Category Archives: Financial returns

Central Colombia town bans ‘world’s largest open pit goldmine’

Adriaan Alsema | Colombia Reports | March 26, 2017

In a historic vote, a central Colombia town banned plans to build what would be the ‘world’s largest open pit goldmine,” creating a major stand-off with multinational mining giant Anglo Gold Ashanti, which has said it would advance the project.

The Colosa project in Cajamarca, Tolima was South African mining giant Anglo Gold Ashanti’s biggest bet in Colombia, until Saturday when the local population banned all mining from its territory in a landslide vote.

According to the National Registrar, 6,165 townsmen voted “No” to all mining exploration and excavation activities. Only 76 people voted ‘Yes’.”

The vote obligates the town council to formally ban all mining activity from the municipality.

Never before has a Colombian municipality banned controversial mining practices from its territory, effectively ending whatever mining titles may have been granted by the national mining agency.

Ahead of the vote, Anglo Gold said a “No” vote would have “minimal” effect, claiming the referendum only applies to future titles, while the company had already been exploring since 2002, reported newspaper El Espectador.

Judicial experts, however, said the mining company was wrong, primarily because business deals do not transcend state decisions. If an activity is prohibited by law, it becomes illegal activity.

Additionally, “they don’t have an environmental license to carry out exploration activities. If ‘No’ wins in the popular vote, it would be absurd if the company were to continue the project,” Dejusticia expert Diana Rodriguez told the newspaper ahead of the vote.

While the town may have avoided becoming the world’s largest gold mine, it has created a problem of epic proportions for the national government, which could be sued before an international tribunal if the state is accused of having breached a contract with a private foreign company.

This could not just cause a AngloGold Ashanti vs. Colombia case, but a downpour of lawsuits against the nation.

Since 2001, mining companies have requested mining titles covering 20% of Colombia’s national territory through some 20,000 exploration and exploitation requests, according to the Center for Investigative Journalism CIPER in 2011.

The government of Alvaro Uribe (2002-2010) granted 9,000 of these titles, reportedly in disregard of obligatory environmental regulations and local approval.

The current government of Juan Manuel Santos hailed mining as “the engine” of Colombia’s economy until 2014 when commodity prices dropped, the peso collapsed and the economy proved to have been growing on a bubble.

Since then, several municipalities have taken legal action against oil and mining licences while the national government declared large swaths of land protected.

A domino effect of Sunday’s vote in Cajamarca is possible, because while mining has been profitable for the fossil fuel industry, Colombia;s national government and foreign investors, most of the areas where mining have taken place have seen more losses than gains. While large communities remained poor, they were left with a mining-destroyed environment.

Additionally, mining has had a major impact on violence in Colombia’s countryside where particularly gold mining has drawn the interest of multiple illegal armed groups.

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Confusion over FGF and bauxite mining in Fiji

Luke Rawalai | Fiji Times | March 23, 2017

The landowning unit of Fiji’s first bauxite mine in Nawailevu, Bua yesterday clarified this issue that Lands Minister Faiyaz Koya earlier described as “one that will benefit the future generation only”.

In an earlier interview with this newspaper, Mr Koya said only the three generations emerging within the 99-year lease duration of the Nawailevu bauxite mine would be eligible for the Future Generation Fund.

Mr Koya said the funds were meant for the future generations of the three landowning units of Noro, Nalutu and Naicobo in Nawailevu.

However, in their response and speaking on behalf of the landowning units, Vilikesa Kaidawa said the Future Generation Fund derived from the royalties of bauxite mining would also benefit current landowners.

This, he said, included the elders of the three landowning units.

Mr Kaidawa said landowning units had a workshop with representatives from the Land Bank Unit who assured them that current generation would also benefit from the revenue generated from investments of the FGF.

“We had a workshop with the unit on the first week of last month where we were told that the fund would be put in investment institutions to grow the fund of $600,000,” he said.

“Revenues generated from the investments will benefit current members of the LOUs while the $600,000 will be set aside for future generations.

