentives may not be available” in talks over the expansion, he said.

Balancing Risk

The success of the initial project lowers the risk associated with future investments, which may give Papua New Guinea more leverage in negotiations, said Andrew Harwood, a research director with energy consultancy Wood Mackenzie Ltd. in Singapore.

“The government is entitled to seek a larger share of any expansion, but needs to balance potential higher government revenues against the risk of deterring future investment,” Harwood said.

One way to increase government revenue would be for state oil company Kumul to take a bigger stake in the expansion. Koim suggested a 30 percent share, compared with 16.8 in the initial project. (The state also has a 2 percent interest through its Mineral Resources Development Co.) Other government officials want drillers to sell a portion of their gas domestically to fuel power plants and spur industrial development.

“Everything is on the table for negotiations,” said Pok, the energy minister. At the same time, he said, the government realizes that Papua New Guinea isn’t the only country courting LNG investments, with competition coming from places like Qatar, Mozambique and the U.S.

“We need to remember that Exxon and Total are companies operating worldwide,” Pok said in a telephone interview. “They’ve come into PNG and built confidence in our oil and gas industry, and their investment is welcome. We will come to an agreement, but we need all the parties together and talking and focused on getting the best outcome.”

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Highlands Pacific to increase its stake in Ramu mine

Poor workmanship and construction has hampered the Ramu nickel mine

Highlands’ ownership of Ramu will increase to 11.3 percent from 8.56 percent”

Cobalt 27 agrees to streaming finance deal with Australian miner

Nicole Mordant | Reuters | 23 May 2018

Canada’s Cobalt 27 Capital Corp said on Tuesday it has agreed to the world’s first cobalt-nickel streaming finance deal on a producing mine with an Australian miner as the industry looks to bolster supplies of the key battery metal.

Streaming is a type of alternative finance that allows an investor to make an upfront payment in exchange for future production at a discounted price. The transaction is the world’s first cobalt-nickel streaming deal on a producing mine, Cobalt 27 said in a statement.

The transaction comes as Brazilian miner Vale SA was seeking to sell cobalt from its Voisey’s Bay mine in eastern Canada in a streaming deal worth around $500 million, Reuters reported in January.

Prices of cobalt, a critical component in rechargeable lithium-ion batteries for electric vehicles, have soared fourfold over the past two years to close to $100,000 a tonne on concerns of a shortfall as demand is forecast to spike.

Cobalt 27 said it had reached a C$145 million ($113.33 million) deal with Highlands Pacific Ltd to buy cobalt and nickel from a Papua New Guinea mine that the Australian miner has a stake in.

Cobalt 27, a small buyer of physical cobalt, is also in advanced talks with other owners of the Ramu mine on Papua New Guinea’s north coast for a further $87 million stream, it said. Both transactions can be funded from cash or a new debt facility.

Under the transaction with Highlands, Cobalt 27 will purchase 55 percent of Highlands’ share of cobalt production and 27.5 percent of its share of nickel output from the mine.

That will result in Cobalt 27 receiving an estimated 450,000 pounds of cobalt and 2.25 million pounds of nickel in concentrate a year from Ramu.

As a result of the deal, Highlands’ ownership of Ramu will increase to 11.3 percent from 8.56 percent. The mine is majority-owned and operated by Metallurgical Corporation of China Ltd. Other shareholders include the Papua New Guinea government, landowners and other Chinese investors.

Cobalt 27 has also agreed to buy a 13 percent stake in Highlands, a Papua New Guinea-focused mining explorer, developer and producer.

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