Govt may give Newcrest a hand

 PRIME Minister Peter O’Neill has expressed concern at the problems facing Newcrest Mining, and the possible implications for the Papua New Guinea resource sector.

The prime minister’s concerns follow announcements by Newcrest to review its business plan and budget for the next financial year up to June 30, 2014.

Next year’s outlook is impacted by the recent deterioration in the gold price, a strong Australian dollar and increasing costs.

The company says it will take A$5 to A$6 billion (K10.79 to K12.94 billion) in impairment charges in the current year related to its investments in gold assets in Papua New Guinea (PNG), Australia and Africa.

O’Neill said the government would consider offering assistance if that was warranted.

 O’Neill said: “Newcrest is the largest operator in the nation’s mining sector, and it is vital the company continue making that contribution at Lihir Gold, New Ireland and the Hidden Valley and Wafi projects in Morobe.

“Clearly Newcrest is facing some serious challenges with its projects, including those in Papua New Guinea.

“The decline in the gold price in particular, and other commodities in general, are impacting on Newcrest Mining,” he said.

O’Neill said the National Government would seek a briefing from the management of Newcrest Mining on the impact on the company’s projects in PNG and discuss with the company possible assistance to ensure the company’s PNG projects remained fully operational.

“The company is highly regarded as a leading participant in our resource sector. When a company as big as Newcrest faces serious problems, we have to be concerned at the possible impact on our resource sector and our economy generally,” he said.

“My government will be open to possible assistance that would help ensure operations continue,” he said.

“This experience is a reminder that our resource sector is subject to issues that are beyond our control – such as a major drop in commodity prices.”

“The principal role of the National Government must be to maintain a sound climate for investors – and especially major resource sector investors who are spending billions developing our resource sector.

“As the Moody’s ratings agency recently confirmed, we are delivering the right climate for investors. We will continue to do so,” he said.