Nautilus tests new rig but no money for further exploration

‘Once the trials are completed, Nautilus will deploy the rig on its South Pacific tenements subject to securing additional funding

Nautilus Minerals begins wet testing of new diamond drill rig

Mining Technology | 8 June 2018

Canada-based underwater resource exploration company Nautilus Minerals has started wet testing of its new seafloor diamond drill rig, which has been developed to relieve the drilling requirements of its future exploration programmes.

The move comes after the rig, which is nicknamed the Hobbit, was subjected to a series of land-based trials, focused on rod handling, functional drilling, and landing stability tests.

To be carried out over a period of two weeks, the wet test programme will expand the testing parameters to include submerged operations and mechanical endurance.

Nautilus Minerals CEO Mike Johnston said:

“According to our recently released preliminary economic assessment for Solwara 1, a single quarter’s production at steady state mining rates (around 3,200t/d) and at average Solwara deposit grades, adds around $110m in earnings before interest, taxes, depreciation, and amortisation (EBITDA).

Solwara 1 is the company’s copper-gold project, which is under development in the territorial waters of Papua New Guinea.

Johnston added:

“Hence forward exploration is a pivotal part of our business. Our pioneering teams are overcoming traditional functional limitations and high fees in seafloor drilling, with our new ‘Hobbit’ scout rig.”

During the testing period, the company will assess the operational functionality of the drill rig’s control systems, landing capability, hydraulic functions, video survey systems, and drilling cycle time versus performance, in a submerged environment.

Additionally, the testing will evaluate the system’s ability to sustain simulated offshore operations at optimal productivity levels.

The company’s personnel will be trained on all aspects of the equipment and operations.

The rig is designed to offer improved landing and drill cycle capabilities, as well as simplified control systems and launch and recovery requirements, which will allow deployment from cheaper vessels.

Once the trials are completed, Nautilus will deploy the rig on its South Pacific tenements subject to securing additional funding.

The company is focused on commercial-scale exploration of the seafloor for massive sulphide systems, which could potentially contain high grade copper, gold, zinc and silver.

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MCC Involves Fishermen In Marine Survey

Post Courier | June 8, 2018

RAMU NiCo Management (MCC) Limited undertook a marine environmental monitoring survey along the coastline of Rai Coast district in Madang province recently.

And MCC used local fishermen to provide the reef fish for Ramu NiCo’s corporate health, safety and environment team and an independent consultant Ninkama Yoba and Associates to dissect for tissue samples for laboratory analysis overseas.

The local fishermen from the far-flung coastline of Rai Coast were very happy to be paid a sum of K300 for their catches which were stored in eski coolers provided by the Ramu NiCo team.

Group leader of the Saidor fishermen, David Lopez, thanked the Ramu NiCo HSE corporate team for their trust in allowing them to fish to supply catches for the survey.

“We usually catch fish to enjoy with our families during meals, but to catch fish to supply for the survey is good and also it provided us some money to help us in our remote place,” Lopez said.

From the catches, the fish muscles and liver plus mollusks and crustaceans were frozen, packed with ice and sent to the Australian Laboratory Services (ALS) in Sydney for analysis.

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Low Tax Revenue From PNG LNG ‘Being Addressed’

Charles Abel

Post Courier | June 8, 2018

Audits into several major resource companies will run parallel with a joint exercise with commercial banks to identify taxpayers, Treasurer and Deputy Prime Minister Charles Abel announced yesterday.

“Audits are also underway by the Bank of Papua New Guinea into foreign currency accounts held by resource companies,” Mr Abel stated in an email.

“This is to ensure compliance with the remittance of proceeds in foreign exchange back to Papua New Guinea.

“Increased expectations for revenue collection at the IRC and Customs have also been factored in the 2018 budget, and collections are on track to date.

“I’ve been assured by the Internal Revenue Commission in writing that Kumul Petroleum is fully meeting its tax obligations.

“The implementation of these measures does not mean that we are relaxed. We have set clear objectives in terms of taxation revenue, as a percentage of GDP, to push up to 14.6 percent in 2018.

“I would like to see this rise to 20 percent eventually.

“Put simply, our revenue to GDP needs to improve, and that means maintaining efforts to grow the economy with a more efficient tax system and smarter project agreements.”

Abel was responding to Opposition leader Patrick Pruaitch’s accusation that PNG LNG partners were evading tax.

Mr Abel said the existing taxation structure was set by Pruaitch when he was in government.

“It is good to see the former longtime treasurer suddenly talk about these issues now,” Mr Abel said.

