The environmental costs of deep-sea mining

Unique deep-sea hydrothermal vent ecosystems that harbour chemosynthetic life forms such as giant tubeworms. Active mining of vents would destroy these rare ecosystems (Image: NOAA Okeanos Explorer Program)

Countries must determine if mining the ocean can be done without harm to the environment

Matthew Gianni, Duncan Currie | china dialogue | 26 July 2018

There is growing interest in opening up the deep-sea to industrial mining for copper, nickel, cobalt, gold, rare earths and other metals. But at what cost?

The International Seabed Authority (ISA) is meeting this week to discuss a strategic plan for the development and regulation of mining in the deep ocean beyond national waters.

The ISA was established in 1994 under the United Nations (UN) Convention on the Law of the Sea. It is responsible for deciding whether, how and under what conditions, mining could be permitted in the international area of the seabed, an area equal to about a third of the earth’s surface.

The ISA has already issued 29 contracts to companies and state agencies from China, Korea, Japan, UK, Germany, Belgium, France, Russia, Brazil, India, Poland and a number of South Pacific countries to explore for metals in the Pacific, Atlantic and Indian oceans.

Biodiversity at risk

But the deep-sea is increasingly recognised as one of the largest reservoirs of biodiversity on the planet and critical to supporting planetary ecological systems.

This first World Ocean Assessment report, published by the UN in 2016, also concluded that deep-sea ecosystems are already stressed by climate change, pollutants, and other human activities. Even plastics are making their way into the deep ocean. A recent study found plastics in the stomachs of fish in depths of 11,000 metres – the very deepest parts of the ocean.

Several scientific papers published in the past year have concluded that if deep-sea mining is allowed then biodiversity loss is inevitable. This is because many deep ocean species are long-lived, and ecosystems will struggle to recover, or may never recover, from mining impacts.

Other studies have pointed to the uniqueness of deep-sea hydrothermal vent ecosystems that harbour chemosynthetic life forms such as giant tubeworms. These recent discoveries have vastly broadened our understanding of how life has evolved on our planet.

The vents also form mineral deposits known as polymetallic sulfides. The ISA has issued exploration licenses for these, but if active vents are mined then the life that thrives in these rare ecosystems will be destroyed.

Weighing the risks

Given the role of the deep-sea and the vulnerability of species and ecosystems to long-term and potentially irreversible damage, it is important that we first understand the risks before deciding whether, and under what conditions, deep-sea mining could be permitted to occur.

This is the essence of a resolution adopted by the European Parliament in January of this year, which called for a moratorium on deep-sea mining until the risks are fully understood.

The Parliament also called for greater transparency by the ISA so that it ensures “effective protection” of the marine environment. This, after all, is its obligation under the Convention on the Law of the Sea. The ISA is also charged with acting for the “benefit of mankind as a whole” as the global steward of the international seabed, referred to in international law as the “common heritage of mankind”.

The UN’s 2030 Sustainable Development Goals (SDGs), adopted in 2015, commit all countries to rethink their economies, their use of the earth’s natural resources, and the protection of our oceans and wider environments in the context of sustainable development.

SDG 14 commits all nations to conserve and sustainably use the oceans, seas and marine resources for sustainable development. We need to conserve the ocean and we need to be investing in reusable technologies, recycling, and better product design to ensure we make the best use of the resources we have.

SDG 14 also commits nations to protecting and restoring ocean ecosystems and enhancing their resilience to be able to better survive the harmful effects of climate change.

The Chinese government has repeatedly told the ISA that it needs to take time for careful consideration and scientific study, while other voices are clamouring for rapid action and adoption of regulations to allow deep-sea mining.

China Ocean Mineral Resources Research and Development Association (COMRA) recently held a workshop in Qingdao to start development of a Regional Environmental Management Plan (REMP) for an area of the western Pacific where China, Russia, Japan and Korea have exploration claims for cobalt crust mining on seamounts. REMPs are essential environmental tools to assess the regional characteristics and environmental needs.

