A Chinese state-owned investment firm has lodged a compulsory acquisition notice for Australian-based mining company PanAust, which has assets in Papua New Guinea and Laos.
The notice, lodged with the Australian Stock Exchange, is the final step in a $1.4 billion takeover bid for PanAust by Guandong Rising Asset Management (GRAM).
PanAust said GRAM would keep its Australian-based management and would take control of the Freida River project once the takeover process was complete, expected to be within six weeks.
The copper project sits in the headwaters of the Sepik River, which winds its way through 1,000 kilometres of jungle valleys and wetlands.
The Sepik River, one of the largest pristine river systems in the Asia-Pacific region, is home to hundreds of thousands of Papua New Guineans.
PNG’s Chamber of Mines executive director Greg Anderson said the takeover followed a worldwide trend of Chinese companies being the only ones with the financial muscle to push through with the acquisition.
“It is world-class project and raising the funds for it, particularly in the current market, would be extremely difficult,” Mr Anderson said.
“They will have that capital so with the entry of the Chinese into the project it is far more likely that it will go ahead, certainly in the next five years or so.”
Dr Gavin Mudd, a lecturer in environmental engineering at Monash University and a director of the independent mining watch-dog the Minerals Policy Institute, said mining companies in Papua New Guinea did not have a good environmental record.
“Any impacts on the Sepik wouldn’t just impact people at the mine site up in the mountains, it would pretty much follow all the way right down to the coast,” he said.
“We need to be concerned about the volumes of water on-site, we need to be worried about the quality of that water, the chemistry of it, how much heavy metals are present and so on, risks such as acid mine drainage, how tailings are managed.”
‘GRAM understands sensitivities in region’
PanAust director Paul Scarr said environmentalists had nothing to fear from the takeover.
“GRAM has been a cornerstone shareholder of PanAust since 2009,” Mr Scarr said.
“During that period PanAust has received international recognition for its sustainability performance and that includes with respect to matters such as environmental management, local communities development, education and training.
“We certainly understand, and GRAM certainly understands, the sensitivities involved in this region, and they completely support PanAust’s goals in this respect to have no negative impact on the Sepik River.
“It is one of the great river systems of the world and we fully understand that.”
On the other side of PNG’s rugged mountain spine, Barrick Gold has just sold 50 per cent of its Porgera mine to leading Chinese company the Zerjin Mining Group.
It is hoped that partnership will help avoid some of the teething troubles suffered by China’s first PNG project, the Ramu nickel mine.
“I think the intention is that they will get to know PNG and get to know the project with the possibility that they might eventually take it over completely,” Mr Anderson said.
“But it is a very good way to go through the PNG learning curve, to be partnered with a very experienced player like Barrick, so I think it is a good way to come into the country.”
Barrick has settled a class action brought by a group of women raped by security guards and police at Porgera, but the company still faces problems with human rights and illegal mining.