“The taxation arrangements with the PNG-LNG Project were established under the former National Alliance Government.

“These arrangements have seen relatively little tax paid to the government since production began because of a combination of low gas prices and accelerated depreciation.

“Treasury is now developing a fiscal template to establish a reviewed tax framework that does not impose extra burden on resource projects, but provides smoother and more consistent revenue to the Government and is easier to administer.

“In terms of the Internal Revenue Commission, our Government has invested significantly in capacity building there supported by an additional K19 million funding in this year’s budget.”

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Alluvial miners want govt to reduce licensing fees

The National aka The Loggers Times | June 6, 2018

TWO alluvial miners at Wau and Bulolo, in Morobe, have called on the Government to reduce the fees needed for mining licences to help keep local people in business.

Many miners have gone out of business because they cannot afford the fees, said one of the miners, George Waure, on Friday.

Waure, who has been engaged in alluvial mining for the past 14 years, said that originally no fees were charged and miners worked freely.

The miners were also concerned with the presence of foreigners in the industry, with Prime Minister Peter O’Neill forced to come out in Parliament last month to clarify that alluvial mining was reserved for locals and not big businesses.

Westy Awiong, of Morobe Gold Field Small Scale Miners’ Association, said they were happy with the prime minister’s assurance.

Awiong said foreigners should not be involved in the sector.

“We have the experience as some of us have been mining for many years,” he said.

“If we are given financial assistance to purchase the right machines we can upgrade to commercial mining.”

Last month, Morobe Governor Ginson Saonu pointed out in Parliament that big companies were now getting into alluvial mining.

In response, O’Neill said those companies must stay out of it.

Landowners in Morobe have rejected an application by Wabu Alluvial Limited and Harmony Gold Exploration Limited for exploration licences for Bulolo Valley.

O’Neill said:

“I’m not privy to the letter that the governor is referring to, but I will instruct the mining department to look into the matter and respond in writing so that his concerns and our people’s concerns are being addressed properly.

“Generally, I support the call by the governor and the people (that) alluvial mining should be reserved for our people and not necessarily large international companies.

“I understand Harmony and the other companies have applied for exploration licences which are different from alluvial mining.”

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Giant Waste-Spewing Mine Turns Into a Battleground in Indonesia

Grasberg mine tailings Source: Freeport-McMoRan

Danielle Bochove and David Stringer | Bloomberg | June 5, 2018

Every year, Freeport-McMoRan Inc. dumps tens of millions of tons of mining waste into the Ajkwa River system in Indonesia. The company has been doing it for decades, and is demanding the right to keep at it for decades to come.

The discharge of what are called tailings, the leftovers of mineral extraction, is perfectly legal under Freeport’s current contract with the government. But recently, after more than a year of tense negotiations over the terms of a new deal, Indonesia suddenly changed the rules: The Grasberg mine in the highlands of Papua province would have to operate by heightened standards. It shouldn’t have been a surprise, really, considering most every other miner in the world has been forced or has elected to stop discarding tailings in rivers.

Freeport, though, has said that won’t happen at Grasberg. Chief Executive Officer Richard Adkerson has been blunt about it. “You can’t put the genie back in the bottle,” he said in April. “You simply can’t say 20 years later ‘we’re going to change the whole structure’.” Grasberg’s waste management, he added, has “always been controversial.”

The tailings tussle is the latest twist in the complicated relationship between the mining giant and the Southeast Asian republic. How it plays out will have far-reaching consequences in Indonesia. Freeport is a major taxpayer and job provider and has built homes, schools and hospitals in one of the poorest provinces. But Grasberg has also long been a target for environmentalists, indigenous and separatist groups and human-rights watchdogs.

At stake for Freeport are reserves that Bloomberg Intelligence estimates to be worth $14 billion at the world’s biggest gold deposit and second-largest copper mine. Grasberg accounted for 47 percent of Freeport’s operating income in 2017, according to data compiled by Bloomberg.

“What happens at Grasberg has global significance,” said Payal Sampat, the mining program director at the mining watchdog-group Earthworks. “It involves some of the largest global players in the mining industry and one of the leading mining economies.”

Most countries have banned tailings deposits in waterways over concerns they can be toxic, destroying habitats, suffocating vegetation and changing the topography of rivers, causing floods. Most miners have said they’re against the practice regardless of local rules. The industry’s biggest, BHP Billiton Ltd., won’t “dispose of mined waste rock or tailings into a river or marine environment,” as the company put it in a statement.