Countries must seriously weigh whether deep-sea mining is consistent with the Sustainable Development Goals and their obligations under international law. Is it worth the risk of significant biodiversity loss and the degradation of deep ocean ecosystems? This is a debate that should occur this week at the ISA and within the broader international community of nations as a whole. The future of our oceans is at stake.

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Indonesia government asked to recalculate Freeport mine damage

FILE PHOTO: Trucks operate in the open-pit mine of PT Freeport’s Grasberg copper and gold mine complex near Timika, in the eastern region of Papua, Indonesia on September 19, 2015 in this photo taken by Antara Foto. REUTERS/Muhammad Adimaja/Antara Foto/File Photo

Reuters | 26 July, 2018

Indonesia’s parliament has asked the government to recalculate damage to the environment from the giant Grasberg copper mine operated by the local unit of Freeport McMoRan Inc, the environment ministry said.

A 2017 report by Indonesia’s Supreme Audit Agency (BPK) calculated that Freeport’s decades-long operations at the mine in Indonesia’s remote easternmost province of Papua had caused environmental damage worth $13.25 billion.

That damage, it said, was largely a result of tailings from the mine that had extended beyond previously agreed limits and which had polluted coastal areas.

The audit also said Freeport Indonesia (PT FI) had missed royalty payments, cleared thousands of hectares of protected forest and began mining underground without environmental clearance.

The environmental issues have presented problems for Freeport and Indonesia, whose state-owned mining holding company, PT Inalum, hopes to finalize a $3.9 billion deal to acquire a majority stake in Grasberg this year.

In a meeting with Environment Minister Siti Nurbaya on Tuesday, parliament urged the minister to “ensure that PT FI fulfils governmental administrative penalties” in accordance with the law, the ministry said in a statement late on Tuesday.

“Commission VII asks the Environment Minister to calculate the value of environmental losses resulting from damage and pollution from PT FI operations, as per the findings of the BPK,” Commission VII chairman Gus Irawan Pasaribu said, according to the statement.

Jakarta-based spokesmen for PTFI and Inalum did not immediately respond to a written request for comment.

Freeport CEO Richard Adkerson said on a call with analysts on July 12 the company had been “working very closely” with the environment ministry and had “received assurance that we will find a resolution of the environmental issues that will be acceptable for all parties. So we’re very encouraged by that.”

Since then he said Freeport had “entered into very productive discussions with the ministry and are making progress with the ministry in addressing these issues and working toward a resolution that we do not expect and the ministry does not expect to adversely affect our operations.”

Parliament also urged the ministry to “conduct environmental risk analysis and environmental audits on a regular basis”, and plans to hold meetings with the ministries of mining and the environment on the matter.

A spokesman for the environment ministry declined to comment further on the parliament request or provide and estimate on how long this process could take.

Indonesia’s mining minister said earlier this month the environmental matters must be resolved before his office could issue a new mining permit for PT-FI up to 2031.

Inalum CEO Budi Gunadi Sadikin told parliament on Monday that “regarding the environment, we told Freeport ‘the past problems are your sins’. In future we will take responsibility together.”

Sadikin added the environmental damage from Grasberg was a shared responsibility as the government already held a 9.36 percent stake in the mine.

Sadikin said a forestry permit for the mine still needed to be issued, and “the 185 trillion rupiah ($12.80 billion) from tailings damage still needs to be cleared up” although he was confident that all the environmental problems could be resolved.

There are 13 of 48 sanctions related to the environmental audit that have not been met yet, according to the environment ministry.

In April, Freeport shares fell to a four-month low after the environment ministry announced tough new rules intended to comply with the BPK audit, just before the company announced its first quarter earnings.

Oceans Face Ultimate Threat from Deep Sea Mining

New Website & Letter Signed By International Scientists & Organizations Urging for a Moratorium on Deep Sea Mining 

MiningWatch Canada | July 24 2018

Our international waters – known as the “common heritage of (human)kind” – are under a new, imminent, and most deadly threat from the deep sea mining industry. 

