Economy. Papua New Guinea press review

The Chamber of Mines and Petroleum says it acknowledges the passing of Oil and Gas (Amendment) Bill 2020 and understands the desire of the Government to maximise its position in resource projects. According to the Chamber’s statement, it believed that significant changes to existing legislation was best made in collaborative consultation with the industry. Despite the fact that Papua New Guinea is endowed with natural resources, it lacks sufficient capital to develop them on its own, and like all successful nations, it will require foreign direct investment and private sector investment if PNG is to maximize its economic and developmental potential. Consultation prior to rushing these changes may have prevented unintended consequences and the Chamber continues to offer its support to the Government as a consultative body with significant international experience among its members. The Chamber is strongly of the view that modifying the existing Oil and Gas Act can deliver the Government’s objectives more effectively rather than moving to a complex new system. President of the PNG Chamber of Mines and Petroleum, Gerea Aopi, also said that he hoped the Government could recognise that the development of an LNG industry in PNG has also helped to diversify the country’s economic base and contribute to significant growth in exports and employment, enabling gross domestic product to double between 2009 and 2014. «Unfortunately, rather than prioritizing efforts to build upon this strong LNG industry foundation further LNG project developments worth US$24 billion have stalled. Had they progressed as planned we would have likely seen PNG avoid a recession, » said Mr. Aopi. [1-2]

However, Port Moresby Chamber of Commerce and Industry President Rio Fiocco said restrictions on international flights will continue to dramatically impact tourism and the airline industry in the second half of 2020. « [The absence of] international flights will have a dramatic impact on tourism and the airline industry both of which are struggling, » Mr. Fiocco said and also added that the business community was not confident at the moment and were anxiously waiting for the Government to approve major resource projects such as Wafi-Golpu (Morobe Province), P’nyang gas project (Western Province) and Papua LNG project (Gulf Province). Mr. Fiocco also noted that capital investment of Wafi-Golpu starting up would be a tremendous boost to not only Lae but the whole economy. Port Moresby Chamber of Commerce and Industry President also noted the impact on the economy with people losing jobs. For example, Oil Search Ltd reduced staff strength by more than 500 employees. [3]

One of the largest resource companies in PNG, Oil Search as of July 1, recorded around 30% reduction in its PNG, Australian and Alaska-based workforce, a company spokesperson says. It is expected that the company would reduce its total workforce by 564 by the end of this year. Its full-time employees, which include employees and long-term contractors, have been reduced from 1,649 people. As stated Oil Search Managing Director Dr. Keiran Wulff: «Under the new structure, there is a material increase in executive and senior leadership opportunities for PNG nationals, which is in line with the evolving dynamics in PNG and increasing importance of citizen representation […] Expatriate positions in PNG will be reduced from 10% to 7% of the workforce […] In addition, gender diversity has increased, with women now representing more than 28% of the workforce, from 25%, » Mr. Wulff said. [4]

The redundancy of some 2700 employees of the Porgera gold mine got underway this week. Given the large workforce number, the redundancy exercise will take the company until the end of July 2020. The 26th of June 2020 marked the last payroll for the mine employees made redundant. Final entitlement payments are expected to be completed on the 27th of July 2020. [5]

At the same time, police are requesting the Government to quickly resolve issues with the Porgera mine and landowners, as an escalating breakdown in law and order will lead to more criminal activities at the mine site. People’s National Congress (PNC) Party Leader and former PNG Prime Minister Peter O’Neill has also raised concern over the closure of the mine, after the Government refused Barrick Niugini Ltd. to renew the special mining lease in April. However, Porgera police station commander Senior Sergeant Jack Kimala said people were breaking into the mine site and stealing whatever they wished to steal. Mr. Kimala also doubted that the situation would remain peaceful for long: «We are managing but the issue with the mine has to be settled quickly before everything goes beyond our control […] People used to collect leftovers of what is mined during the operations. But now that it is closed, they are breaking into the company’s premises and getting office equipment and other items, » he said. The Government recently sent 100 soldiers and resources to Porgera to help police. Mr. O’Neill said the lives of workers, contractors and landowners in Porgera had been «ruined by the government’s attempt to nationalise a mine». «The people of Porgera, Enga and the nation are losing around K100 million [US$28,32 million] each month because of [Prime Minister Hon. James] Marape’s miscalculated decision, » Peter O’Neill said. However, the Government said last month it wanted to advance the Wafi-Golpu (Morobe Province) and Porgera projects, as well as other major resource developments before the third quarter of this year. Moreover, PNG Prime Minister James Marape assured provincial governments and landowners in the resource areas that the Government «will give you a fairer share within what the State secures from negotiations with developers». [6-8]

