Tag Archives: Papua New Guinea

PNG resource extraction law at stake

“The truth is that our country is at a crisis point. If we do not correct some very serious faults and failures in how we approach the extraction of resources such as minerals, gas and oil we will not only continue to fail to deliver progress to our people, we will put the very survival of our country at peril.”

Editorial | The Sunday Bulletin | 2 December 2018

THIS week Papua New Guinea’s expanding resources industry will be showcased at a three-day PNG Mining and Petroleum Investment Conference.

Widely regarded as the nation’s premier international conference, will be held from 3 to 5 December 2018 at Sydney’s Hilton Hotel in Australia.

We understand that speakers will include the PNG Prime Minister, Peter O’Neill, along with a number of government ministers who will provide delegates with insights into the government’s policies in areas such as energy and environmental protection.

The PNG Chamber of Mines & Petroleum in its media release hinted that an important project that will be featured during the conference is the country’s upcoming Papua LNG project, of which a Memorandum of Understanding on this project was signed by the project’s joint venture partners Oil Search, Total and ExxonMobil and the PNG Government during the summit.

The Wafi-Golpu project, a 50-50 joint venture project owned by Australian-owned Newcrest Mining, and South African mining giant Harmony Gold which early works is expected to start in a few years will be a main draw-card for conference delegates.

While the current focus is showcasing our vast mining and petroleum potential to prospecting investors, there is a real need to correct PNG’s mining laws.

The review of mining legislation (The Mining Act 1992) is long overdue in Papua New Guinea. There have been some attempts made in recent times but nothing is forthcoming. How serious Government is about this review? It seems to have been carried out with very little urgency.

We have seen very little in the way of radical suggestions for changes in the way mining is done in Papua New Guinea.

For the truth is that our country is at a crisis point. If we do not correct some very serious faults and failures in how we approach the extraction of resources such as minerals, gas and oil we will not only continue to fail to deliver progress to our people, we will put the very survival of our country at peril.

We need a new vision for resource extraction. We need to make some hard decisions, not just make little changes around the edges. For example, we need to decide that the people own the resources. Not the government. Not outsiders. It’s the people. And we need to ensure that there is an equitable distribution of the benefits – not only to landowners, the affected areas, provinces and government, but to the entire nation. This is what our country cries for today, and this is what we must provide.

But to develop a strategy of sustainable prosperity, we must first understand the mistakes we have made in the past and continue to make. Someone must tell this story or we will never correct our mistakes.

The Mining Act 1992. That Act declares: ‘All minerals existing on, in or below the surface of any land in Papua New Guinea, including any minerals contained in any water lying on any land in Papua New Guinea, are the property of the State’.

The Oil and Gas Act 1998 makes a similar declaration in respect of oil and gas reserves throughout PNG.

The State has unilaterally wrested ownership of all wealth on or below the ground from the people who owned those resources for 40,000 years.

What we need now is for the government to change the much talked about Mining Act 1992 so that our resource owners get a fair share of the resource wealth that’s derived from their land.

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A high-profile deep-sea mining company is struggling

Nautilus has multiple problems, including the loss of an expensive ship

The Economist | December 5 2018

AFTER LISTING on the Toronto stock exchange in 2006 Nautilus Minerals became the public face of a daring new industry: deep-sea mining. It planned to pursue riches on the ocean floor, mining metals such as gold, zinc and copper, desired respectively for lustre, alloys and electronics. Robotic machines would cut, grind and gather volcanic rock at a site called Solwara 1, located 1,600 metres beneath the surface of the Bismarck Sea near Papua New Guinea (PNG). The resultant rocky slurry would be pumped up to a support vessel, then shipped to a site at which the metals could be extracted. Investors were convinced; Nautilus’s shares doubled from their initial price of C$2 ($1.80) in a few months.

Today a Nautilus share is worth just a few Canadian cents. Three problems have changed sentiment. First, the firm has had substantial contractual trouble with the government of PNG, in whose territorial waters Solwara sits. The two sides wrangled for years over payments that the government owed for its equity stake in the project. The government eventually stumped up, but the row slowed progress.

Second, the idea of using Nautilus’s vast machines to carve and crush underwater volcanoes does not sit well with environmental groups in PNG and around the world. That may have unnerved investors.

Third, uncertainty after the financial crisis of 2008-09 made it harder for Nautilus to fund its untested venture. That has left only two big shareholders: MB Holding, an Omani conglomerate, and Metalloinvest, a Russian steel and mining firm.

Timetables have slipped badly as a result. The firm states only that mining at Solwara 1 will now be delayed “past” the third quarter of 2019, with no start date offered. Meanwhile, the firm’s finances are making a descent. Some $350m is required to get mining going. Nautilus has drawn down half of a $34m credit line that MB Holding and Metalloinvest extended to it in January in exchange for the rights to purchase more shares (an arrangement which coincided with the departure of some senior managers and Nautilus’s chairperson). The company is due to start repaying these loans in January but, as of September 30th, only had $200,000 of cash.

