Tag Archives: Papua New Guinea

Mining Policies Need To Be Reviewed: Minister

Minister For Mining Johnson Tuke Says The Policies Governing The Mining Sector In Papua New Guinea Need To Be Revisited.

Matthew Vari | Post Courier | February 22, 2018

Minister for Mining Johnson Tuke says the policies governing the mining sector in Papua New Guinea need to be revisited.

He said much of the legislations governing the sector are still from the colonial era.

Mr Tuke said with the strong support from Prime Minister O’Neill and government caucus he is determined to take stock of benefits to landowners that make changes for the country to have a greater share in its own wealth.

“I think all our mining policies are more or less colonial. Are we still in the colonial times? We are moving forward,” Mr Tuke said.

“Leaders like Sir Julius Chan have all learnt their mistakes, and are telling me to move forward. The decisions conducted then were suitable for that time. This time has different underpinning. We have take heed of it and move ahead.”

Mr Tuke said he plans for all new mines to provide community obligation concessions.

“We have been for far too long reaped. This is high time; there will never be another time. It needs courage and determination. This government is determined.”

Mr Tuke commended Prime Minister Peter O’Neill for his leadership in ensuring changes do take place for the country’s mining sector.

“There has never been a time any consecutive government has thought so much of its people. I have started off with MRA and I will pursue with mining policy and acts.”

“I am adamant and I will fight vigorously until I pass the mining policy (review). I think 40 years is enough and we are overqualified to develop new policies.”

“I have got to do one or two things, I have to make abnormal decisions that will stimulate many others but affect a few.”

He said with the mining industry a huge contributor to the national purse much of its activities have been done behind the curtain. Something Tuke says he wants to change.

“I want everybody to know the system, the guidelines, the policy and the process, because once it (minerals) is gone, it is gone. You can’t renew that so our people have to know what they (developers) are doing.”

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Ok Tedi workers sacked for peaceful protest

Mine group sacked

Shirley Mauludu | The National aka The Loggers Times | 22 February 2018

THE Ok Tedi Mining Ltd has sacked a group of employees who were staging a protest at the mine site on Tuesday, telling them in a letter that their action was “illegal”.
Some of employees, who arrived on a charter flight yesterday in Port Moresby, claimed there were 191 of them who were issued termination letters on Tuesday. They were told to leave the site on a charter flight yesterday.
Henry Kuso, a spokesman for those who arrived at Jackson Airport, in Port Moresby, yesterday, said the company arranged three charter flights yesterday out of Tabubil in Western.
Mining Minister Johnson Tuke was unable to comment when contacted yesterday.
Ok Tedi managing director Peter Graham could not be reached for comment yesterday. But he had confirmed with The National on Tuesday that the protest had not affected the company operations.
“The industrial action was illegal since it did not follow the grievance process and was not supported by the union,” he said.
“Management is addressing the matter in accordance with company policy and the employee terms and conditions.”
Department of Labour and Industrial Relations Secretary Mary Morola told The National yesterday that the department was yet to be informed of what happened at Ok Tedi.
“All I can advise is that the Department of Labour and Industrial Relations has not been officially informed of the Ok Tedi matter on staff terminations,” she said.
Kuso told The National when the group of sacked workers arrived at Jackson Airport that their sacking was because of the protest on Tuesday.
The protest was to follow up on their demand to:

  • Change to current the 2/1 (two weeks on, one week off) roster for shift workers;
  • Change their current contract; and
  • Renegotiate the industrial agreement.

Kuso said the company had promised when it resumed operation in March 2016 following the drought in 2015 that it would review some of their work conditions and benefits.
“The protest (on Tuesday) was to raise our grievances to the management,” Kuso said.
“It has been two years since the resumption following the drought. Some of the things the company promised to do, it failed to honour.
“We had just a peaceful sit-in protest to get the company to come and have a face-to-face discussion with us.”
He said they had talks on Tuesday with the acting general manager who “never got back to us, not even the human resources division”.
“We sat from 6am to 4pm. We were surprised in the evening when a team from the Asset Protection Department delivered our termination letters.
“Some of us were given the termination at night while they were asleep.
“Their termination letters were shoved under their doors.
“They were advised to leave in the morning (yesterday).”

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PNG’s losses from Solwara 1 currently over K350 million

Solwara 1 is chewing its way through PNG taxpayer funds at an alarming rate

In 2014, the State borrowed US$120 million [K375 million] from BSP to buy a 15% stake in the proposed Solwara 1 seabed mine.

Nautilus Minerals says US$113 million from the loan was paid to the company in December 2014.

It is not clear what has happened to the other US$7 million, the balance of the funds borrowed, but at the moment the government’s investment in Solwara 1 is not looking like a very good bet.