‘Environmental Burden’

Only two other industrial-scale mines — and a third, small operation — are known to get rid of tailings as Grasberg does, and they’re in Papua New Guinea, which occupies half of the island of New Guinea; Indonesia owns the rest, which is home to the Freeport-run mine. In recognition of risks that could leave “a massive environmental burden for future generations,” the practice has been phased out everywhere else, according to the United Nations’ International Maritime Organization.

Freeport sees things differently. “As we have stated before, the tailings are benign,” said Eric E. Kinneberg, a spokesman, referring to the corporate website for a detailed explanation.

Tailings deposition area in the Ajkwa River system.Source: : Action for Ecology and People’s Emancipation

The Phoenix-based company maintains that much of the sediment in the Ajkwa River system downstream from Grasberg is caused by natural erosion, and that tailings pose no significant — or at least unexpected — threats. “There have been no human health issues or impact on the environment that wasn’t anticipated,” Adkerson said on a quarterly earnings call in April.

The company’s partner in the Grasberg complex, Rio Tinto Group, recently addressed concerns about waste removal. “Riverine tailings disposal is very, very far from best practice,” Chairman Simon Thompson told a meeting in London in April, perhaps highlighting one of the reasons Rio may be willing to sell its 40 percent interest to a state-owned company for $3.5 billion. A spokesman for the company declined to comment for this story.

Rio shares were up 1.5 percent in U.S. trade at 2:54 p.m. while Freeport gained 2.8 percent. Copper and gold prices were also higher.

‘No Realistic Alternative’

“If you think about it from Rio Tinto’s perspective, one of the biggest problems with this mine is the environmental issues. I think that’s an incentive for Rio to get out,” said Christopher LaFemina, an analyst at Jefferies LLC. “This is a critically important part of Freeport’s overall value. For Rio Tinto, it’s not.”

The problem for Freeport and Indonesia is that there’s no easy solution. “There has been no realistic alternative identified,” Thompson said. Freeport’s local unit studied 14 alternatives for tailings disposal — including dams and pipelines — and concluded all were too risky in a mountainous terrain prone to earthquakes and heavy rainfall.

As it is, the heavy ooze wends its way through glacier-capped valleys, descending almost 4 kilometers (2.5 miles) to tropical lowlands and a 230 square kilometer deposition zone, where roughly half the tailings are parked. The rest flows on to a river estuary and the Arafura Sea.

“The company has sacrificed not just the river, but also the coastal area,” said Pius Ginting, coordinator of Action for Ecology and People’s Emancipation, an Indonesian environmental group.

50 Million Tons

According to Earthworks, Freeport sends more than 76 million metric tons of tailings and waste rock into Indonesian rivers every year. The company puts the 2017 figure at 50 million tons. Without spelling out precisely how the requirement should be met, Indonesia told Freeport that it would boost to 95 percent from half the amount of tailings that must be recovered from the river system, according to Adkerson.

That was a shock that sent Freeport’s stock tumbling after Adkerson revealed it on April 24. Shares have largely recovered as investors bet the government will fail to follow through.

The negotiations to secure the right to keep mining Grasberg until 2041 had already been complicated by an edict that foreign miners sell majority stakes in their assets to local interests. Rio’s apparent interest in divesting would ease that problem for Freeport, reducing how much it would need to unload.

Stunning Asset

Even if its share dropped below 50 percent, Freeport as an operator could still win big — Grasberg is a stunning asset, expected to produce more than 520,000 tons of copper in 2018 and more gold than any other mine. Of course, Indonesia’s tailings mandate may be a negotiating tactic, as some Freeport investors said they suspect. Ilyas Asaad, inspector general at Indonesia’s Environment & Forestry Ministry, didn’t respond to a request for comment.

The company is holding its position: The discharge of tailings into the river system is an inescapable consequence of keeping the mine in operation. If the government backs down, it will be “a political decision,” said David Chambers, a geophysicist who runs the U.S. nonprofit Center for Science in Public Participation. “There aren’t many governments that are willing to sacrifice those kinds of environmental resources for the financial resources.”

Few investors have publicly seized on the tailings mess as a reason to shun Freeport. One was Norway’s $1 trillion sovereign wealth fund, which in 2006 excluded Freeport from its investment universe and in 2008 sold its holding of about $850 million of Rio shares, citing Grasberg’s use of the river system to dispose of tailings.

“The spotlight has shone on these issues a lot more brightly in the last couple of years,” said Andrew Preston, head of corporate governance in Australia for Aberdeen Standard Investments, which owns shares in Rio and BHP. The “wake-up call,” Preston said, was the 2015 failure of a tailings dam at BHP’s Samarco iron-ore joint venture with Vale SA in Brazil. Billions of gallons of sludge escaped to travel hundreds of kilometers down the Doce river, killing at least 19 people and leaving hundreds homeless.