To add to these problems, Nautilus appears to have lost the specialised support vessel that it had planned to use. It had chartered a new ship through MAC Goliath, an Emirati shipowner and operator. The vessel was nearing completion at the docks of Fujian Mawei Shipbuilding in Fuzhou in southern China in December 2017 when MAC Goliath defaulted on a payment. Nautilus was given the option to step in and make the missing payment, but was unable to do so. In July the Chinese shipyard found a new firm to take over the contract, MDL Energy, an Indian shipowner that is planning to engage in deep-sea mining explorations for India’s government. Kulpreet Sahni, MDL’s chief executive, confirms that his firm now owns the ship.

On December 2nd Nautilus stated that it was “in negotiations with various parties” about ownership of the vessel; its shares surged in response. But Mr Sahni says his firm terminated negotiations about Nautilus’s continued use of the ship months ago. On December 3rd Mr Sahni wrote to Nautilus’s boss, John McCoach, warning that the firm’s statement was detrimental to MDL Energy, and to Nautilus’s own minority investors, and that it might contact the Toronto Stock Exchange or take legal steps if the matter was not clarified. (In an emailed statement to The Economist, Mr McCoach declined to comment on the specifics of this story but said that some of it was “not accurate from our perspective”.)

If the vessel is gone, that would be a huge blow for Nautilus, for it had been custom-built for the firm’s particular mining methods. It will be near-impossible to replace, especially given Nautilus’s beleaguered finances.

But Nautilus’s travails have offered lessons to the rest of the deep-sea mining industry. Gerard Barron, Nautilus’s first financial backer (who sold out of the company years ago), has hired some of Nautilus’s ex-employees for DeepGreen, a new deep-sea mining venture which focuses on harvesting metallic nodules that are scattered across the sea floor in the deep ocean. These contain metals such as cobalt and nickel needed for the batteries and wind turbines that power the clean economy. Having watched Nautilus’s progress, he reckons that hoovering up nodules will be easier than grinding volcanic rock, and that their uses lend such activities a more environmentally friendly sheen. Other firms have made a similar bet.

Although the water in the Clarion-Clipperton Zone, a patch of Pacific sea floor in which such firms will operate, is some three times deeper than that at Solwara, the location is out on the high seas. That means it is subject to a clearer set of rules for mining and exploration which is overseen by the United Nations, thereby reducing the scope for wrangling with national governments. Nautilus holds a concession there, too. But if the firm does not secure a fresh infusion of cash, its machines may never venture further than a dock in PNG.

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Nautilus setting JV to secure support vessels for Solwara 1 project

Nautilus’ floating base.

UPDATE: 6 Dec. Nautilus Minerals is reported to have been referred to the Toronto stock exchange for misleading investors over the fate of its mining vessel which it is claimed has already been sold to a third party despite Nautilus claims below that it is preparing to buy the ship.

Cecilia Jamasmie | Mining.com | 5 December 2018

Shares in Canada’s Nautilus Minerals (TSX:NUS), one of the world’s first seafloor miners, climbed more than 10% on Monday as the company disclosed is negotiating the terms of an agreement with arm’s length third parties that would involve the creation of a joint venture company.

The purpose of the new firm, Nautilus said, would be to fund the acquisition of the Production Support Vessel (PSV) that Nautilus had previously arranged to be procured through shipbuilder MAC Goliath.

In July, the Vancouver-based company announced that MAC Goliath Pte’s had failed to pay part of a contract with the owner of the shipyard where the Nautilus’s support vessel were being made.

Nautilus, which is in the last stages of developing its Solwara 1 gold, copper and silver project, off the coast of Papua Guinea, said the support ship would be used at that venture.

The miner, which also is developing another underwater project, off the coast of Mexico, secured in May $34 million from lender Deep Sea Mining Finance, to finish Solwara 1, which is set to become the world’s first commercial deep-sea mine.

However, it lost support from Anglo American’s (LON:AAL), which decided to divest its 4%-stake in Nautilus.

Environmental groups have criticized the project, which will use three robotic machines weighing up to 310 tonnes to mine copper and gold from extinct hydrothermal vents on the ocean floor.

Nautilus plans to then mix the ore with seawater to create a slurry, which can be drawn to the surface, stored and then put on other ships for transport. The extracted seawater is then pumped back to the seabed.

Nautilus’ shares were trading up 10% in Toronto at 0.5 Canadian cents by 11:35 am Toronto time.

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Introduction Of Mining Bill Pushed To Next Year