The International Seabed Authority (ISA), a UN agency which has not received much public scrutiny until now, meets in Kingston, Jamaica this week to discuss how to open up the deep sea bed to mining. Scientists, academics, and non-governmental organizations unite in a joint letter to raise alarm over this ultimate threat to our oceans.

Nnimmo Bassey, Director, HOMEF foundation and Alternative Nobel Prize recipient stated:

“Oceans play a critical role in maintaining life on the planet. However, the ISA continues to ignore the profound lack of scientific understanding of the immediate and long-term ecological costs of digging up the sea floor. 

“It is evident that large private and state-owned conglomerates have succeeded in shifting the ISA’s regulatory discussions toward outcomes favourable to corporate-directed industrial development.”

“Our joint letter is a call from civil society globally to protect our common heritage.”

Renowned marine biologists, including Cindy Van Dover and colleagues, have recently pointed out that deep-sea mining would impact both the seabed and the water column, such that biodiversity loss would be both “unavoidable” and “likely to last forever on human timescales.”

“The world’s seas are already on the brink of catastrophe from overfishing, pollution, such as from plastics and chemicals, destruction of critical habitat such as mangroves and coral reefs, global warming and acidification” said Catherine Coumans of MiningWatch Canada.

“The oceans cannot survive wide scale destruction of the sea bed by the same irresponsible industry that mines on land.” 

The signers of the joint letter noted:

“This is not the time to move forward with an extractive regime; there are far too many uncertainties. International leadership at the ISA is required to prevent recklessly proceeding with deep-sea mining.”

The ISA has already issued numerous exploration contracts in international waters to mining interests supported by member states of the ISA. As these exploration contracts come to an end, the ISA is considering implementing a regime to allow extraction.

Raj Patel, Activist, New York Times best-selling author and Research Professor, University of Texas claimed:

“When the Law of the Sea was written and the idea of ‘common inheritance’ first framed, I’m certain that corporations weren’t intended to inherit the seabed. There’s little evidence that corporate stewardship is compatible with the continued, sustained health of these under-studied ecosystems.”

“The seabed is everyone’s common inheritance, and we need broad, transnational and formal public consultation to learn and then decide how best to ensure its survival for those who will inherit it from us.”

Rather than permitting deep sea mining the ISA must declare a moratorium on deep sea mining before irreparable damage is done to the health of the world’s oceans.

View and sign Letter | Download Letter

Ok Tedi Pays Out K100 Million In Dividend

Post Courier | July 24, 2018

The Ok Tedi Mining Limited (OTML) board paid out K100 million as dividend to its shareholders last week Friday.

In announcing the payout, OTML board chairman Sir Moi Avei also cautioned shareholders not to have high expectations heading into the second half of 2018.

He said the company had showed its resilience to bounce back from the effects of February’s 7.5 magnitude earthquake which affected the province and the mine, including four other provinces in the southern and highlands regions of the country.

“While the performance of the business was adversely affected following the earthquake in February, production and profitability have progressively returned to more normal levels,” Sir Moi said.

“Allowing the company to make a K50 million contribution to the earthquake appeal in March 2018 and now fund an interim dividend (of K100 million).”

He thanked employees and contractors for their efforts in recovering from the effects of the earthquake while pointing out that the second half outlook, while positive, required care on the part of the recent fall in copper prices and major infrastructure development.

“While the outlook for the second half of 2018 remains positive, the recent decline in copper price and the ongoing cash requirement to complete the replacement and relocation of the in-pit crusher meant that the board continued to exercise prudence,” Sir Moi said.

Following the transfer of additional equity from the State to Western Province entities in April 2018, K67 million of the dividend was paid to the State, with the balance of K33 million paid to the Fly River Provincial Government, CMCA and Mine communities.

O’Neill promises more delays for LNG payments

Landowners face more delays before receiving promised benefits

Royalty payments to be released after proper clan-vetting process done

The National aka The Loggers Times | 18 July 2018

PRIME Minister Peter O’Neill says royalty payments for landowners of the PNG LNG project will only be released after proper landowner identification is completed through the clan-vetting process.

