A tale of two sectors
There is the increasing divergence in fortunes of PNG’S mining and petroleum sectors, according to Greg Anderson, Executive Director of the Papua New Guinea Chamber of Mines and Petroleum.
While the country’s petroleum and gas sector is moving from strength to strength on the back of the Exxonmobil-led PNG LNG project, mining is in the doldrums.
‘For the past 10 years, we’ve had solid growth in both sectors,’ Anderson tells Business Advantage. ‘Gas is still very positive, whereas mining is facing a lot of questions.’
‘The mining industry is facing difficult times. Globally, prices have fallen, there are productivity declines and financing has dried up for exploration and for producers.’
‘We’ve been trying to take the message to the PNG Government that we’re facing challenging times.’
There is some good news, with Panaust a welcome new player due to its interest in the Frieda River project, and Indochine Mining and Numinco Group increasing their commitment to PNG by listing locally in the past year.
However, existing mines such as Ok Tedi and Lihir have cut jobs, while ‘exploration has come to a stop, except for a few exceptions.'’
One positive development is the massive Wafi-golpu gold project, being jointly developed by Newcrest Mining and Harmony Gold in Morobe Province, which is entering feasibility study stage.
New Mining Act
Against this background, the industry is awaiting a revised Mining Act from the PNG Government, currently in draft form. Anderson remains hopeful the new Act can deliver an environment that encourages mining investment.
‘We’ve been trying to take the message to the PNG Government that we’re facing challenging times. It’s not PNG’S fault; it’s cyclical.’
There’s no knowing how long the current mining slump will last, although there are some encouraging signs out of China on the demand side, and Newcrest, after posting significant losses in 2013, is already reporting a profit turnaround.
Meanwhile, Anderson says, ‘ there are lots of great stories in oil and gas’: not only the imminent completion of the Exxonmobil-led PNG LNG project (see page 28), which he describes as a ‘huge achievement,’ but also promising work being done by Talisman Energy, Horizon Oil and Heritage Oil.
The industry is also still buzzing from the news that Interoil has chosen French major Total SA as its partner for what looks like being PNG’S second LNG project (see page 27). The presence of a second major in PNG’S petroleum sector is a major coup for PNG.