PanAust looks for ‘social licence’ to operate Frieda River mine in Papua New Guinea
David James | Business Advantage | July 12, 2016
Frieda River Ltd, the wholly-owned Papua New Guinea subsidiary of PanAust, has lodged a Special Mining Lease application with PNG’s Mineral Resources Authority to develop the Frieda River Copper-Gold Project. Glen Connell, PanAust’s General Manager, Government and Community Relations, tells Business Advantage PNG that developing a ‘social licence’ to operate is critically important for the success of the project.
With a potentially long term operation, Glen Connell says establishing a sound relationship with the community is fundamental:
‘If you don’t have the social licence to operate you won’t have any longevity whatsoever. I think we have long accepted that and it is something that we have learned in Laos.
‘It put us in good stead in that country, which wasn’t a mature mining investment destination when we went in. The key very much to our success in Laos has been community engagement, good environmental practices, strong safety performance, and looking after our people.
‘Whether it is PNG, or anywhere else in the world, the same philosophy applies.’
‘I guess the trick is to work out how you tailor that to any given situation. Whether it is PNG, or anywhere else in the world, the same philosophy applies.’
The Frieda River Joint Venture is 80 per cent owned by PanAust, which is in turn owned by Guangdong Rising H.K., a subsidiary of the Chinese State Owned Enterprise Guangdong Rising Assets Management Company (GRAM). Highlands Pacific owns the remaining 20 per cent stake. Frieda River Limited is the manager of the JV.
‘PNG is a more mature mining destination with decades of experience.’
The PNG government has a right to acquire at cost up to 30 per cent of the project.
The Joint Venture’s recently released feasibility study claimed the potential mine is ‘one of the largest undeveloped copper-gold deposits in the world’, with an initial 17-year mine life.
Connell says there are similarities between Laos and PNG. Both nations are developing countries and in similar socio-economic situations. But he says there are some crucial differences.
‘PNG is a more mature mining destination with decades of experience,’ he says. ‘The legislative frameworks are well developed; the bureaucracy understands mining and is attuned to it.’
Long term outlook
Connell says the company does not focus on short-term fluctuations in metals prices. He says that periods of weaker prices often represent the best times to be advancing and building projects.
‘You need a little bit of tunnel vision.’
‘It is not about what today’s copper or gold prices are and projecting those forward for the next six months. We are looking at a project that could operate for decades.
‘So, we look at what the longer term outlook is and I think with copper it is safe to say that most, if not all, analysts see a good future for copper. If not in the near term then certainly in the medium to longer term. We share that view.’
Connell says falling interest rates in the developed world means a potentially lower cost of capital. ‘But the external environment will do what the external environment does. You design the most robust project you can and you seek to deliver it.
‘We have been in close contact at all levels of government and other stake holders to make sure that we secure the business licence.’
‘You need a little bit of tunnel vision in that regard. At the same time, we have to think about the long term price of oil, or any given commodity, or economic factor that you have to deal with.
‘It all comes down to the robustness of the design, development, implementation and your ability to operate. I think we have ticked the box on each of those in Laos and there is no reason to think we won’t do the same in PNG.’
Now that the application for a Special Mining Lease has been lodged, Connell is not willing to speculate about how long the approval process will take. ‘We have been in close contact at all levels of government and other stake holders to make sure that we secure the business licence to operate as well as the social licence to operate. That process has been positive.
‘But I can’t answer how long it will take. It is not a process that we can control,’ he tells Business Advantage PNG.