O’Neill said this in Parliament yesterday when responding to questions from Sinasina-Yongomugl MP Kerenga Kua.
Kua said the Government had not honoured most of its landowner commitments under the umbrella benefit sharing agreement (UBSA).

That included non-payment of royalties and equities, infrastructure development grants, business development grants and the seven per cent equity participation.

Kua asked O’Neill whether Government had delivered all these commitments to the people of Hela and Southern Highlands.

The prime minister said his Government was committed to honour all commitments made by previous governments, “some of which are very misleading to landowners”.

No more mine waste dumping in rivers

The Ok Tedi mine has destroyed the Fly River system (Brent Stirton/Getty Images)

PNG urged to use history to deal with mine waste

The National aka The Loggers Times | 18 July 2018

PAPUA New Guinea has lessons to learn from Fly River in Western when working on the Mine Waste Management Policy framework, according to Department of Mineral Policy and Geohazard Management.

Asavi Kendua from the department says the mine waste management plan should indicate mine waste avoidance, reduction and mitigation strategies.

In his presentation during a seminar on capacity development in mine waste management in PNG, Kendua said treatment of mine waste, including mine waste water, had to be done in accordance with the Environment Act 2000.

He said it also had to abide by any codes of practice developed by the Conservation and Environment Protection Authority.

Proper monitoring systems should take into account health and safety aspects of the environment and surrounding communities.

“Riverine tailings disposal shall not be an option for mine waste disposal for new mining leases that will be granted from the date of the enactment of Revised Mining Act,” Kendua said.

He said mine inspectors should ensure proper inspections were done on mine waste treatment facilities before the expiry of mining leases.

“Where a mining lease or lease for mining purposes is granted, it shall be granted on the condition that the tenement holder complies with mine waste management plan,” Kendua said.

“The holder of a mining lease for mining purposes shall periodically update its mine waste management plan.

“The holder shall ensure that the integrity and safety of mine waste storage, treatment and dischange facilities are constantly maintained with adequate emergency response mechanisms in place.”

The mine waste management plan takes into account closure aspects of a mining project with respect to operational and post-closure monitoring, rehabilitation of disturbed and contaminated sites, stabilisation of waste rock dumps, stockpiles and acid rock drainage mitigation.

Ok Tedi funds not safe: MRDC a milking cow for people in Waigani

O’Neill clears air on K200m mine fund

The National aka The Loggers Times | 18 July 2018

PRIME Minister Peter O’Neill told Parliament yesterday that well over K200 million from OK Tedi Mine is currently accumulating in the Community Mine Continuation Agreement (CMCA) and non-CMCA trust accounts for the people of Western.

He said this in response to questions from Middle Fly MP James Donald on why Government had made a decision to transfer money in the CMCA and the non-CMCA trust accounts to Mineral Resource Development Company (MRDC).
Donald said he was very concerned because MRDC was a “milking cow” for people in Waigani.

“I asked the prime minister earlier on and he had given me and the people of Western province assurance that the funds were in safe hands,” he said.

“An NEC decision in June 2017 has stated that after the audits of the CMCA and the non-CMCA trust accounts, the balance of the funds, will be transferred to MRDC.

“I am very concerned that the prime minister has lied to me and the people of Western.

“MRDC is a milking cow for Waigani people and the funds are now in the wrong hands.”

O’Neill said what the Government tried to do was to correct gross mismanagement and misuse of funds in the CMCA and non-CMCA trust accounts over the past years.

He said hundreds of millions of kina belonging to Western people under CMCA and non-CMCA trust accounts had been mismanaged over the years.

“Those funds have never reached the people,” O’Neill said.

“That’s why we are trying to correct and stop this nonsense going on.

“The government has put a ban on the CMCA and non-CMCA trust accounts and conducted an audit.”

Nautilus’ stock plummets as deep sea mining litigation proceeds

Deep Sea Mining Campaign | 17 July 2018

Today Nautilus Minerals Solwara 1 deep sea mine project will be at the centre of a court hearing in Papua New Guinea as local communities seek to enforce their legal rights to full information about the project.