Jefferies’ LaFemina said investors are betting on the status quo in Indonesia. “In negotiations, different sides are trying to get leverage.” In the end, “I am not expecting there to be a significant change to how this asset operates”.

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‘Bougainville won’t fall for more false claims from BCL’

Photo: Catherine Wilson/IPS

Philip Miriori (Chairman) and Lawrence Daveona (Ex Chairman) SMLOLA | 4 June 2018

HOW CAN BOUGAINVILLE COPPER LIMITED BELIEVE WE AND OUR AUTONOMOUS BOUGAINVILLE GOVERNMENT WILL FALL FOR MORE OF THEIR FALSE CLAIMS OF RESPECT FOR BOUGAINVILLE AND ITS PEOPLE?

Bougainville Copper Limited (“BCL”) continues to insult and disrespect Bougainville: the Panguna Customary Landowners by the recent statements made by BCL’s Chairman, Mr Mel Togolo and the ABG by their treatment at their Annual General Meeting blocking their vote.

Why did BCL not work with the ABG in advance to ensure they could have their say at the meeting if they are genuinely trying to mend fences with Bougainville and lose their mantle of being a PNG controlled company?” asked Mr Philip Miriori, the Chairman of the Special Mining Lease Osikaiyang Landowners Association (“SMLOLA”).

Mr Miriori said “we know the new BCL Chairman has his trainer wheels on, but this is unbelievable! How many world class mines has he developed? Wasn’t he the guy who sat on the Rio controlled BCL Board in the bad old days – for 6 or 7 years? Isn’t he the PNG country manager for the environmentally controversial deep sea mining start up, Nautilus Minerals? Why would we want any of that?”

Then there is the false attempt to blame third parties for the opposition by the Panguna Customary Landowners: this reflects the continuing failure on the part of BCL to even acknowledge the historic environmental havoc wreaked on the Panguna Land by BCL and the role of BCL in the devastating conflict in Bougainville. “Do they think we have forgotten or forgiven – no never” says Mr Miriori.

Mr Miriori, says “The failure of BCL’s Chairman, Mr Togolo, to acknowledge the historic wrongs committed against the people of Bougainville is totally unacceptable. The wilful blindness of BCL, its failure to admit its role in causing the environmental devastation to our land and its failure to rehabilitate or provide compensation for the damage, condemns BCL from ever obtaining SMLOLA’s approval or support. Trying to blame third parties for this is both naïve and arrogant – it is a flimsy and dishonest attempt to divert attention from their failure to win any aspect of social licence to return to Bougainville. That is and will always be the problem.”

Mr Miriori said “it is simple, BCL has one of the worst environmental and social impact records in the world and has not been welcome to return to Panguna in 30 years – yet they claim strong Landowner support. Just more lies!”

Prominent SMLOLA member Mr Lawrence Daveona supported Mr Miriori’s comments saying “BCL’s operations at the Panguna Mine were the cause of the devastating conflict on Bougainville. That is why they have been unwelcome in Bougainville for the last 30 years. It was the height of arrogance to think they could win community support without any reconciliation. They have ignored us and tried to go around “the impediments” – the owners of the minerals and have tried to simply pull political strings. The recent BCL attempt to curry favour and scramble to regain tenure to their old mine has been a disaster, just like their treatment of our lands and people – after 30 years of neglect and arrogance, how surprising!”

Mr Daveona said “our President Momis summed it up perfectly when he said BCL did not deserve the renewal because their attitudes to Landowners had not changed from the past.”

Mr Miriori spelt out what he said “were obvious facts:

  • BCL has achieved no reconciliation with the Customary Landowners for 30 years;
  • BCL has not attempted discussions with the current Court sanctioned SMLOLA Chairman and Executive even once; 
  • BCL has failed to acknowledge its role in Bougainville’s tragic history;
  • BCL has offered no compensation for the environmental and social impact of BCL’s massive profit taking operations at the Panguna Mine;
  • BCL has offered no assistance to rebuild Bougainville post resolution of the conflict; 
  • BCL has undertaken no remedial action to address the massive environmental damage from its past operations; and
  • BCL has made no attempt to identify the needs of the Customary Landowners and engage with the community.;

Mr Miriori said “it was outrageous that BCL untruthfully claimed it held unanimous Landowner consent when there was an existing petition with more than 2,000 SMLOLA members rejecting BCL’s return to Panguna. BCL has insulted the Customary Landowners by referring to them as ‘impediments to be removed’ and more recently, ‘disruptive influences’. This shows a contempt for the rights of Customary Landowners and the people.

