Low prices hit coffers

MINING Minister Byron Chan says the uncertain environment caused by falling commodity prices means Papua New Guinea will expect lower export receipt, less tax, reduced royalty levies and reduction in direct expenditure within the economy.

The downturn had combined with a falloff in production from Ok Tedi, lower than forecast production at the Lihir, Simberi and Hidden Valley mines and a slower move to full production at the Ramu Nickel and Cobalt mine.

Chan said all the key minerals mined in PNG – copper, gold, silver, nickel and cobalt – had been impacted by this downturn, with prices falling in value to varying degrees.

Production from PNG’s existing mines – according to Bank of Papua New Guinea records – had declined since 2007 for copper and 2010 for gold.

PNG had always ranked highly on its international reputation for prospectivity.

With the downturn, he said the government considered some options for mineral diversification and expansion.

He outlined these minerals as coal, mineral sands, nickel and geothermal.

Chan said “three exploration companies were spearheading the coal exploration initiative in Papua New Guinea. Waterford, Mayor Coal and Pacific Mining Partners have come together in Gulf where highly prospective discoveries have been made and a drilling programme is underway.

“Coal has been identified in other provinces and it is a mineral that provides much opportunity for PNG, including direct export, power generation and manufacturing.

“Similarly with mineral sands where advanced exploration is being undertaken in Orokolo Bay, Salamaua and Amazon Bay by Mayur Iron, Katana and Tital Metals. 

“With potential for significant tonnages identified as available for extraction, an early move to development and export is considered feasibility.

“I understand that advanced nickel exploration in Oro identified has proven resources in excess of 200 tonnes.

“A potential for further diversification in the nickel market may be available for PNG as a consequence of the recent shift in Indonesia. 

“They have restricted direct exporting.”