Economy. Papua New Guinea press review

The Prime Minister of Papua New Guinea (PNG) Hon. James Marape expressed his disappointment over misinformation circulated by people with commercial and political motives over the Government’s decision not to grant the Extension to the Special Mining Lease (SML) to Barrick Nuigini Limited, (BNL). SML for Porgera Mine granted to BNL expired in 2019, and their request for further 20 years was refused by the Government on the recommendation from the regulatory body, the Mining Advisory Committee, (MAC). According to PNG Prime Minister, the information that Government nationalized or expropriated the Mine from BNL is utterly misleading and flagrant lies. «Mining assets and properties are still intact and belong to BNL. They will decide what they want to do with them. If they want to sell these assets, the Government is willing to buy these assets […] Let me explain in this manner. If you are a property owner and you lease your property to another person. After expiry of the lease or contract, you have the right to decide whether to extend the lease or not […] So that is what the Government has done – refusal of the extension is within its right under the Laws of this country, » Mr. Marape stated. PNG Prime Minister also pointed out that the Government wants to re-open the Mine, but this has been made difficult by the Court actions taken by BNL, challenging the decision of the Government. «I want to assure the people, particularly people from Enga and Porgera that Government will do everything within the laws of our country to re-open the Mine […] This time, the country and Landowners will receive greater share of the benefits of the Mine, as opposed to only 5% equity currently owned by Enga Provincial Government and Landowners […] According to our experts, the mine has a life of 20 years, with high grade gold reserve of 11.6 million ounces […] If the Mine produces 500,000 ounces of Gold a year at a gold price of $US2,000 per ounces, the annual cash flow will be $US1.0 Billion. After taking out operating costs of $US360 million, and net earnings is $US640 million, » Mr. Marape said. [1]

In turn, PNG Finance Minister Rainbo Paita says that Papua New Guinea is resilient and despite the impact the COVID-19 has had on the economy the country will thrive. According to Mr. Paita, it’s a bit too extreme for critics who are saying that the country’s economy was about to crash». « Yes, our economy may have a few dents caused by COVID-19 but so is the rest of the world […] we have competent people monitoring the repercussion of COVID-19 not only locally but internationally as well and advising the Government […] PNG is a resilient country and we have adjusted and injected funding into provinces and districts and the economy as a whole, » said Mr. Paita. [2]

However, according to Bank South Pacific (BSP) Group Chief Executive Robin Fleming, PNG businesses have been affected in the first half of this year because of not only the COVID-19 pandemic but also the downturn in activities such as mining operations. As stated in the 2020 half-year results, the main PNG sectors affected were transport and tourism. [3]
In the first half of 2020 BSP recorded a net profit of K381.9 million (US$108 million). [4]

The Australian High Commission and Asian Development Bank (ADB) will continue their supporting role for the government to deliver infrastructure developments. Both sides gave their assurances during the launching of «Connect PNG 2020-2040» Road Policy in Port Moresby. Australian High Commissioner Jon Philp said Australia would work towards the government’s priority of getting 50% spending on development and infrastructure. «We recognise that high-quality infrastructure projects are vital for economic prosperity in any country and certainly in Papua New Guinea, » Mr. Philp marked. In turn, ADB said the future and in response to PNG’s development goals, it would increase its total financing to K2 billion (US$570 million) across 2020 to 2022. The current programmes included new infrastructure projects in the transport sector that will benefit the poorest and most remote parts of the country. «The Connect PNG 2020-40» Road Network policy will unbundle PNGs economic potential through infrastructure which will diversify the country’s economic base, says PNG Prime Minister Hon. James Marape. It is estimated that the programme will boost the economy that will generate more than 2 million jobs, equivalent to 20% of the country’s population and grow more than 1000 small to medium contractors into national contractors into the future. [5]

One of the main PNG mining companies Ok Tedi Mining Ltd (OTML) plans to restart its operations in the week commencing the 14th of September 2020, almost six weeks after it suspended operations on the self-titled Ok Tedi Mine (Western Province). The company suspended operations on the 5th of August due to a number of COVID-19 cases that were reported in the Mining Township. The suspension of operations has seen Ok Tedi losing USD20 million (K70.6 million) in revenue per week, directly affecting foreign currency inflows into the country. According to the statement, over 3,000 samples have been collected to date with 143 positive COVID-19 cases. [6]

In turn, one of the major PNG airline company Air Niugini has laid off some employees in the airport and engineering sections as a result of the COVID-19’s impact on the airline’s operation, says Chief Executive Officer Bruce Alabaster. According to Mr. Alabaster, all entitlements in accordance with the applicable employment agreements had been paid to them. The number of employees laid off is unknown, but Mr. Alabaster also stated that the airline was seeing a reduced number of passengers during the COVID-19. According to Air Niugini Chief Executive Officer, airline staff reduction around the world was unfortunate and not uncommon during the COVID-19 pandemic: «Even Qantas has had to let over 6,000 staff go and has another 20,000 on leave without pay […] Fiji Airways had to let go almost 800 citizen staff or over half of their entire workforce […] Here in Papua New Guinea, it is understood that PNG Air had also stood down over 600 of its workforce on indefinite leave without pay, or over 80% of its citizen employees». [7]
[1] https://www.kalangfm.com/news/porgera-mine-will-be-re-opened-says-prime-minister-marape-939
[2] https://www.thenational.com.pg/png-resilient-resisting-impacts-of-virus-paita/
[3] https://www.thenational.com.pg/downturn-affecting-ops/
[4] https://www.thenational.com.pg/bsp-to-pay-interim-dividend-of-25t-per-share/
[5] https://www.thenational.com.pg/govt-assured-of-support/
[6] https://emtv.com.pg/otml-to-commence-operations-in-mid-sept/
[7] https://www.thenational.com.pg/airline-lays-off-workers/

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