While the State’s partner, Nautilus Minerals is on financial life support and haemorrhaging senior staff, the State has written down its investment by over K260 million.

The latest financial report from Eda Kopa (Solwara) Limited, which holds the State’s interest in Solwara 1, shows that while the company still owes K376.8 million to BSP, it is valuing its assets, the 15% stake in Solwara 1, at just K113.7 million.

Above: Excerpt from the Annual Return for Eda Kopa (Solwara) Limited

As well as the K260 million write down in value, it is estimated the State is paying around K29 million a year to BSP in interest payments. This is calculated from the indicative interest rate of 7.75% shown in the financial report of Eda Kopa’s parent company, Kumul Minerals Holdings Limited.

So, not only has PNG already LOST K260 million on its investment in Solwara 1, it has also paid around K90 million in interest payments to BSP (2015-2017) and is still paying an additional estimated K29 million a year.

How many nurses, health centre workers or teachers could that money have paid for instead?

Looking deeper into the company records of Eda Kopa (Solwara), there are also some other interesting numbers lurking there.

In April 2014, Eda Kopa (Solwara) registered a charge in favour of BSP for up to K2.275 BILLION or US $875 million, (which ever is the higher).

Above: Excerpt from the Registration of Charge document

In November 2014, a second charge was registered by Eda Kopa (Solwara). This time a cross charge with Nautilus Minerals in the sum of K10 BILLION.

Above: Excerpt from the Registration of Charge document

The existence of both these substantial charges is verified by Deed documents [BSP Deed – 1mb, Nautilus Deed – 7mb] executed by the parties

Above: Excerpt from the Deed for the K2.275 billion charge

Above: Excerpt from the Deed for the K10 billion charge

Does anyone trust Eda Kopa (Solwara) to be playing around with such enormous potential liabilities?

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East Sepik governor dispatches police to arrest rogue miners

Radio New Zealand | 21 February 2018

The Governor of Papua New Guinea’s East Sepik province has dispatched police to detain a company looking to mine without landowner approval.

Allan Bird, who was elected six months ago, said he was trying to improve the governance around resource extractive projects in his province.

He said his administration was ready to support landowners in any action they would like to take in protecting their traditional tribal land.

“Two days ago we had a ship go up the Sepik river with all kinds of equipment to go and mine a gold mine somewhere up in Angoram, in a place called Keram LLG (Local Level Government area). The landowners came and complained.

“Today I dispatched 15 police officers to actually go there and arrest these people and bring them to Wewak and we can figure out what’s what.”

Mr Bird said he checked with PNG’s Mining Minister about the Keram mining concern who didn’t know anything about it.

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How the elite profit while a nation suffers their incompetence

Port Moresby, a city where the elite profit while the rest suffer the consequences of their incompetence

PNG Exposed | 19 February 2018

Imagine a company that is in debt, heavily in debt and still racking up more losses.

Imagine a company that in 2016 alone lost over K354 million.

Imagine a company where the total liabilities exceed the total assets by more than K218 million.

Imagine that this is a company set up by the government to manage a nations interests in its abundant mineral resources.

Now imagine no more and say hello to Kumul Minerals Holdings Limited, formerly Petromin PNG Holdings Limited.

The figures above are from Kumul Minerals Holdings latest Annual Return, which is for the 2016 financial year.

How could a company that, according to Statute, is supposed to be the commercial enterprise that participates in mineral exploration, development, production, processing and marketing activities,on behalf of the State be run into near bankruptcy?

But never fear, the Directors, the people responsible for this appalling state of affairs are still profiting handsomely.

While the company was racking up losses of K354 million in 2016 alone its Board members were still taking a handsome pay packet:

Director Remuneration
Brown Bai K 159,759
Ian Goddard K 211,337
Jerry Wemin K 126,227
William Searson K 102,654
Richard Tengdui K 99,809
Issac Lupari K 68,232
Peter Pokawin K 23,959
Arunavu Basu K 182.816
Peter Graham K 59,028
Stanley Lira K 33,129
Richard Kuna K 34,379

 

In total K1,101,329 paid to eleven men [yes, all men, no room here for gender diversity let alone equality] many, if not all of whom, already occupy other well paid jobs.

K1.1 million paid for overseeing losses of over K354 million, losses that were almost three times greater than in the previous year, 2015 (K133 million).

And the excess does not end there. In addition to the Board remuneration, Kumul Minerals Holdings had 10 staff who earned more than K100,000 each in 2016.

One of those staff earned over K920,000, two more over K620,000, another over K450,000 and one over K300,000. Two more earned over K270,000.

