Tag Archives: Kumul Mining

O’Neill ‘infecting’ Ok Tedi

Malum Nalu | The National aka The Loggers Times

PNG Sustainable Development Program (PNGSDP) chairman Sir Mekere Morauta has accused the O’Neill Government of setting up a “highly suspicious” company to manage the giant Ok Tedi copper mine in Western and the small Tolukuma gold mine in Central.

However, a spokesman for Prime Minister Peter O’Neill urged Sir Mekere to name the management company “otherwise it is outright falsehood”.

“If he is talking about Kumul Mining, this will be a transparent company that will house all of the State’s mining assets,” he said.

“It will have a much stronger balance, and will be a much more focused company.

“The management of Ok Tedi has done very well and will remain.”

Sir Mekere told reporters yesterday: “The other day, I heard that he (O’Neill) is setting up an independent management company to manage Ok Tedi and Tolukuma (mines).

“Why is he infecting Ok Tedi with a disease of Tolukuma?

“Why is he setting up a management company?

“It’s another suction device to suck out funds from Ok Tedi and Tolukuma to the management company.

“Who is going to own this management company?

“Who are the shareholders and why is he setting it up?

“What is wrong with Ok Tedi management now, last 20 years a highly-profitable company, managed well he’s now going to change it.

“When he takes over ownership, he’s converting Ok Tedi into a state-owned enterprise such as PNG Power, you know the agony we’re going through.

“They lack capital, technical expenditure, commercial discipline, services are not provided.

“He’s going to convert Ok Tedi into state-owned enterprise.

“He says there’ll be no interference but he’s already interfering.

“He added that he had already told the (OTML) management not to pay dividends.

“Who is he?

“In doing so, he’s already deprived people of Western province their share of the dividends.

“That’s interference in the management of Ok Tedi and board decisions.

“I don’t understand why he’s trying to destroying a company that is owned by the people of Papua New Guinea.”

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PNG seeks IMF advice on how to manage mineral wealth

Radio New Zealand

The Papua New Guinea government is reported to be working with the International Monetary Fund on how to manage the country’s mineral wealth.

EMTV reports that PNG’s Minister for Treasury, Don Polye, has met with IMF consultants to discuss the best practices PNG can adopt in the creation of the sovereign wealth fund.

They also discussed PNG’s new Kumul Holdings Limited structure for managing mining and petroleum assets and other state-owned enterprises.

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PNG PM explains his ambitious plan to reform the economy

Papua New Guinea’s Prime Minister Peter O’Neill has embarked on an ambitious plan transform the standard of living of his people from one of the lowest in the Asia Pacific region to one in the middle ranks.

ABC Radio Australia

So far the high economic growth of PNG’s resources boom has not been translated into better schooling, health services and job opportunities for Papua New Guineans.

Unless this happens soon PNG risks going the way of other developing nations, such as Nigeria, where resource development is a curse rather than a blessing.

This year the O’Neill government has increased spending on health education and law and order by a staggering 50% and he plans to spend 6 Billion US dollars on improving infrastructure over the next five years.

It’s a once in a lifetime opportunity that other Pacific nations may face now they are starting to do business with big mining companies.

In Port Moresby, Prime Minster O’Neill spoke in-depth to Pacific Beat about the changes he is implementing.

Our reporter Jemima Garrett began by asking him if PNG has the capacity to do so much so quickly.

Presenter:Jemima Garrett
Speaker: Papua New Guinea’s Prime Minister Peter O’Neill

O’NEILL: Yes I think we have the capacity but we have not been able to apply ourselves. Many agencies are over-staffed but under-worked, and that is why we are now pushing the leadership of many of these organisations like the Works department, like all the other relevant infrastructure building departments to step up. And of course have to enter into a program in partnership with many contractors and private organisations, private companies that are able to deliver these projects on a timely basis. So there’s a mix of contractors, both international and local, we know that there is no capacity within the country, so many of the projects have been given to international companies to bring in the better technologies and better workmanship on many of the projects.

GARRETT: How will you keep corruption out of the picture?

O’NEILL: Corruption as you know it’s a battle that’s not going to be resolved in one year or one single day for that matter. It is a state’s program and we are now focussed on prioritising the way we conduct our business in the most transparent way. So all the projects have been advertised and have gone through a rigorous procurement process that will enable some level of transparency in itself. We are also now focussing on corruption being with special taskforce like the taskforce sweep, we have now expanded on their support, including budgetary support, we put 20 million extra to go out there and recruit more people and recruit more investigators that will help them prosecute offenders. Of course Attorney General’s office is working on a much stronger ICAC, Independent Commission Against Corruption, and then we are going to present this year, we’re committed to presenting that this year to parliament. And we will then transfer all the agencies and functions of corruption into that organisation so it becomes truly independent and I’m certain that that will deter the practice of corruption in the country.

