Category Archives: Mine construction

Contractor on seabed mining ship defaults on payment

Nautilus said it has a number of options available to it to remedy the default and/or replace MAC as a party to the contract for the seabed mining vessel

More problems for Nautilus as ship owner defaults on payment

David Foxwell | OSJ | 13 December 2017

MAC Goliath Pte Ltd, owner of the production support vessel that is being built for seabed mining outfit Nautilus Minerals, said MAC has failed to pay the third instalment due on the contract for the vessel.

In a statement, Nautilus Minerals said it had been told by Fujian Mawei Shipbuilding Ltd, owner of the shipyard where the production support vessel is being built, that MAC had failed to make a payment of US$18M plus interest. The vessel is to be used by Nautilus and its partner in Papua New Guinea, Eda Kopa (Solwara) Limited, as the base for its seabed mining operations at the Solwara 1 Project site in the Bismarck Sea.

Under the contract between the shipyard and MAC, MAC is required to rectify the default immediately, and perform corresponding obligations under the contract. If MAC fails to remedy the default within 21 days of the receipt of a notice to MAC from the shipyard, the yard may rescind the contract.

In the event that the contract is rescinded, the shipyard has the right to either complete or not complete the vessel and to sell it in a complete or incomplete state.

In accordance with the terms of the contract, Nautilus Minerals Singapore Pte Ltd has the option to either remedy the default on behalf of MAC and/or replace MAC as a party to the contract by way of a novation or assignment within 14 days of receipt of the notice to the company from the yard.

Nautilus noted that the build of the vessel is progressing well, with construction more than 70% complete. The derrick substructure was recently delivered to the shipyard for installation on the vessel. Foundations for two of the three launch and recovery systems are being installed, the bulk cutter winch has been installed, work on the cargo handling system is progressing, and the 100-tonne and 200-tonne cranes have also been installed. The vessel was floated out in October 2016.

Nautilus said it is in discussions with the shipyard, MAC and third parties with respect to the default and potential remedies, and said it will issue further updates as matters develop.

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Independence ‘challenges’ could derail any return to mining on Bougainville

Image: Department of Defence.

While RTG Mining and BCL squabble over exploration rights, far more serious problems are brewing on Bougainville…

Back to Bougainville

Declan Sullivan* | ASPI | 11 Dec 2017

Trouble is returning to the island of Bougainville and Australia must be prepared. With the 2019 independence referendum looming, Australia will be called on to help support the peace process, whatever the referendum’s outcome. Australia was a major participant in two past interventions on the island, and its strategic connections run deep. Australia must ensure that it is adequately prepared for the coming challenges in Bougainville.

The 2001 Bougainville Peace Agreement stipulated that a referendum on independence would be held between 15 June 2015 and 15 June 2020. Last year, John Momis, president of the Autonomous Bougainville Government, and Peter O’Neill, prime minister of PNG, agreed on a target date of 15 June 2019. Two months ago, however, O’Neill backtracked on that commitment. He cited the ‘proper establishment of rule of law, proper establishment of a government structure on Bougainville, [and] proper disposal of weapons’ as conditions for the referendum to go ahead, and said that if those criteria weren’t met, the referendum ‘may not be possible’.

In response, Momis denied that good governance or complete weapons disposal were prerequisites for the referendum. Furthermore, he claimed that PNG was ‘hampering’ Bougainville’s disarmament and good governance efforts by failing to give Bougainville the grant money it was owed. PNG faces severe financial difficulties stemming from government overspending and overreliance on the commodities sector, which declined sharply in 2015. Revenue projections took a 20% hit, but government spending remained the same.

PNG has since defaulted on its electricity bills for government buildings and been suspended from voting in the UN for failure to pay its membership dues. The cost of supporting the Autonomous Bougainville Government and the peace process may be behind O’Neill’s recent backflip on the referendum. Depriving the Bougainville government of funds may save PNG money while also impeding efforts to organise an effective independence campaign.

This disagreement could derail the peace process just as it’s approaching its conclusion, and it’s possible that Bougainville may choose to fight to hold the referendum, rather than accept delays and weak promises from PNG.

The conflict on the island stems from the establishment of the Panguna mine in 1972 by Conzinc Riotinto of Australia. The mine displaced local landowners and caused environmental issues. The people of Bougainville were angry about a lack of compensation from one of the world’s richest copper mines. And the mine and its construction brought mainland Papuans to Bougainville, creating ethnic tensions.

Those factors led to an outbreak of violence and then armed conflict in 1988. The Bougainville Revolutionary Army fought against increasingly brutal PNG defence forces, which used Australian-supplied helicopters to attack villages and allegedly drop executed detainees’ bodies into the ocean.

A fragile peace process began in the early 1990s, encouraged by Australia and the wider Pacific community. The process led to a peace conference in 1994 between the PNG government and Bougainville leaders. An Australian-led multinational peacekeeping force was deployed to protect the conference and its attendees. The conference, however, collapsed when a few key Bougainvillean leaders refused to attend and PNG soldiers attacked other leaders who did.