“The workshop was also attended by representatives from investment banks and talks had been held during the workshop on putting up investment projects such as the purchase of a home, hotel and so on to bring in revenue.”

Mr Kaidawa said they had asked for part of the funds to invest and make money.

But the Ministry of Lands has made its stand clear that the FGF would not be released at any time except for the three generations born during the 99-year lease period.

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LNG landowner frustrations rising again in PNG

Hides landowners met several times with the government to discuss outstanding LNG Project payments. Photo: Supplied

Radio New Zealand | 21 March 2017

Papua New Guinea’s major LNG Liquefied Natural Gas or LNG project could be shut down again due to simmering landowner frustrations.

Landowners in the Highlands province of Hela say the government has let them down again by not following through on promised benefits from the multi-billion dollar gas project.

The landowners mounted a protest blockade of the project’s conditioning plant in Hides last August.

In response the government signed an agreement to address landowners’ grievances over lack of benefits and equity arrangements within thirty days

Hides landowner representative Andy Hamaga said government did not honour their promise.

“Unfortunately to date they haven’t done anything. We are looking at options, whether to take them to court, or go with the national arbitration, or go go back again and shut down the whole (LNG Project) operations before the general election,” he said.

At the time of last year’s blockade of the LNG plant, in response the government said the delays in royalty payments to landowners were due to complications over identifying genuine landowners.

The Petroleum and Energy minister Nixon Duban said that it was in the best interests of Hela to ensure that the right beneficiaries would be getting the payments.

“This project is going to be here for a long time,” Mr Duban explained at the time.

“We cannot make a mess and pay the wrong people. And so the onus is on the state to ensure it’s done properly. Whether we take one year or a couple of months, we must ensure it is done properly.”

However, Mr Hamaga said this was misleading.

“The state minister is not giving us the actual information,” he said.

“They were supposed to do this clan vetting and landowner social mapping thing before we signed the big Umbrella Benefit Agreement we have signed in 2009. I think they’re using this one as an excuse.”

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How the free market failed Australia and priced them out of their own gas supply

While Asia is enjoying low prices for Australian gas, back home things are getting worse. (Origin Energy)

Ian Verrender | Business Editor | ABC News

Fashion has a habit of turning full circle.

Remember that old shirt, the super tight one with the stretchy material and weird collar that you found at the bottom of the wardrobe? What on Earth possessed you to buy it, you wonder. What were you thinking?

For anyone who lived through the ’70s, the memories of those fashion crimes often come back to haunt us.

It was also an era when free market ideology began to assert itself in public policy. And with good reason.

Government-run businesses were inefficient, bloated and bureaucratic. Letting them loose would free up scarce public funds, competition would lower prices and scarce resources would be allocated with the greatest efficiency.

When Margaret Thatcher came to power in the UK in the 1980s, she unleashed a wave of privatisations that transformed the economy and contributed to decades of economic growth.

It didn’t take long for the fad to gain ground here. Government-owned businesses from airlines to banks and insurance companies were jettisoned.

Even vital infrastructure like roads, telecommunications and power generators were flogged to the highest bidder with little thought about the long-term consequences.

But have we gone too far? Free market theory, while it’s terrific in theory, has some almighty shortcomings and, as we now are discovering, may not be the economic cure-all we once imagined.

Suddenly, the winds have shifted. Business leaders talk in hushed tones, openly uttering a phrase once considered unmentionable: market failure.

In the past few days, there has even been a call for part nationalisation of our energy industry from a free market wheeler dealer. More on that later.

A fortnight ago, competition chief Rod Sims let fly with his annual swipe at the fee-gouging taking place at our airports.

Airlines and the travelling public were forking out an extra and largely unnecessary $1.6 billion in fees.

What’s going on with gas?

The problems arise when the business being sold is a monopoly, when the buyer, having paid an exorbitant price, is given carte blanche to extract its tonne of flesh. The benefits flow from the community to private interests, often offshore.