GARRETT: Where will you be looking for loan funds for all these projects?

O’NEILL: There are mixed sources in which we are looking for funding. Our traditional partners including AusAid and of course the two international institutions like IMF, World Bank and ADB. But the processes take a number of years to finalise and that is the only setback that we see. We have an increasing population, growing economy, some of the major projects going towards the end of their construction phase and which will cause a lot of people to be out of jobs. And there’s an urgency on our part to ensure that the infrastructure work starts now so some of these people who are skilled are not leaving the country to look for jobs elsewhere, but will return to build the country. And that is why we believe that sourcing funds from places like China, NZ Bank is one of them, we’re going to the international market for loans on raising bonds, that is a prospect opportunity that we are working with Treasury to look into. And of course there’s enough liquidity within our own financial systems here in Papua New Guinea that can be able to also fund the deficit that we are proposing to carry.

GARRETT: You’re looking to reorganise Papua New Guinea’s mineral and petroleum and gas assets, and also to change the way the Sovereign Wealth Fund is structured. What do you say to people who are concerned about the transparency and accountability involved with these changes?

O’NEILL: I think people are unnecessarily concerned and expressing views without any proper facts before them. In fact where we are structuring will enhance transparency and accountability. We don’t believe that it will diminish that at all. I understand people require that of any our governments to do that. People forget that we are the ones who passed the legislation to establish Sovereign Wealth Fund for the first time in this country. We are trying to restructure all these organisations so they are responsive to making sure that state-owned are run in a commercially viable proposition, and that it provides the returns through the state and ultimately the people who are the shareholders of these enterprises. And that these businesses conduct themselves and report themselves to parliament and publicly in a timely manner, so the reporting structure is not there. So we are improving on the processes of management of these companies. So I don’t see why people are jumping to conclusions that it will not be transparent and accountable. I think the legislative structure that we are proposing will be very good for the country and good for the state-owned enterprises.

GARRETT: What consultation will there be on the legislation for the Kumul Holdings, Kumul Mining and Kumul Petroleum?

O’NEILL: There will be public consultations and we want to encourage that and when we put it through parliament there will be a debate on the issues and we’ll encourage it. In fact we are encouraging people to debate but debate on facts, don’t make assumptions that are not true. We have to learn from our mistakes from the past. We’ve had all these organisations and state-owned entities parking funds in some strange accounts all around the world where none of our citizens ever visited. We don’t know what has happened to those funds. Now we are saying that it must be managed in the country publicly, but reporting must be done on a regular basis so people are aware where their assets are, where their funds are and they report through a structure that we are proposing.

GARRETT: We’re talking here about 20 billion dollars worth of funds and many developing countries have seen leaders pillage national assets in the past. How are PNG’s assets protected from future leaders who might take a sort of Mr 10 per cent approach?

O’NEILL: That is why we are putting it through a legislative structure so that no government, no single politician, no single leader will individually control these assets. It will be done through parliament, the entire parliament will be responsible through the nation.  These people are mandated and trusted people and that is the reason why they get into parliament in the first instance. If we cannot trust them, who can we trust? We cannot place all these assets in unmandated people to run it for us thinking that they are the only ones who are the honest citizens of the world. So I think it is important that we give due respect to the people’s decisions, in fact our electorate’s decision, that they’ve given us leaders to set a direction for how we manage their assets on their behalf. And as I said we are learning from the past, it’s no different from how Temasek, which is a Singapore investment company for Singapore government, how successful that has been with no resources whatsoever. We’ve got a lot of resources and we’ve got nothing to show for it. So I think all in all everyone is on the right track, we’re all trying to protect the interests of our country. But I think there must be some genuineness, some honesty in the manner in which we debate this issue, rather than an emotional one because there’s a pursued view that something will go wrong because politicians are in charge. In fact politicians are not going to be in charge. In fact the board of trustees will be the senior leaders of our country that at one time or another has been entrusted by the people to run this country. And I’m certain they’re concerned about their legacy, they’re concerned about their own standing with respect that they are countrymen and women and they will do the right thing and they will do it within the legal structures that we set on how their behaviour should be in managing that trust. The management and the respective boards will be all independent. We are going to get the best talent that is available to manage our petroleum and gas resources, we are going to get the best talent as available to manage our mining interests and all the other companies. These are technical fields that we leaders don’t have expertise in but we must employ the right people and independent people to do so


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Le Grande Heist: Why Kumul Holdings aint Temasek?

Martyn Namorong | The Namorong Report

Some of my friends have described the distribution of shares in Kumul Holdings into the hands of several former Prime Ministers as a Grand Heist. Others have described Kumul Holdings as being modelled around the Singapore Government’s business arm –Temasek. Temasek owns various Singapore government assets including SingTel and Singapore Airlines.

