James Regan | Reuters | 19 May 2016
A Chinese conglomerate planning to develop the Frieda River copper project in Papua New Guinea has more than doubled the estimated construction cost for the mine to $3.6 billion after boosting its potential production capacity.
State-owned Guangdong Rising Assets Management Co Ltd (GRAM) bought into Frieda River in 2015, in line with moves by Chinese companies to pursue offshore copper mines to feed demand in the world’s biggest user of the metal.
The project has still to gain formal financing and no date has been set for construction, said Joe Walsh, corporate development officer at GRAM subsidiary PanAust.
The capital cost for Frieda River is more than double the $1.7 billion estimate made in September 2014 by PanAust, before it was acquired by GRAM for around $950 million.
The increase reflects a larger annual production capacity, as well as extra spending on waste management and rising construction costs, according to a document released by Highlands Pacific Ltd, which has a 20 percent stake in the project.
An additional $2.3 billion would also be spent over the life of the mine, the document said.
Copper has been earmarked as one of the few growth markets for mining companies stung by a slowdown in metals directly related to steelmaking, such as iron ore and nickel.
China Molybdenum paid $2.65 billion for Freeport McMoran’s majority stake on the Tenke copper project in Democratic Republic of Congo this month and $820 million for the Northparkes copper mine in Australia in 2013.
In 2014, Hong Kong-listed MMG Ltd bought the Las Bambas copper project in Peru off Glencore for $5.85 billion.
Copper is languishing near its lowest price in seven years due to a supply glut. With fewer discoveries, however, miners exploiting new lodes hope by the time they are up and running, the market will have turned.
Tag Archives: Frieda river mine
David Stringer | Bloomberg | 19 May 2016
China-owned PanAust Ltd. estimates it may take as long as two years to win approvals for its expanded $3.6 billion copper project in Papua New Guinea as bigger rivals forecast a deficit of the metal by the decade’s end.
A revised development plan for the Frieda River project by state-owned Guangdong Rising Assets Management Co.’s Australian unit more than doubled an earlier cost estimate following a better understanding of the earthworks required, PanAust General Manager of Corporate Development Joe Walsh said Thursday in a phone interview. The new study also raised forecasts for copper output about 40 percent to 175,000 metric tons a year.
“Commodity prices are, in our view, going through a cyclical low and we do envisage that in the fullness of time we will see prices recover,” Walsh said.
“The focus over the next year or two, when we would envisage that we would be largely in an approvals process, is to look at opportunities to improve the fundamentals of the project, with a particular focus on capital and infrastructure.”
China is stepping up a hunt to secure more supplies of copper through acquisitions and mine projects to prepare for the forecast long-term demand growth. A copper deficit is likely to develop toward the end of the decade, BHP Billiton Ltd. said in February, as output is constrained at existing mines on lower grades.
Frieda River, acquired from Glencore Plc in 2013, may contain as much as 12 million tons of copper and 19 million ounces of gold, Brisbane-based PanAust said Thursday in a statement on itswebsite. A further $2.3 billion is earmarked in the new plan for sustaining capital and development over the life of the mine, it said.
The mine will also deliver average annual production of 250,000 ounces of gold over the initial 17 years, PanAust said, compared with 200,000 ounces under a September 2014 proposal.
PanAust’s study didn’t include any forecast date for Frieda River to enter production. The project remains subject to permits, approvals and a final investment decision by Guangdong and partner Highlands Pacific Ltd., which has a 20 percent stake, PanAust said in its statement. Guangdong last year completed a takeover of PanAust with an offer that valued the producer at about A$1.2 billion ($870 million).
“It’s not really possible to put a clear timeframe on this,” Walsh said. “History would suggest that approvals processes for substantial projects in PNG tend to be quite drawn out.”
The partners will seek a special mining lease from the Papua New Guinea government by June 30.
Norway’s Government Pension Fund has dumped its shares in Australian mining company PanAust, the company planning to build the controversial Frieda open pit copper mine.
The Fund is advised by a formal Ethics Committee and is sensitive to both environmental and human rights concerns. The Fund has recently divested from 11 international companies because of their involvement in rainforest destruction
In 2011 the Fund owned PanAust share worth US$38 million, by 2014 that holding had been reduced to just $3 million and the Fund’s 2015 report reveals it has dumped the miner completely from its portfolio.
PanAust acquired its interest in the controversial proposed Frieda river mine from Xstrata in 2013. The mine site sits in the headwaters of the Sepik River, which winds its way through 1,000 kilometres of jungle valleys and wetlands. The Sepik River, one of the largest pristine river systems in the Asia-Pacific region, is home to hundreds of thousands of people who rely on the river.
US$50million Settlement Over Due Since Nov-2015
Gabriel Ramoi LLB | PNG Blogs
On the 30th of August 2013 a deed of settlement was entered into between Pan Aust Ltd and Xstrata-Glencore Mining for the sale of EL 56 covering the Nena -Frieda Deposit. On the signing of the Deed, US$25m exchanged hands between the two with US$50m now Due and outstanding since November 2015.
The payment of the additional US$50m rides on the back of Pan Aust obtaining approval from the PNG Government to proceed with its Bastardized Version of the original Mine Development Concept first proposed by Xstrata Mining to the PNG Government in 2012.