Violence resumed following the collapse of the conference, reaching its peak in late 1996 and early 1997. A major scandal—the hiring of Sandline mercenaries to fight in Bougainville in 1997—forced the PNG prime minister, Julius Chan, to resign, effectively ending PNG’s military attempts to pacify Bougainville.

New Zealand–sponsored talks in 1997 led to the deployment of a new peacekeeping mission to the island. The Truce Monitoring Group was a mix of military, police and government agency personnel from Australia, New Zealand, Fiji and Vanuatu. PNG and Bougainville concluded a peace agreement in 2001, and the mission withdrew in July 2003. Throughout the period, Australia played a key role.

It may well again. Given the potential for violence during the referendum, it was always likely that Australia and New Zealand would be asked to support the effort in some capacity, potentially with observers on the ground. A return to violence could require an even more substantial peacekeeping mission. Given that weapons are still present in Bougainville, it behoves Australia and New Zealand to support the disarmament process, even with their own financial resources if PNG proves unable. Pressure also should be placed on O’Neill to abide by the timetable agreed with Momis. PNG recalcitrance will likely slow the rate that weapons are handed in if former fighters believe there could be a return to conflict.

Bougainville is an issue that Australia will have to deal with, one way or another. Right now there’s a chance to smooth the way towards the referendum and potential independence. If negotiations break down and violence returns, however, Australia’s involvement will be much more difficult.

* Declan Sullivan is a master’s candidate at the Strategic and Defence Studies Centre at the Australian National University.

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Bougainville landowners to write 2000 signature petition over Panguna mine

Ewen Hosie | Australian Mining | December 11, 2017

Landowners in Bougainville, an autonomous region of Papua New Guinea, have expressed backing for an RTG Mining-led consortium to take over the abandoned Panguna mine instead of Bougainville Copper (BCL). The landowners are expected to present a 2000-signature petition in opposition of BCL.

The long-dormant copper mine, abandoned since 1989 due to local conflicts, is currently under consideration for redevelopment by BCL, which is now partially owned by the Bougainville Government.

The rival consortium, Central Me’ekamui Exploration, said it has the backing of local landowners, including the Special Mining Lease Osikaiyang Landowners Association (SMLOLA), however, and representatives of RTG Mining said that the BCL’s problems regarding its legacy in the region were “insurmountable”. The mine, while non-operational for three decades, was owned by Rio Tinto until last year.

The Bougainville Government has accused the consortium of bribing landowners.

“The Autonomous Bougainville Government will not entertain companies who use the back door or break and enter through the window using self-centred individuals who think they have a monopoly over the people’s resources or represent their interests,” said mining minister Raymond Masono.

The mine’s relaunch remains a keystone of Bougainville’s upcoming independence plans; Bougainville’s regional cabinet is expected to finalise Panguna’s exploration licence next year.

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RTG Increases Its Interest in the Panguna Landowners Joint Venture Partner

ANNOUNCEMENT TO THE TORONTO AND AUSTRALIAN STOCK EXCHANGES

RTG | Stockhouse | 8 December 2017

The Board of RTG Mining Inc. is pleased to announce that through a further direct investment and conversion of loans in Central Exploration Pty Ltd (“Central”), RTG has increased its interest in Central to 24%. Michael Carrick is now Chairman of Central and Justine Magee has also been appointed a director of Central. In addition one of RTG’s major shareholders (interests represented by Mr. Richard Hains, who also independently provided early stage funding to Central), has a 32% interest in Central. 

As announced previously, Central is the joint venture partner of the Special Mining Lease Osikaiyang Landowners Association (“SMLOLA”), being the owners of the minerals at the old Panguna Mine. The joint venture is held through Central Me’ekamui Exploration Limited who has applied for an exploration licence over the customary land of the SMLOLA members, being the old Panguna Mine. The SMLOLA has nominated RTG as their development partner for Panguna.

The Autonomous Bougainville Government (“ABG”) is currently considering all exploration licence (“EL”) applications, including the purported EL renewal application of Bougainville Copper Limited. Both the SMLOLA and RTG are committed to working with the ABG to ensure both the ABG itself, and all Bougainvilleans benefit from any redevelopment of Panguna.

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Bougainville locals give thumbs up to RTG project; shares soar 83pc

RTG shares over the past month. Source: Investing.com

Melissa Yeo | Stockhead | December 6, 2017

RTG Mining hit 52-week highs on Tuesday after the junior explorer got the green light from Bougainville locals to start work on its copper and gold mine.

The historic partnership, the first of its kind in 30 years, pushed RTG shares as high as 34.5c before they cooled to 28c — a gain of 83 per cent for the day.

Consent from the traditional land owners is required for the issue of any exploration licence on their customary land at the Panguna 1.5 billion tonne copper and gold project on the central island of Bougainville, a process which has historically escalated to wide-scale political unrest on the island.