Generally, we’re talking about utilities — things like power companies, for instance. And then there is gas.

For years, electricity and gas operated independently. But the two have become intertwined as the shift towards a cleaner environment and lower emissions has thrust gas firmly into the box seat as the transition fuel to generate electricity.

We’ve suddenly discovered, however, we don’t have enough. It’s no exaggeration to describe the power situation now facing eastern Australia on both fronts as a catastrophe. And here’s why.

Within the next four years, Australia will overtake Qatar as the world’s biggest supplier of gas. We are sitting on vast gas reserves. In fact, we’re swimming in the stuff.

And yet, we face critical shortages at home which could starve manufacturers of fuel, see power outages across the eastern states and force energy prices through the roof while any profits that are made will be shipped offshore.

This is a public policy fail of epic proportions.

And it’s worth getting a handle on how it all came about and the shenanigans employed by the gas majors that have deliberately created this crisis and the supposed shortage which is a total con.

How could this happen?

First, however, consider this: the gas we are exporting does not belong to the energy giants. It belongs to us.

Companies like Woodside, Origin and Santos and their foreign partners merely have bought the right to exploit those gas reserves, which was supposed to lead to massive benefits for ordinary Australians.

Here’s the scorecard so far. Having spent close to $250 billion building new export facilities, no-one seemed to think that flooding the globe with extra energy would see global prices drop.

They have. Gas prices into Asia, where we export, have now dropped below what it costs to extract, process and ship the stuff. In fact, the east coast suppliers so far have written off around $6 billion on their new plants.

It gets worse. Extracting the gas from coal seams in Queensland was a little more problematic than originally thought. Then farmers, incensed at the activity taking place on rich agricultural land, began shutting the gates.

That meant the companies couldn’t get enough to satisfy the huge supply contracts they’d written in Japan, South Korea and China. So they plundered the supplies, much of it from Bass Strait, that once powered the domestic market. That’s why we have an artificial shortage.

But wait, there’s more. No-one ever considered that once we were plugged into the global market, we’d be paying global prices. Around the time all these new gas plants were developed, prices in Asia were up to $25 a gigajoule. Back then, we were paying between $2 and $4.

Prepare now to be outraged. Global prices have more than halved to $10 and under. Domestic prices, meanwhile, have soared, to well above $10 because of the domestic shortage.

By putting the domestic market under pressure, they deliberately pushed local prices higher.

The upshot is that we now are paying more than Japanese manufacturers for our own gas. In fact, power company AGL is actively considering buying Australian gas in Japan and shipping it back home. And why not? It’s cheaper there.

That means energy-rich Australia is subsidising Asian manufacturers while penalising our own, a situation likely to force many to the wall.

Just to rub salt into the wound, the ramp-up in exports has not delivered the resources rent tax bonanza once promised by US giant Chevron. In fact, thanks to a shifty cash shuffle, ExxonMobil, Chevron and Shell until two years ago were booking around $3 billion a year in profit, tax free.

That’s seen our Petroleum Resources Rent Tax proceeds, which in the past delivered around $2 billion a year, plummet. In fact, by the time we overtake Qatar for global gas domination, it’s anticipated our resources tax will collect just $800 million.

Qatar, on the other hand, is expected to receive $26.6 billion in royalties that same year for roughly the same volume of exports.

So what’s being done about it?

Treasurer Scott Morrison last year declared he would urgently look into the matter. He’s called a review to get to the bottom of why soaring exports have coincided with a halving in the resources rent tax collections.

The review panel could do worse than read a report sent out last week by global investment bank Credit Suisse.

Hardly a bastion of left-wing ideologues, the report — entitled The Wolf Who Cried Boy — raises the prospect of Australia establishing a national oil company as one possible solution to the concocted crisis. And it goes straight for the jugular.

“If the gas producers and sellers are the wolves, they themselves are seemingly calling foul just as the danger is truly upon us,” it begins.