In total, Kumul Minerals Holdings paid its staff just under K9 million in 2016 and spent a further K1.5 million on consultancy and professional fees.

Who is ultimately responsible for this negligent mismanagement of our nations mineral wealth, and the looting of an empty pot?

Well it has to be the trustee shareholder does it not, the person who effectively owns the company on behalf of the nation, who is none other than one Peter O’Neill.

It seems our trustee is not doing a very good job!

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Nautilus Minerals says it doesn’t know very much at all

According to Nautilus Minerals, although it has successfully tested its mining machines in a giant puddle, there is an awful lot it does NOT know about its proposed Solwara 1, experimental seabed mine in Papua New Guinea.

Indeed, it is hard to find anything the company does know with any certainty.

Nautilus Minerals admits it does not know:

1. If its mining machines will work on the seafloor

Nautilus says there are “risks relating to the performance of the Seafloor Production Tools include the risk of equipment failing to perform to design specifications when operated at the Solwara 1 Project, as the machines have not yet been tested at depths similar to depths present at the Solwara 1 Project”.

2. If it can raise the money it needs to even start mining

The risks related to continuing the Company’s operations and advancing the development of the Solwara 1 Project include “the risk that the Company will be unable to obtain at all or on acceptable terms, and within the timeframes required, the remaining financings necessary [$300 million] to fund completion of the build, testing and deployment of the Company’s seafloor production system

3. If it can fix the failed funding for its mining support ship

The Company may “be unable to rectify or arrange for the rectification of the default under the shipbuilding contract for the construction of the Production Support Vehicle (as announced on 11 December 2017)

4. Whether its other contractors can do their part on time

Nautilus says that “agreements with third party contractors for building slots within certain timeframes are not secured as required”.

5. Whether the mine is economically viable

Nautilus does not even know if the mine is economically viable:

“As the Company has not completed an economic study in respect of the Solwara 1 Project, there can be no assurance that the Company’s production plans will, if fully funded and implemented, successfully demonstrate that seafloor resource production is commercially viable”

6. What the environmental impacts will be

Nautilus Minerals doesn’t even know what the environmental impacts of any mining will be: “the actual impact of any SMS mining operations on the environment has yet to be determined” says the company.

On top of all this, yesterday we revealed that Nautilus apparently doesn’t know that the company it thought was its partner in the Solwara 1 mine, holding a 15% stake, actually doesn’t exist any more… oops!

Maybe all these unknowns explain why Nautilus Minerals can’t find anyone dumb enough to finance its plans – except, of course, the PNG government!

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Nautilus Minerals working with ghosts

Nautilus Minerals has been going through a rough time recently, so rough the company is now claiming to be working in partnership with a ghost, a company that no longer exists.

Nautilus Minerals wants to be the first to mine the seabed, but has been on financial life support since last year, unable to raise the $300 million it needs to complete its preparations for mining. In the meantime it is being kept alive only by a series of short-term loans from its major shareholders.

To make matters worse, in November last year, the company supposed to be supplying the mining support vessel, the key piece of infrastructure for a seabed mining operation, cut off funding for the ship build.

With no money and no ship and forced to close its Papua New Guinea offices, perhaps it is no surprise senior staff have started bailing too. First, Chairman Russell Debney, on December 27  and then President, PNG Operations, Adam Wright.

But even given this alarming state of affairs, industry observers have been shocked to see Nautilus Minerals claiming, in its official Toronto Stock Exchange notices that it is still [12 February] working “closely with its partner Petromin”.

Clearly that statement can’t be true as Petromin is dead, it was extinguished by the Kumul Minerals Holdings Authorization Act of 2015. The Act replaced Petromin with Kumul Minerals Holdings Limited.

Kumul Mineral Holdings extract showing Petromin ceased to exist in December 2015

How could Nautilus Minerals not know that its partner in the Solwara 1 mine had been abolished by an Act of Parliament and replaced?

Whether a case of ignorance or sloppy management of its stock exchange statements, claiming to be working closely with a ghost is not a good look.

And there is more bad news for Nautilus. Unfortunately, the replacement of Petromin by Kumul Mineral Holdings just further undermines Nautilus’ lack of financial credibility, as Kumul Minerals Holdings is effectively bankrupt.

Kumul Minerals Holdings Annual Return for 2016, reveals a loss for the year of K354.7 million and total liabilities that exceed the total assets by K218.1 million.

Kumul Mineral Holding Ltd Annual Return 2016, page 11

This raises the question of whether Nautilus Minerals has informed its shareholders and the stock exchange of its partners financial strife and the ‘material uncertainty‘ it will be able to ‘realise its assets and settle its liabilities‘?

But then again, they are all probably reading this blog anyway!

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