Whilst Temasek has projected Singaporean economic power beyond its boundaries, Kumul Holdings is bound to be an oversize failure like the Independent Public Business Commission (IPBC) and its sorry cousin Petromin. Both IPBC and Petromin are chronic sufferers of the scourge of political interference that has prevented them from making sound business decisions. Whilst they both have served their political masters well, this has been at great loss to their commercial interests.

Petromin’s acquisition of Tolukuma was a political decision and not a commercial one. Today Tolukuma has halted production for a couple of weeks and still carries significant litigation risks associated with environmental damages caused by its previous operator. You can draw your conclusions about how the government will run Ok Tedi if it takes over that mine.

It amazes me that many people have been taken by surprise with regard to the announcement of Kumul Holdings. So let me set some context for all you mere mortals.
When O’Neill began threatening to take-over Ok Tedi, the obvious question that arouse was –how? Firstly, he could “nationalize” the mine (which is unlikely because of the spill over effects on those who have invested big or intend too). Secondly, he could ask BHP to hand over PNGSDP (BHP aint handing over its interest). Finally, he could get a Chinese loan to buy out PNGSDP’s interest in Ok Tedi.

If O’Neill were to buy Ok Tedi, he’d need a massive loan. Ok Tedi Mining Limited (OTML) is worth about K3 billion and PNGSDP’s interest in the mine is around 63.4 %. Whilst current mine life is extended for 10 years (2015-2025), the mine could potentially operate for another 50 years with ore brought in from nearby sources.

What O’Neill had good fortune of is that the some of the creators of IPBC and Petromin are Ministers in his cabinet. It was only a matter of time before they re-arrange state assets into the IPBC-Petromin model aka the creation of Kumul Holdings.

With the consolidation of state assets, those which aren’t already mortgaged for the PNG Liquefied Natural Gas (LNG) project will now perhaps be mortgaged to buy out Ok Tedi.

The Big Winners out of this little adventure by the boys in Parliament is that the Banks will end up owning every PNG Government asset and perhaps own the country.
So what have Papua New Guinea’s predatory elite have to gain from fiddling around with state assets?

If they’re not directly dipping their sticky fingers into these State-owned honey-pots, the predatory elite are laughing all the way to the bank with fat supply contracts. I suspect that many would love to get their hands on the services contracts from Ok Tedi, once they buy out the mine.

It would be interesting to find out if any current politician has an interest in the services contracts at the unprofitable state-owned Tolukuma mine.

A Marxist friend of mine, who disagreed with me over my opposition to PNG politicians controlling Ok Tedi, said that it was okay for a National Bourgeois to control such economic assets. Some people and blogs have framed this as economic independence.

But let’s face it, when Telikom and BMobile had a monopoly, we had some form of economic independence during which many ordinary Papua New Guineans suffered from the high cost of communications. PNG’s predatory elite have shown themselves to be self-serving since independence in 1975.

Unlike Temasek, Kumul Holdings and the take-over of Ok Tedi, aren’t as a result of some ideal or national interest matter rather, the current moves are engineered by PNG’s predatory elite for their own self gain.

The other obvious question that now hangs in the air is that what becomes of PNG’s Sovereign Wealth Fund. Board appointments for the SWF are due later this year and it seems unclear what impacts Kumul Holdings will have on the SWF.

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PNG’s PM vows proposed holding companies will operate for the people

ABC Radio Australia

Papua New Guinea’s Prime Minister Peter O’Neill says no one, including himself, will benefit individually in the proposed holding companies for resource projects in the country. He says shares will be held only in trust and managed on behalf of the people.

Presenter: Firmin Nanol
Speaker: PNG’s Prime Minister Peter O’Neill

Prime Minister O’Neill says under a planned restructure of government businesses, the states interests and or shares in major resource projects will be transferred to two single holding companies.

He says under the restructure, by law a sitting Prime Minister will hold the shares in trust.

Mr O’Neill says former Prime Ministers will hold other ordinary shares as trustees as well.

The government says its investments, equities and interests in oil and gas, petroleum and mining projects will be consolidated into two holding companies.

Last week, Prime Minister Peter O’Neill told reporters all oil and gas and petroleum interests will be restructured and transferred into a new company called Kumul Petroleum Holdings; while for mining it will be held by a Kumul Mining Holdings.

He says parliament is yet to pass a legislation to create the companies and shares to be held in trust and no one will benefit individually.

Prime Minister O’Neill says the shareholders of the companies yet to be created, will guide its operations and future investments.

One of PNG’s policy research think-tanks, the Institute of National Affairs has cautioned the government’s planned business restructure.

Director Paul Barker says there should be wider consultations amongst the public and private sectors.

He told Radio Australia’s Pacific beat program there should be less government interference on the management and should be run like private entities.

Prime Minister Peter O’Neill says consultations will be held with all stakeholders.