The region has long been known for its copper and gold prospects, but disputes between regional residents and explorers such as Rio Tinto subsidiary Bougainville Copper Limited (BCL) have marred production since the early 1970s.

Conflict between the Bougainville Revolutionary Army and Papua New Guinea Defence force escalated to a civil war in 1988 and took almost ten years to cease.

Now, the Autonomous Regional of Bougainville is seeking independence for its population of 250,000, with a target date of June15, 2019 set for a referendum on the topic.

They will be the ones to decide the fate of RTG’s application, now led by the traditional landowners, the Special Mining Lease Osikaiyang Landowners Association (SMLOLA) and chairman Philip Miriori.

“We believe the proposal presented by the SMLOLA consortium represents a unique and once in a generational opportunity to responsibly re-open the Panguna Mine for the benefit of all Bougainvilleans,” the company told the market.

“RTG has always suggested that this is best achieved by discussion and negotiation with all relevant parties, including the ABG.”

In 2016, Rio’s subsidiary BCL was forced to abandon the mine in the face of attacks by rebels, transferring its take to the provincial and national governments at no cost.

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Financial vultures circling PNG LNG expansion

Oil Search is understood to have hosted a number of local project finance bankers to PNG in recent weeks. Rocky Roe

With a Panguna style conflict brewing in Hela over benefits from the first LNG project – a project the Supreme Court has condemned as a fraud – and the Konebada Petroleum Park Authority mired deep in allegations of corruption, how could any reputable financial institution lend money for another LNG project in PNG?

Except, of course, these foreign based financial vultures don’t care a jot about human rights, corruption or violence in PNG – as long as they get their slice of the pie…

Local lenders jostle for mega PNG financing deal

Sarah Thompson Anthony Macdonald Joyce Moullakis | Australian Financial Review | December 3, 2017

Key project debt lenders have been giving their passports and travel insurers a workout as they troop up to Papua New Guinea to get to grips with what could be the region’s biggest financing since the record $US20 billion deal for Ichthys LNG.

While the final configuration of the next stage of LNG expansion in PNG is yet to be settled, those behind the circa $US17 billion project – primarily ExxonMobil, Total and Oil Search – are already well advanced in considering funding.

A large project finance facility is understood to be the favoured option, building on the experience of the $US14 billion funding for the initial PNG LNG project.

Oil Search is understood to have hosted a number of local project finance bankers to PNG in recent weeks, with several testing the lay of the land again last week at a petroleum conference in Port Moresby, which also attracted a host of engineering contractors vying for a piece of the action.

Appetite from the main Australian banks is understood to be strong, although could be tempered by some being close to fully allocated in their exposure to PNG. The country’s sovereign credit rating has slipped a notch since the initial deal amid soft commodity prices, weak governance and ongoing political and security risks.

Still, export credit agencies are again expected to be well in evidence, while the backing of two oil majors and the sheer size of the project count in favour of commercial lender interest. Also supportive is the outperformance of the initial LNG project, and expected robust economics and sturdy customer support for the brownfield expansion despite the oversupply due to plague the LNG market later this decade.

A firmer idea of how the expansion will look, including the split of feedstock supply between the Elk-Antelope, P’nyang and other gas fields, the capacity size and the ownership structure, is expected by early 2018. 

Yet to be figured out is how the cash-strapped PNG government will fund its expected involvement down the track.

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Formal Reconciliation of Mr Philip Miriori and Mr Lawrence Daveona

Press Release | The Special Mining Lease Osikaiyang Landowners Association | 5 December 2017

Mr Philip Miriori, the Chairman of the Special Mining Lease Osikaiyang Landowners Association (“SMLOLA”) and Mr Lawrence Daveona are pleased to report to all members, that following a customary reconciliation process, both men as leaders in Panguna have reconciled and are keen to build unity amongst all members to support the initiatives of the Chairman, Mr Philip Miriori.

Both Mr Miriori and Mr Daveona are appreciative of the mediation process led by the Honourable Judge Kandakasi over recent months and believe it was instrumental in allowing both men to better understand the merits of their respective views. They have now agreed to work together, co­operatively, towards a redevelopment of Panguna. Mr Daveona now has a better appreciation of the deal delivered by the SMLOLA Executive with RTG Mining Inc., which they have worked hard on for more than 18 months and is keen to be a part of the process to professionally and sensitively redevelop Panguna so that all the SMLOLA members, all Bougainvilleans and the Autonomous Bougainville Government (“ABG”) are winners in this historic process.

Both Mr Miriori and Mr Daveona will work co-operatively with both the ABG and the National Government and call on both Governments to respect the wishes of the landowners.

It is recognised that there is still much to be done, including an extensive awareness program among the members, to ensure that all understand the care being taken to respect and treat fairly all Bougainvilleans this time around, while also working with a partner to ensure the highest of environmental standards. Both Mr Miriori and Mr Daveona are confident they can work well together and undertake to work tirelessly to protect the member’s rights as owners of the minerals at Panguna and ensure any redevelopment of Panguna is with the partner of their choice.

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