Market crisis may impact resource sector

 By SHIRLEY MAULUDU

THE resource sector in Papua New Guinea will most probably feel an impact from China’s stock market crisis, the Port Moresby Stock Exchange says.

General manager Vincent Ivosa said that was because China was a major importer of raw materials and minerals from PNG.  He said there was no impact on POMSoX as there was no Chinese-owned company listed with it.

However, Barrick Gold Corporation PNG noted that its partnership arrangement with Chinese firm, Zinjin mining group, would not be affected in any way. Zijin is listed on the Shanghai Stock Exchange. Following the recent strategic partnership arrangement the two companies outlined their intent to collaborate on future projects and joint investments.

As a first step in the partnership, Zijin would acquire 50 per cent of Barrick (Niugini) Ltd, the company which owned 95 per cent of and managed the Porgera gold mine. 

Institute of National Affairs executive director Paul Barker said the Chinese economy remained strong and growing but it had come off its years of meteoric growth rates and had been slowing over past years.

He said the construction boom had tailed off and demand for many raw materials exported from places like PNG and Australia were in lower demand, with prices slipping back (iron ore for Australia and copper for PNG). Barker made the comments following questions by The National on whether China’s stock market crisis would have any impact on Chinese engagements with PNG. 

“The Chinese Government has made efforts to stabilise the market by promising to buy into these markets itself … but this doesn’t seem to have worked to date.

“If this bursting stock market (and possibly property bubble) has wider market and economic ramifications in China, it will trigger difficulties for China playing such an active market role as an investor or financier than had been envisaged just recently it will stall the capacity until markets and confidence are firmly restored,” Barker said.