“We wonder whether a national oil company, a la Kumul Petroleum in PNG, could work? Instead of the petroleum resources rent tax on future projects, could we see state participation instead?”

Could we indeed? There undoubtedly will be howls of protest from the business lobby and their associated hangers-on. But consider this. Is this not the ultimate form of capitalism?

We are the landlords. The energy companies are tenants. If we had a controlling stake in the business, it would be much easier to ensure the kind of chicanery that has taken place in the past few years was never repeated. There would never be shortages.

And just perhaps, we’d end up with a dividend cheque, maybe even along the same lines as Qatar’s.

Just a thought.

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President Momis announces support for the new Bougainville Copper Limited (BCL)

Bougainville News | 16 March 2017

President of the Autonomous Bougainville Government Chief Dr John Momis has announced his support of the new Bougainville Copper Limited (BCL) .

The new BCL is step away from the post-colonial and pre-crisis arrangement that had Bougainville at a disadvantage; it is partly owned by the Autonomous Bougainville Government, the National Government, Panguna Landowners and people of Bougainville to develop the defunct Panguna Mine with the landowners for the benefit of Bougainville.

President Momis said the ABG as regulator will work together and support BCL explore alternative Panguna development options that will accommodate the interest of project stakeholders to fast track the development of the Panguna resources.

“Since BCL was invited to formally re-engage in discussions in Bougainville in 2012, the landowners have consistently stated their preference to work with BCL as the developer,” Momis said.

This was recently reaffirmed by the nine (9) Landowner Associations in Buka on 23 February 2017 after the BCL team led by Chairman Rob Burns made presentations to the ABG leaders and the nince landowner association executives and representatives on the new BCL’s development proposal for Panguna.

During that visit the Chairman present to the ABG leaders and the landowners a staed development proposal outlining how different the new Panguna approach will be under the new BCL hich now owned by the ABG, the Panguna landowners, people of Bougainville and the National Government.

Due to the recent majority of shares transferred by the Rio Tinto to ABG and the National Government, the ABG and the landowners now view BCL as not the devil we know but the devil we won.

The ABG and the landowners will now have to take advantage of this scenario and work out a positive strategy for an outcome that will be equitably beneficial for all stakeholders especially the landowners.

The ABG and the landowners have also committed to addressing the immediate challenges to progressing the Panguna project and looks forward to working in partnership with BCL through the project development cycle.

During discussions held this week between the BCL and the ABG, the two parties reaffirmed their commitment in which a way forward can be agreed for the immediate addressing of stage 0- Removing impediments under the BCL proposed staged development proposal presented during 23 – 24 February visit.

In those discussions it was also mentioned for BCL’s consideration to find ways and opportunities in its exploration to project development financing phase to support the ABG’s immediate development agendas as a way of building a long term unwavering development in Panguna.

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Where to dump Frieda’s raw waste just a ‘technical issue’: Minister

Frieda River mine set to start operations 
[the Post Courier loves a misleading headline!]

Post Courier | March 09, 2017

The giant Frieda River mine in West Sepik is now 60 percent ready of becoming a reality with the National Government waiting to issue the mining license for the project to start after few technical issues are sorted out, says Aitape Lumi MP and Minister for Treasury Patrick Pruaitch.

“Frieda River is 60 per cent reality now, we are ready to issue the license. We just need to work through with the technical people to on how they will dump the raw waste.”

“The company has put an application to convert mine waste into power generation system , but the State does not have the capacity so it is doing its best to hire people to give the best advice on how we can look at that and we can give the okay for that 40 per cent to be completed, for 100 per cent to give the mining license for project to start,” Mr Pruaitch said.

Mr Pruaitch said this at the opening of the first ever Frieda Mine Landowners Forum underway in Port Moresby’s Crowne Plaza Hotel that started yesterday and will end today.

Mr Pruaitch urged the people to work together and put together their benefits package for the National Government to consider during the project negotiation.