Mining Minister Johnson Tuke

Post Courier | December 5, 2018

Mining Minister Johnson Tuke told the Mining and Petroleum Conference in Sydney that proposed amendments to the Mining Act (1992) will be made next year.
He said this despite previous indication of last month being the sitting that would introduce the proposed amendments.
Citing concerns from the industry and the need for independent review from within government circles, he said the amendment would still take place nonetheless citing an over 9 years consultative period.
“One of the principle priority for my ministry was to ensure the proposed mining bill is introduced in parliament in the November session in accordance with the NEC decision No 8 of 2018,’’ he said.
“The ministry had put together a working team comprising the Department of Mineral Policy and Geohazards Management, the Mineral Resources Authority, the Department of Treasury and the Office of the State Solicitor and the First Legislative Council under the oversight of the Chief Secretary to Government to prepare the mining bill for introduction in parliament, however, certain considerations have pushed the introduction of the mining bill to 2019.
“Let me say at this juncture that the mining bill and the new policies are necessary for the effective regulation of the mining industry in PNG.
“The review of the mining act was done by Papua New Guineans on both sides of the table who are well experienced in their respective fields of employment.
“The nine years of review, which three, specifically with the mining industry is testament to the scrutiny the review has undertaken.”
He also assured the industry and potential investors that the policy and legislative changes proposed by government intend to establish a foundation for growth and prosperity for the country in the years to come.
“The aspiration to protect the rights and interests of our investors is of paramount interest to the government,’’ Mr Tuke said.
“By the same token, the aspiration to ensure the rightful benefits are due to our people is also of paramount interest to the government.
“Finding the balance that best serves our collective interests and aspirations is what we have to do collectively in a responsible manner.
“While the industry has the duty to serve its respective boards, we as the leaders of the country also have the responsibility ultimately to serve our people.”

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Peter O’Neill: Government to Ensure Better Deal for Communities

Meriba Tulo | EMTV | 4 December 2018

Negotiating a better deal for Papua New Guinea will be the mantra for the National Government as it looks to finalizing some major projects within the Extractive Industries in the months ahead.

Prime Minister Peter O’Neill made these comments when speaking to EMTV News on Day one of the 2018 PNG Mining & Petroleum Investment Conference.

Addressing the opening session of the PNG Mining & Petroleum Investment Conference, Prime Minister Peter O’Neill elaborated on the efforts by his government in pushing for better deals for upcoming projects within the mining and gas space.

His comments on the back of concerns regarding the perceived unfair distribution of wealth from existing projects operating in PNG.

According to Mr O’Neill, the lessons from current projects will not be repeated, with the National Government aiming to ensure that the country receives a better deal, financially, but more importantly, socially, through respective project agreements.

A major aspect of upcoming projects that the government is keen to complete, is the all-important landowner and clan-vetting exercise, especially within the gas sector – which according to the Prime Minister was rushed during the country’s first LNG project.

The Prime Minister’s comments come at a time when the government is trying to finalise project agreements for the Papua LNG, and Wafi -Golpu Projects respectively.

An MoU between the State and Project developers was signed during the recent APEC Economic Leaders Week in Port Moresby, and according to the Prime Minister, an agreement a similar agreement is expected to be signed for the Wafi -Golpu Project at the conclusion of the Sydney Conference.

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Porgera landowners sue PNG Govt for billions

A protest against Barrick Gold. Photo: Facebook/ Kelly Taila

Radio New Zealand | 4 December 2018 

A landowners group in Papua New Guinea’s highlands region is suing the national government for $US13.28 billion over a breach of contract.

The Justice Foundation for Porgera and other landowners whose land is inside the boundaries of the Porgera gold mine are behind the suit.

They claim that Barrick Nuigini, a subsidiary of Canadian mining giant Barrick Gold, has destroyed their environment and livelihoods, and has not kept to the commitments made in the contract signed in 1989.

The Foundation’s Jonathan Paraia said the amount of money they are seeking is justified.

“That is based on the contract for Porgera Mine signed between the state and Porgera landowners, but the state has got its own agreement with the Candian mining company, Barrick. So we expect the government to call on the company to take responsibility for the claim because the company is the one that is causing the problems and destroying the people’s livelihoods,” Jonathan Paraia.

He said the initial stage of such a suit is arbitration but if that fails to reach a resolution the matter will be referred to court.

The Justice Foundation for Porgera has separately asked the courts to restrain the government from renewing the Porgera licence, which expires next May, until the issues surrounding the suit are sorted out.

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We Want Greater Share: O’Neill

Gorethy Kenneth | Post Courier | December 4, 2018

PAPUA New Guinea wants a greater share of benefits from major oil and gas companies operating in the country, Prime Minister Peter O’Neill said when officially opening the 15th PNG Mining and Petroleum Conference in Sydney yesterday.

Mr O’Neill told delegates and major oil and gas companies operating both in PNG and those who have interests in the resource sector that the country needs and wants a fairer share of the benefits flowing from the development of these resources.

He said that PNG wanted them to invest in its oil and mining sector and at the same time wanted returns that benefit the people and resources owners.

“I know you will continue to invest in the sector and the government is very much familiar with the ups and downs in the sector which we have all gone through,” Mr O’Neill said.

“The resource sector has the first opportunity to deal with many of our landowners issues and concerns, in many of our remote communities.

“They want to be included and must be part and parcel of the decisions we make in investing and developing their resources.

“The inclusiveness of these communities by making sure that they participate meaningfully in the development of the resource and participating in and — of course, making sure that their standard of living improves and grows is something that is important to the core agenda of our government.

“We want to invest in our people and we want to make sure that they participate. We want to make sure that the benefits that come with the development of the resources is fairly shared.

“We understand very well that investors want a decent return on their investments, but we also, in our country, want a fair share of the benefits coming out of those resources developments.

“It is important that industries continue to support that,” he said.

The conference ends tomorrow.

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