Mr Miriori said “how could they have been surprised – they have never had majority Landowner support. Have they forgotten their 30 year history of devastation they never seem to mention now?”

Mr Daveona supported the ABG’s decision saying “BCL had an EL for two years from 2014 to 2016 and even had a further 15 months after the expiry of EL 1 and still they could not win Landowner support. The refusal of that application has been very positive for the Landowners and allowed us to bring an end to the social disharmony their false claims caused and to build an even stronger opposition to their return. The Landowners are now fully united against BCL. BCL should leave and respect the wishes of Landowners.”

President Dr John Momis of the ABG stated on 8 January 2018, in a public interview with the Australian Broadcasting Corporation, that the BCL Application had been denied by the ABG because of the Panguna legacy Issues and consequently the inability of BCL to gain a social licence. He observed BCL’s attitude towards Customary Landowners had not changed and therefore that BCL did not deserve an extension. It was noted that at the Warden’s Hearing in December 2017 almost all those who spoke referred to these significant and continuing legacy issues and the need for BCL to pay compensation.

President Momis was entirely correct in his observation and the recent statements by BCL’s Chairman show a contempt not only for the Customary Landowners but also for the ABG itself.

Mr Miriori agreed saying “BCL was the tenement holder during the time which systemic damage to the environment and river systems occurred. The Panguna mine was at the centre of the conflict.” It is reported 20,000 Bougainvillean people died in this conflict. This is the incontrovertible factual truth of BCL’s legacy.

These events are of global significance and to this day are fundamental to the vast majority of the Panguna Customary Landowners and Bougainvilleans opposing BCL’s return.

BCL made a formal decision to not acknowledge responsibility, to not say ‘sorry’ and to not pay any fair compensation for these events and the massive damage. These deliberate commercial decisions (to save BCL money and to not acknowledge its past wrongdoings) are fatal to BCL’s attempt to return to Panguna.”

As the highly respected community leader, Mr Sam Kauona said at the Warden’s Hearing, BCL can never be allowed to return to Panguna. The petition opposing BCL’s return has more than 2,000 supporters. The majority of those attending and speaking at the independent Warden’s Hearing in December 2017 opposed BCL’s return.

The continued failure to have regard to the opinion of the Customary Landowners, Mr Miriori says, “shows an arrogance and on-going disrespect.” He powerfully criticises BCL’s attempt to divert the blame from its own conduct “This arrogance and ongoing disrespect of the Landowners’ clear wishes perpetuates the tragic legacy of BCL/Rio, and with every day that passes, further compounds and entrenches the opposition of the overwhelming majority of Panguna Landowners to BCL. Let us now look forward not backward to a new deal for Bougainville. BCL is finished. Its attempt to cause even further delays to the successful redevelopment and reopening of the mine blocks and delays employment opportunities, the funding of critically needed community programs and obtaining of financial benefits for all Bougainvilleans.”

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Mines Need To Be Closely Scrutinised says Australian Govt

Matthew Vari | Post Courier | June 6, 2018

Despite much of the discussion coming out from a concerned mining industry over the review of the Mining Act 1992, there is need for Papua New Guinea to use its resources to its best advantage.

Considering the large portfolio of Australian mining companies investing in the PNG mining sector, Australian assistant Minister for Trade, Investment and Tourism Mark Coulton was asked if the Australian industry had approached his ministry with their concerns to be raised to the PNG government.

While Mr Coulton said there was no such request, nor was he fully aware of the particular concerns of the review, he reiterated from a government standpoint that scrutiny in the mining industry was in the best interest of the country whose resources were being developed.

“I don’t think scrutiny with mining hurts, mines can bring great benefit but they certainly need to be closely watched because there is potential to damage of the environment,” Mr Coulton said.

He said as a partner, Australia could help with formulating agreements with resource owners to ensure effective benefits take place.

“There is always a balance and modern technology means there is much a lesser issue than it used to be.”

“I think some of the future developments where Australia can help with maybe local people in helping with the sort of agreements that might bring benefits.”

“The feeling that being a part owner of a mine would be a benefit to local communities but maybe it’s more beneficial to communities if they had an offtake agreement where a percentage of the royalties went to the local people rather than the ownership of the company.”

“I am a believer and we should use our natural resources sustainably, but correct me, if PNG has these wonderful resources they need to use them to the best of their advantage,” Mr Coulton said.

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