Copyright 2000, The Independent (PNG)
December 28, 2000
By WINIS MAP              

MINING, petroleum and gas industry have a special responsibility to promote the social and economic well-being of Papua New Guinea. In fact this industry also faces great challenges of producing non-renewable resources that are very vital for the economic growth of the country.

Through the years the industry has grown from strength to strength despite the instability of the PNG economy due mainly to the constant political changes. The year 2000 could be seen as a year of many challenges and triumphs for this industry.

This year, the value of the Kina was trading below 0.5 US dollars, it was at 0.3 level and is still trading at this mark. The fall of the Kina contributed to many things, an obvious one was that production costs for the industry rose dramatically because most hardware for the industry is imported. Companies in the mining, petroleum and gas industry had to pay more because the purchasing power of the Kina was weaker.

The announcement by Ok Tedi Mining Limited (OTML) this year to close the mine had mixed reactions from the people and the government. OTML plans to cease operation in ten years time.

OTML contributes about 20 per cent of PNG’s export earnings. This is quite a lot from one mining company. To stop panic among workers and the community OTML had to make their plan to close as a proposal to the government, so the company cannot just pack up and leave when they feel like it.

The mine has ten years to go, however some foreign companies have shown an interest to take control if OTML leaves. The government through the Mining Department thinks that OTML’s life span is more than ten years. Secretary of the Department of Mining Kuma Aua thinks that there are some ore deposits in the area.

As talk on Ok Tedi’s future was being discussed, the signing of instruments for the development of the billion kina cobalt and nickel mine in Ramu were made. Some landowners of the Ramu nickel mine at first refused to sign the agreement, but following close consultation amongst all concerned, all landowner representatives, the state and the developer (Highlands Pacific) have signed the Memorandum of Agreement (MOA).

The signing of the agreement has now given Highlands Pacific and its partners the opportunity to begin work. Although not much has been done this year, the signing of the MOA marks the beginning of the Ramu Nickel project’s development.

This year was a very good year for Lihir Mining. Despite the fall of our currency Lihir was very optimistic in its performance. The company had set a target for production of 600,000 ounces of gold. The company expects a shortfall of three per cent but have also mantained to produce the same quantity next year.

The mine is still doing some exploration work on the North Minifie area. They have made about a total of 20 holes, and two holes show some sign of gold deposits.

The production and sales for this year were on schedule, although there were some drops during the year.

One of the major events this year would be PNG’s effort to sell the idea of developing its gas resources in the Southern Highlands. The newly formed PNG Gas Limited has embarked on a major advertisement drive both here and overseas in line with this. 

The government and management of PNG Gas had a major road show when they sponsored the PNG rugby league team to participate in the World Cup. The PNG Gas Kumuls went as far as the quarter finals before losing to Wales.

PNG Gas wants to play a leading role in trying to sell the idea to the Australian companies, especially those in Queensland that the proposed gas pipeline from PNG to Queensland is economically viable.

The biggest winner of the industry for this year was oil. Oil prices in the world market increased thus boosting the revenues from sale of our oil from Kutubu and Moran oil fields. Landowner conflicts also impacted the production.

This year has been generally good for the industry too. The tax review bill passed during the November sitting of parliament brought relief to many mining companies.   Error: Unable to read footer file.