By YEHIURA HRIEHWAZI in Brisbane
INMET Mining Corp of Canada which holds 18% stake in the giant gold and copper Ok Tedi mine is pulling out.
Inmet has been under pressure for many years by its shareholders to leave Ok Tedi because of their environmental concerns.
In recent weeks, there has been more pressure in Canada by environmental groups to force the government there to impose tough social responsibility and community obligation guidelines against Canadian companies operating overseas.
Inmet’s departure is expected to be effected within months, according to its announcement to the Toronto Stock Exchange last Friday.
It will exchange its 18% equity with OTML for a 5% royalty payment on net smelter returns (NSR) which is sales receipts of concentrate sold to smelters around the world.
Another of its condition of departure is that 2% royalty be paid to the Government of PNG and the landowners. It will be paid 18% of the total operating capital of the mine on departure date.
The decision effectively means Ok Tedi will now become a 100% PNG-owned mine.
BHP owned 51% but departed following a protracted court battles over environmental concerns.
In a move seen as a compensatory move, BHP set up PNG Sustainable Development Corp Ltd and handed over its entire equity package FOC which was earning about K200 million a year and departed.
The rest of the equity (30%) in OTML is owned by the PNG Government and the landowners through Mineral Resources Development Corp (MRDC).
Inmet said in its statement to TSX that the NSR (net smelter return) will apply to proceeds from the sale of all mineral products from the Ok Tedi mine, less treatment charges and penalties, insurance, freight, sampling and assaying, and a 2% royalty paid by OTML to the PNG Government and local landowners.