In 2012 Xstrata Mining Ltd proposed to develop the world class Frieda Mine with a Capital Expenditure Budget of US$5.4 Billion which consist of the plan to develop a fully integrated open cut copper mine with a potential life of 40 years with a 68 MW Hydro Power Plant costing US$800m . It also Proposed a Tailings Dam to mitigate against the contamination of the Fragile Sepik River Eco System and was considering the option of building a 300km Road link from the mine to the coast at Aitape jointly with the State for the export of Copper as opposed to the strongly contested option of barging copper down the Sepik River System.
Since taking over the Frieda Exploration License, Pan Aus Ltd has been selling a revised Bastardized version of this Mine Development Plan by sponsoring a campaign to take short cuts in the development of the Frieda Mine by reducing Capital Expenditure from US$5. 4 Billion to US$1.2 Billion with a plan concentrated on taking the Gold first out of the Mine to finance the rest of the mine Development cost.
For Power Pan Aust Ltd Proposed a Diesel Generation set which will be barged up the Sepik River on a pontoon and anchored on the Frieda river to supply Power to the mine. Over the last year Pan Aust has also carried out a concerted campaign to get villages on the Banks of the Sepik River to accept their proposal to barge copper concentrate down the Sepik River System despite the total rejection of this plan by the entire Sepik Community. To date I have yet to read any environmental impact statement by Pan Aust on Frieda and in Particular its comments on Mine Tailings or its plans on the construction of a mines tailing Dam.
Building of Mines in PNG is more then just profits for shareholders. It is about opening up new opportunities and access to services by communities which but for the mine will remain unconnected to the rest of the country. It is about long term contribution in revenue streams to Provincial and Local Government Budgets. It is about building long term infrastructure that will survive long after the life of the mine. It is why the building of a road link from Frieda to Aitape must be the central piece of infrastructure that the Sepik Community and its leaders must insist from the mine developer. Frieda must add value to the two Sepik Provinces not take value and self respect out of us by buying out our leaders and compromising the integrity of the project.
My plea to Governor Amkat Mai and Governor Somare is to leave our Gold and copper in the Ground if the cost of taking it out would only cost hardship and misery to our People and the environment and by all indication Pan Aust ltd as the Potential Developer of the Frieda Mine is not the type of company and Developer with the resources to Develop a word class mine.
The National aka The Loggers Times | 2.02.2016
HIGHLANDS Pacific Ltd says the completion date of the Frieda River project feasibility study has been extended to next month.
Highlands Pacific, which owns 20 per cent interest in the project, said this was to allow for additional operating parameters and design options to be investigated to maximise project returns, given the depressed commodity prices and challenging funding conditions.
It said in its 2015 December quarter report that the current work programme was scheduled for completion at the end of March.
It will be followed by an independent peer review to be conducted in April, providing the opportunity for an application to be submitted for a special mining lease by June 30 this year.
The majority 80 per cent stake is held by Chinese company Guangdong Rising Assets Management following its acquisition of PanAust last year
GRAM has left the PanAust team in place completing the feasibility study.
The costs of the feasibility study and associated work are being funded by PanAust (GRAM).
Meanwhile Highlands Pacific managing director John Gooding said the company continued to advance its projects during the December quarter, with strong production results at the Ramu nickel project, encouraging exploration results at Star Mountains.
UPDATE ON FREIDA MINE
G.Ramoi | PNG BLOGS
Officials of GRAM [Guangdong Rising Asset Management], the New Owners of Pan Aust Ltd, Charged Under Official Corruption in CHINA.
Over the week end while in Singapore I received new of grave concern regarding the arrest on corruption Charges against the Chairman and a number of leading Directors of Guangdong Asset Management Ltd.
It was reported over the week end that on Saturday the 17th of this Month the Guandong Prosecutors office arrested Mr.Xie Liang who is the Party member and Deputy General Manager of GRAM for official corruption.
It was also reported that GRAM is one of 13 Companies in Guagnadong under investigation by the Office of Public Prosecutor for stock Market manupulation. In September last year Mr.Zhong Jin Song the Former General Manager of GRAM was cited by the Party for serious disciplinary violation and in January this year , the ex Chairman of GRAM Mr.Li Jin Ming was expelled from the Party due also to serious violation and Disciplinary issues.
Now if this information is correct it should lead immediately to the Register of Mines moving quickly in protecting PNG National Interest in ensuring that any application before it by Pan Aust Ltd to extend its Exploration Licence over Frieda River and in particular any attempt by Pan Aust Ltd to extend EL 58 should be rejected out right and the matter immediately referred to Cabinet through the Ministerial Economic Ministers Committee for consideration on the way forward with respect to the development of the Frieda River Gold & Copper Mine.
The Current State of Play
In 2013 Xstrata Glencore Ltd entered into a deed of sale with Pan Aust Ltd to buy the Exploration licences over the Frieda River Deposits valued at US$125 million. PanAust Ltd deposited US25million in August 2014 nad took control of the Frieda River project . According to the terms of the deed of sale by November 2015 Pan Aust ltd must pay another US$50 million to Xstrata Glencore. Readers of this blog will note that Pan Aust earlier this year went ahead and sold the Frieda asset together with the entire company for over US$380 million to GRAM of China. GRAM of China is now for all intent and purpose the new owner of the Frieda Deposit.
Now with this grave news coming out of China regarding GRAM , t is in the best interest of the State to once and for all reign in control and sovereignty over the Frieda Deposit by putting its foot down by rejecting any attempt to extend the exploration licence over the Frieda Deposit by GRAM or any other player and for the state to take over the licences and to develop this resources itself utilising a number of Models available to it including Contract Mining or production sharing regime as opposed to the rent based regime .