The government says the proposed legislation to enable the creation of the two companies-Kumul Petroleum and Mining Holdings will be tabled for debate and passage in parliament in September this year.

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Caution urged in new PNG resources plan

ABC Radio Australia

The Papua New Guinea government has been cautioned over its plans to restructure its holdings in resources projects.

The Institute of National Affairs or INA says the government should seek wider public and private consultation over the proposed plans.

Director Paul Barker says it’s good to separate government interests in oil, gas and mining separated into two companies, but will done in a proper legal framework.

Last week Prime Minister Peter O’Neill announced all oil, gas and petroleum interests will be transferred to a company called Kumul Petroleum Holdings, while mining interests will be held by a Kumul Mining Holdings.

The INA’s Director Paul Barker told our reporter, Firmin Nanol the management of the new companies must be on a par with private companies.

Presenter: Firmin Nanol
Speaker: Paul Barker, the director of PNG’s Institute of National Affairs

Listen to the interview on Radio Australia

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Watching the developments of Kumul Holdings and IPBC

K.S. Punduari | PNG Blogs

Major Restructure – Only One Person will own special Share and VETO POWER over the 7.5 million people’s Resources and their State Owned Enterprises.

Petromin, IPBC and other State Owned Enterprises to be merged and all powers will be transferred to 3 Kumul Holdings and Only One Person will have SPECIAL SHARE and VETO POWER to control it.

The article on Sunday Chronicle about the major restructure can not be read unseen. Although the idea about the major restructure seems appealing, it may result in totalitarian control now or in the long run. And also peoples’ powers and resources concentrated into a single body to manipulate may easily give raise to a dictatorship.

It may seem like merging a large system will make it easy for only few people to control it but it could also result in inefficiency and unproductively. Who knows, the result might be a single point of failure.

I know that Prime Minister Peter O’Neill has good motives behind this new restructure but we must also foresee what could possibly happen if people with negative motive get into power.  It’s the country’s resources and its investment through its business arms that give its economy power.

If one person controls it then he controls everything.  However, it’s obvious for a true patriot of this beloved Nation to see that there is no room for totalitarian and dictatorship type of government in this Nation of Nations.

Finally but not the least, how could a Prime Minister, the servant of the Nation who has sworn an oath to serve the interest of this Nation with its 7.5 million people merge the country’s resource and State Owned Enterprises and then buy shares in it again?

This will result in conflict of interest as the prime minister will now try to run the country has its own business while trying to serve the interest of the people. Obviously, in this scenario, business will take precedence.

AS a leader of this beautiful Nation with its 7.5 million people, the most sensible and humble thing to do is to buy shares for the 7.5 million people of this Nation so they too can become financial share holders of their resources and State Owned Enterprises.

How can the 7.5 million people benefit from shares owned by serving prime minister and former prime ministers? The prime minister should be a servant serving the interest of the people not owning shares out of the people’s resources and State owned enterprises.

This country is dying of a true servant leader. True Leaders are leaders who gave up their own life for the common good of humanity. These are individuals who gave up their personal dreams, businesses, families, qualifications, jobs, etc, for what they believe will benefit their people.


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PNG to restructure major assets

Eoin Blackwell | AAP

PAPUA New Guinea will restructure all its petroleum and mining assets as well as other state-owned enterprises by September.

PNG’s Petromin Holdings and the Independent Business Corporation will be wound up, and assets and interests transferred to three new “Kumul” entities to be set up.

All of PNG’s mining interests – including in Bougainville Copper, OK Tedi Mining Limited and in the Ramu Nickel project – will be transferred from the Mineral Resources Development Council to Kumul Mining Holding Limited.

All petroleum assets, including PNG’s 16.575 per cent interest in the massive Exxon Mobil-led PNG LNG project, will be transferred to Kumul Petroleum Holding Limited.

PNG Prime Minister Peter O’Neill said the restructure is necessary to remove inefficiencies and duplication in state-owned assets.

“It will result in efficiency that will maximise benefits that will flow to the state,” Mr O’Neill said.

“The state’s position is not made any better with the duplication and overlapping of participation in the PNG LNG project, with Kroton holding 16.57 per cent in the project, while Petromin holds 0.2 per cent, both for the state.”

Under the restructure a “Kumul Trust” will be created.

The prime minister will hold what’s called a Kumul share, while former prime ministers will hold an ordinary share.

“By having former prime ministers as shareholders/trustees, we will be drawing from their wisdom and vast experience,” Mr O’Neill said.

“I’m confident this structure will have political and commercial integrity.”

Institute of National Affairs executive director Paul Barker said the scheme would need to be answerable to parliament for it to work.

“Throwing it all into another untried model is cause for concern,” he told AAP.

“As long as it’s not a separate empire, so long as it’s integrated into the government system and it’s managed properly and has systems of accountability … then it may be a positive action.”


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