At the same time, Landowner Leaders of the Porgera Special Mining Lease (SML) area deny that there is theft at the Porgera mine, except for the removal of certain crushed rock waste by locals in search of alluvial gold in a particular area where a crusher is located. The landowners say that the Porgera Police Commander should do his policing duties instead of misleading the public to undermine the Marape -Steven government’s decision to refuse the extension of the SML. Regarding the words of Mr. O’Neil, the landowners stated: «We are confident that Mr. O’Neil would have renewed the SML, selling out our resources cheaply to foreigners and ignoring the pleas of the Landowners, who are citizens he had undertaken by oath to protect […] Mr. O’Neil should be ashamed that he had allowed the Porgera Landowners to continue to suffer environmental damages, human rights abuses, denial of education for children and failure to resettle the landowners from the SML area […] It is further shameful that Mr O’Neil, an Accountant by profession, talks about an unsubstantiated amount of K100 million a month loss from the Porgera mine, when Papua New Guinea was losing each month for 30 years more than US$65 million a month in revenue from the Porgera Gold Mine at today’s gold price, when foreign owners were taking out of the country 95% of the gold and silver produced with a little of the revenue earned from their sales were brought back for operating costs […] The Marape-Steven Government has in fact stopped the loss of that gold valued millions of Kina, therefore saving it for the benefit of Papua New Guinea and its citizens». [9]

One of the largest PNG mining companies Kumul Mineral Holdings Ltd (KMHL) is reviewing its involvement in mineral exploration and participating in large projects, says chairman and acting managing Peter Graham. According to Mr. Graham, recent amendments to the Mining Act opened opportunities for a broader role in mining than previously. «The company is now positioned to acquire and manage investments in mining assets on behalf of the State […] KMHL’s core asset is the 67% ownership of Ok Tedi Mining Ltd, while the 17,4% ownership interest it held in the Bougainville Copper Ltd has been pledged to the Panguna landowners and the people of Bougainville, » Mr. Graham said and also added that KMHL «will hold any interest that the State may acquire in the Porgera mine and the proposed Wafi-Golpu project». [10]

PNG Prime Minister James Marape has announced that the National Executive Council (NEC) has approved a 12-month funding support package of K94,7 million (US$26,81 million) for the National Airports Corporation (NAC). The funding will come under the Government’s K5.5 billion (US$1,55 billion) economic stimulus package to ensure the Airports continue to operate at acceptable safety and security compliance levels. In turn, Minister for Civil Aviation Lekwa Gure said that the impact of COVID-19 pandemic and its aftermath on the domestic and international aviation industry has severely affected the industry with the restrictions on air travel and closed international borders. According to Mr. Gure, the International Air Transport Association (IATA) forecasts a 40% reduction in global aviation revenue from April to June 2020. Moreover, NAC revenues have declined sharply as a result of drastic reductions in aircraft, cargo and passenger movements. [11]

However, However, Papua New Guinea continues to implement infrastructure projects. The Ramu 2 Hydro-Power Project in Eastern Highlands and parts of Morobe is still under review, according to the Kumul Consolidated Holdings Ltd (KCHL). The K2,86 billion (US$800 million) proposed project is recognised by the Government as a natural supply source of electricity for the Wafi-Golpu project. It should be noted that Ramu 2 includes the construction of a weir and storage facility, an eight-kilometer underground tunnel, a power station, a permanent camp facility, 34 kilometers of access roads, and 12 kilometers transmission line to the nearest PNG Power Limited substation. [12]

Cocoa farmers in Middle Ramu (Madang Province) will access a solar combination dryer promised to them by Agriculture and Livestock Minister Mr. John Simon. The dryer will not only ensure the best quality cocoa produced but also lessen labour. It can cater for more than 20 tonnes of wet bean and will ensure that the beans are not smoke tainted – hence, boosting quality especially for export. Middle Ramu, although not thoroughly surveyed in terms of statistics in regards to cocoa production, is said to have one of the highest yielding cocoa productions in Madang. According to Middle Ramu Cooperative Society Chairman Pius Mimpi, Middle Ramu could produce up to 50 tonnes of dried beans. [13] The Farmers and Settlers Association has welcomed the decision by the Madang government to subsidise copra in the province. According to the Association President Wilson Thompson, it was good to see Governor Peter Yama injecting provincial services improvement programme funds to support the copra farmers in Madang: «We believe it is timely and look forward to more intervention in other parts of Madang including support for copra buyers and traders, » Mr. Thompson said. [14]

PNG Mining Minister Mr. Johnson Tuke handed over a 9% shareholding certificate to villagers in the OK-Tedi mine area in Western Province. According to a statement from the Mineral Resources Development Company (MRDC), the share certificate is for Mineral Resources Star Mountains Limited (MRSM), a subsidiary of the MRDC group, which represents the 10 villages around the OK-Tedi mine. MRDC managing director Augustine Mano told the landowners that the share certificate was significant to MRSM’s investment portfolio. Mr. Mano also said that the transfer of the OK Tedi Ltd shareholding 9% had insignificantly increased the value of the MRSM as a company to K800 million (US$231,2 million). [15] [1]
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