Andy Whitmore, Finance campaigner from the Deep Sea Mining campaign said, “We were informed that Nautilus told its shareholders at their AGM that the legal case bought by local communities in PNG to stop the Solwara 1 project had been dismissed on June 18.”

“It is also alleged that Nautilus stated to shareholders they believed the government of PNG was going after community for cost recovery because it was a spurious lawsuit.” 

“This is misinformation from Nautilus!” claimed Jonathan Mesulam from the Alliance of Solwara Warriors, a local community leader whose village is located 25km from the Solwara 1 project.

“There is still a legal case registered at Waigani National Court House. The case, which was adjourned on June 18, will be heard today.”

“The real question is this: why is the government trying to dismiss this case? Why would government resources be invested in blocking this case over the constitutional right of all PNG citizens to Freedom of Information?”

Nautilus stock fell by 19% this month after a string of bad news stories. These include the contract with their shipbuilding supplier had been canceled, major mining company Anglo American divesting its’ shares from the company and that the majority of the local community in New Ireland province oppose the renewal of Nautilus’ exploration license.

“Local community around the Community Beneficiary Area (CBA) have all objected to the renewal of Exploration License 1196 through written objection which was lodged at the Mineral Resources Authority (MRA) in March this year. There was also strong objection during the Warden hearing in April” continued Mr. Mesulam.

“New Irelanders are now well informed of the potential impact of Nautilus Minerals and their experimental seabed mining project. They are giving their undivided support to ensure the project is stopped at all cost.” 

Exxon’s Papua New Guinea Gas Project Is Dead In The Water

Tim Daiss | Oilprice | 16 July 2018

As liquefied natural gas (LNG) markets mature, trying to establish itself against decades of crude oil dominance, developments far removed from most of the action are taking unusual turns that could in time impact the entire LNG value chain.

Until recently, tiny Papua New Guinea (PNG) was the envy of the world’s LNG producers. Not only did its PNG LNG export project come online without much delay but it also avoided the quandary, affecting nearby Australia whose LNG development has been marred by budget over runs running into the billions, continual project start delays and industry troubling feuds between worker groups and project developers.

PNG LNG project loses its shine

The ExxonMobil-led $19 billion PNG project came online in mid-2014 and started shipping LNG to markets in the Asia-Pacific region, which accounts for 72 percent of all global LNG demand. By 2017, the project was producing some 8.3 million tonnes of LNG, an increase of 20 percent from the original design specification of 6.9 million tonnes per annum (mtpa).

By last year, ExxonMobil’s PNG project looked as if its success would be endless. However, that storied beginning has crashed and burned.

The first crack appeared just after a destructive 7.5 magnitude earthquake struck the country’s oil and gas rich interior, triggering landslides and flattening buildings, killing at least 100 people, prompting the PNG government to declare a state of emergency.

The quake also caused PNG LNG operators to stop operations to perform safety checks and repair damaged project infrastructure, which also impacted LNG markets in Asia at the time, particularly spot prices for the fuel.

PNG LNG swung back into operation by mid-April, but not without damage to the project partners’ reputation among villagers in the area which blamed gas drilling as either the main cause of the massive quake or at least as one of its main contributors. The region was also hit with a number of severe tremors in the weeks after the original earthquake.

PNG straddles the geologically active Pacific Ring of Fire, known for its geological volatility and earthquakes. Project partners, along with geologists, disputed the claims, but the goodwill that had been carefully won more than a decade ago has been lost and will be hard to win back, which has also leads to another point of contention.

Local angst

PNG government officials are now claiming that they received an unfair deal ten years ago when negotiating the terms of the PNG LNG project, and have vowed that any new projects going forward would not suffer the same fate. Peter Koim, head of the country’s Gas Project Coordinating Office and a member of the original negotiating team, said “there is a general view that Papua New Guinea gave away too much for the first LNG project. For the next round the country will not away concessions as was the case in the PNG LNG project.” 

