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.

Business Advantage Papua New Guinea - - Sector Overview -

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.

Huge achieve­ment

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.

The PNG Cham­ber of Mines and Petroleum’s Greg An­der­son

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