Govt urged to maintain positive investment climate

 PAPUA New Guinea’s mining industry hopes that the government maintains a positive investment climate and does not change policies or make unexpected demands on the resources sector.

Outgoing PNG Chamber of Mines and Petroleum president Dr Ila Temu said that when the investment climate turned negative, the industry could become dormant for long periods of time. 

“PNG’s climate for resource investments is related to international perceptions and unexpected changes which the government must understand,” he said.

“In many cases, resource companies are confronted by technical challenges related to proving up of a mineable resource, site access and power supply, and the complexities involved in extracting and processing the minerals. 

“This is in addition to high development costs and operational costs.”

The chamber said the Ramu NiCo project took more than five decades from exploration to commercial development.

In  the  same  time frame,  Frieda  River  copper-gold  only got to the final stages of a bankable feasibility study.

“The mining industry, through the PNG Chamber of Mines and Petroleum, would like to see the national  government honour the letter and spirit of the law when it grants mining leases and to prevent unrelated disputes to subsequently stall the development process.

“This is important from the perspective of sovereign risk and for maintenance of a regulatory regime that is predictable and fair to all participants.

“Recent announcements from Treasury suggest that lower commodity prices would reduce anticipated national government tax revenues this year by K500 million, and possibly affect the budget framework in the next few years.”

“Because of the high capital costs and technical complexity, big mining projects such as Ok Tedi, Lihir Gold, Ramu Nickel and Frieda River usually take many years before they become  profitable   and   can   provide stakeholders with significant dividends and commence the payment of company tax. 

“This is because profits in these years are utilised to repay the capital costs, including the huge loans required to fund these projects,” the chamber said.