Continuing the fallout, on July 5 Exxon Mobil said that it had stopped construction in late June on its Angore gas pipeline in the country’s strife-hit highlands, after building sites were vandalized.

“All work at the Angore well pads and pipeline construction has been suspended and all impacted personnel are in the process of being demobilized or reassigned,” an ExxonMobil PNG spokeswoman said. The 7-mile (11 km) pipeline is being built to connect the gas field with the Hides gas conditioning plant, and the stop work does not affect production there, she added.

Radio New Zealand also recently reported that Angore Tiddl Appa Landowners (a PNG landowners group) has advised the government that it must resolve a dispute over unpaid LNG gas project royalties by July 18 or the venture would be “closed permanently”.

The association is demanding from the government an “infrastructure development grant” of ($9.6 mn) 32 million-kina, equity shareholder certificates for traditional landowners, 2 percent royalties every month, and for the government to complete official clan vetting for the PNG LNG project.

The government has already offered 20 million kina to the land-owners and ordered the group to halt the protesting and unrest in Angore. The landowners, however, say that if their demands aren’t met they will permanently close the LNG project by blockades and destruction of its pipeline and other infrastructure.

The danger for ExxonMobil is not only how it will handle immense PR damage in the country, but also that local unrest and demands could spill over into future LNG development projects there. If PNG landowners can forge ahead and set a precedent, local landowners in other turbulent locations even globally, particularly in Mozambique, could follow, creating more difficult negotiations for affected oil majors and their projects.

In fact, not only do Western oil majors have to contend with landowners and decades of government bureaucracy and corruption in gas rich but still undeveloped Mozambique, casting doubt over the future of the country’s fledgling LNG sector, but Islamic militants are also striking back. The U.S. embassy in the country in late June said Americans should consider leaving a northeastern district close to a major gas field as imminent attacks are likely after suspected Islamist militants beheaded 10 people and killed seven others since May.

More than $30 billion is expected to be invested in Mozambique’s natural gas sector to build capacity to produce 20 million tonnes per year of LNG, with the first exports from the fields discovered seven years ago due to start after 2021.

Australian miners in firing line of PNG law shake-up

The streets of Sydney are paved with Papua New Guinea’s gold

Jewel Topsfield | Sydney Morning Herald | 17 July 2018

Major Australian mining companies face the prospect of higher royalties, tough restrictions on fly-in fly-out workers and the potential nationalisation of assets under reforms under consideration by the cash-strapped Papua New Guinea government.

The proposed law changes have sparked warnings from the country’s peak mining body that they would pose “significant deterrents” to investment in future projects and “threaten the existing operations of current mines”.

Several Australian Securities Exchange listed companies including Newcrest, Highlands Pacific and St Barbara Limited operate mines in Papua New Guinea, which has significant resources including gas, gold, copper, cobalt and nickel.

Mineral exploration in Papua New Guinea

The PNG Chamber of Mines and Petroleum says the proposed changes to the Mining Act could clamp down on international fly-in fly-out workers, impose a right for the state to compulsorily acquire mining projects (on commercial terms) after 24 years and result in an increase in royalties.

It says some of the proposed changes – which have been under discussion for years – would have “severe negative impacts in the immediate and long term on both existing operations and proposed projects”.

But the Resource Owners Federation of Papua New Guinea claims existing laws are “primitive, unjust and self-harming”, and mining companies continue to reap benefits while keeping the landowners and citizens who own the resources poor.

PNG Deputy Prime Minister Charles Abel told Fairfax Media the government was concerned about a number of factors including increasing the share of benefits to landowners.

The Papua New Guinea resource industry is responsible for just 20,000 jobs in nation of over 8 million people.

“Any proposed amendment must address the underlying concerns and keep PNG competitive as an investment destination,” he said.

New copper and gold projects inlcuding the Newcrest-led Wafi-Golpu mine and PanAust’s Frieda River mine are currently awaiting special mining leases from the PNG government.

At an update last month Mr Abel said the PNG government was bringing on Wafi-Golpu, the expansion of a ExxonMobil-operated PNG liquefied natural gas plant and Papua LNG “under an improved fiscal template”.

