Delay costs millions

 By GYNNIE KERO

PRESSURE from landowners and environmental organisations on seabed mining in Papua New Guinea may cost the state more than K285 million (US$118 million), Mining Minister Byron Chan said.

He was responding to questions raised by The National on the cause of delay by the state in having to pay the funds owed to complete its 30% stake in the copper-gold project in the Bismarck Sea.

Nautilus recently terminated its licence with the government after the state failed to pay for its 30% stake in the development cost of Solwara 1. 

Chan said yesterday: “The delay is due to pressure from environment-focused non-governmental organisations, landowners and the provincial government’s concern in which the deep sea mining would take place.

“They want the government to negotiate better terms in benefit sharing when the project gets underway.”

He said: “The state owes about K285 million to Toronto-based Nautilus Minerals from its 30 % participating interest in the company’s Solwara 1 project off the coast of New Ireland and East New Britain provinces.

“Nautilus, in response to the state’s hesitation, recently announced a cessation of the agreement, three years after the initial state equity option agreement (SEOA) was signed by both parties in March 2011. 

“The company has now filed for damages against the state. 

“The retribution cost on the State may surpass the initial K285 million should the state be found to be in breach of the contract placing more burden on the government to source funds to meet the cost.

“The state will still have a say as government regardless of it losing on the participating interest.”

Meanwhile, Nautilus has said: “We will continue to work with all levels of government; State, Provincial and Local Level to ensure Solwara 1 and seafloor mining become a reality and the people of West New Ireland benefit from the project”.