” Let us not send mix signals, it will give opportunity for company to go divide a few LLGs and MP’s to start the mine with the least cost possible so we can bring in impacted development for that region,

“I believe that is a big project that will transform Sandaun Province and Sepik region including Madang. This project will spread benefits across the region.”

YUP, JUST LIKE OK TEDI HAS TRANSFORMED WESTERN PROVINCE; LIHIR HAS TRANSFORMED NEW IRELAND; PORGERA HAS TRANSFORMED ENGA; AND THE LNG HAS TRANSFORMED HELA PROVINCE

HOW ARE OUR POLITICIANS STILL ABLE TO SPOUT THIS NONSENSE AND NOT GET LOCKED UP IN LALOKI PSYCHIATRIC HOSPITAL?

OR MAYBE WE NEED TO CHANGE THE LAW TO MAKE PEDDLING FALSE CLAIMS AND PRAYING ON PEOPLES DESPERATION BECAUSE THEIR GOVT HAS FAILED THEM A CRIMINAL OFFENCE?

“I want initial support from landowners because if we don’t have a project, we will not talk about benefits. We have to have a project, we have to get a leg in and another one in than we can be able to negotiate for the benefits. If we are not supporting the project than we can be standing here as leaders driving a lost cost, we must have a project, we must have shareholding understanding with impacted landowners, we must have understanding with the Telefomin district, we must have that understanding with the Telefomin LLG and sandaun Provincial Government.”

“I want Frieda mine which is going to be the first mining for the next government to use LNG precedent to allocate these benefits.”

Landowners to discuss benefits amongst others

FRIEDA Mine landowners have come together to discuss issues including benefits for negotiations with the National Government and developer PanAust when Frieda Mine project comes into development.

Member for Telefomin Solan Mirisim who initiated the first ever landowner forum to discuss issues surrounding the Frieda River Project, the Political Leaders from the West Sepik Province. MRA and stake holders emphasised on how best they can work hand in hand and support the Company, landowners and the State to kick start the Project once the SM application is granted.

“I stand up here representing the views, the cries and the excitement of over 50,000 people from Telefomin District, including people from ward 21, particularly the seven impact Villages within the vicinity of Special Mine Lease area.”

Mr Mirisim said Telefomin is the host District of the Frieda River Project and is one of the most remotest districts in the country that has no road link, only mode of transport is by Air and the four LLG are all accessible by third level airline and it is very expensive District to deliver goods and services to our people on time.

“Frieda River Project is the only Project in this country that has taken over 40 years of exploration after exploration, I must take this time to thank many exploration companies who have worked on the Frieda River Project for many years to this time, it is long time awaiting for our People in Frieda River and Telefomin District.”

“I would like to thank the Highlands Pacific and the PanAust for taking the project closer to fruition. One final step to finish and we will have a world class Mine that will be mined and developed in our District which will no doubt create prime opportunity to impact and transform the lives of our people through employment, training, economic empowerment, contracts and all kinds.

“We want to see a Pathway that will improve our way of life, a pathway that will change the areas of Infrastructure, a pathway that will see a society transformed with Improved Social and Health Indicators.

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Highlands claim piece of Woodlark pie

Esmarie Swanepoel | Mining Weekly | 10 March, 2017

ASX-listed Highlands Pacific has laid claim to a portion of the Woodlark gold project, in Papua New Guinea, telling shareholders that it has identified a royalty entitlement after reviewing agreements relating to previously held exploration ground.

Highlands Pacific told shareholders on Friday that the royalty amount was for A$10/oz of gold for the first 200 000 oz produced at the area.

Highland’s precedent companies held an interest in one of the exploration tenements making up the Woodlark projectin 1995, prior to the sale of the exploration tenement and the creation of the royalty entitlement.

Highlands has now reminded owner Kula Gold of the entitlement to the royalty.

Kula’s joint venture partner Geopacific Resources, which is earning an 80% share in the Woodlark project, recently identified a A$25-million capital saving at the proposed Woodlark plant.

Geopacific is also now looking at opportunities to achieve further savings in infrastructure costs. 

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