The Wafi-Golpu project, a joint venture between Newcrest and Harmony Gold, is a key part of Newcrest’s future and is considered the company’s top growth asset.

Newcrest’s Wafi-Golpu joint venture mine in PNG.

Australian company PanAust holds an 80 per cent interest in the Frieda River copper-gold project, which has an estimated initial mine life of 18 years.

PNG Chamber of Mines and Petroleum executive director Albert Mellam said some of the proposed changes had undermined investor confidence in PNG.

“We are concerned that some of the draft amendments are internationally uncompetitive, are a serious deterrent to investment in future mining projects in PNG and will threaten the existing operations of current mines in the country,” he said.

Dr Mellam said the transitional arrangements were inadequate to protect existing operations and could affect permit applications that already been submitted. He also said businesses would have to wear increased royalties, fees and levies and “unreasonable penalties”.

He said the passing of legislation in February – which removed industry representation on the Mineral Resources Authority Board and doubled the production levy rate from 0.25 per cent to 0.5 per cent – had already created a “great deal of uncertainty in the minerals sector and for international investors watching PNG”.

“The industry has already observed a gradual decline of investment into mineral exploration over the past two years.”

Mr Abel, who is both the Treasurer and Deputy Prime Minister of PNG, told Fairfax Media the current system had yielded good returns to government from mining projects in the past but a number of circumstances had combined to greatly reduce these flows as a share of government revenue.

These included projects approaching maturation, tax concessions, low prices, PNG LNG and Lihir, the gold mine owned by Newcrest, accessing accelerated depreciation provisions and greater use of the tax credit scheme.

“The state is not necessarily seeking to increase its take but wants earlier returns and smoother flows at lower cost,” Mr Abel said.

The gold processing plant on Lihir Island in PNG. Photo: Reuters

“This may necessitate a tax regime that is more production based rather than profit, has longer depreciation periods, has an element of free carry equity and simpler, more transparent structural arrangements and doing away with tax concessions.”

Mr Abel said PMG also wanted to minimise international fly-in fly-out operations to retain more benefits in Papua New Guinea.

The proposal to reduce maximum mining licenses from 40 to 25 years was “still under consideration”.

Mr Abel said the government was determined to deliver Wafi-Golpu, the PNG LNG expansion and Papua LNG to early works and final investment decision by 2019.

“These and other imminent projects should be based on the current legal framework with negotiated terms to meet some of the requirements I mentioned.”

The Resource Owners Federation of Papua New Guinea said the Mining Act should be reviewed in its entirety, so the ownership of minerals was retained by customary landowners.

“Minerals can still be mined only after development agreements are reached between the landowners and mining companies,” it said in a statement.

“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.”

According to the 2018 PNG economic survey by the Australian National University and University of PNG, the country is experiencing an “urgent economic crisis” and a shortage of foreign exchange is worsening.

The economy is dependent on the resource sector, which makes up 30 per cent of GDP, but much of it is foreign owned and a large share of the benefits flow offshore.

“Since 2015, resources revenue (corporate taxes and dividends from mining and petroleum) have been at their lowest level since 1992,” the economic survey says.

It says accelerated depreciation and tax holidays meant new projects paid no or virtually no resource revenue but it was surprising that even older projects were paying very little revenue.

“On the one hand there are genuine concerns in PNG that the country and landowners haven’t been getting a good deal from resource projects and change is needed,” said Professor Stephen Howes, the director of the Development Policy Centre at ANU.

“On the other hand the economy is in a very precarious state and the government is desperately looking for stimulus from new resource projects. That’s the tension … I think the government is in a difficult position.”

Professor Howes said he did not believe big new projects would go ahead until the uncertainty was resolved.

“They want clarity on these issues because they are long-term investments and these issues are seen as very important.”

Austmine, the leading industry body for the Australian Mining Equipment, Technology and Services sector, said current macroeconomic conditions and mining regulations in PNG had proven to be “considerable roadblocks to investment, creating uncertainty and stifling exploration”.