Kumul Minerals Holdings Ltd (KMHL) is to participate in more projects in the future. It is a State-owned entity, operating as a commercial enterprise, principally in mineral exploration, development, production, processing and marketing activities. It is mandated as the exclusive nominee to hold and manage mining investments on behalf of the PNG Government. Managing director Dr John Kuwimb explains to Business reporter Peter Esila what KMHL plans to do.
Dr Kuwimb: Our future is bright, we want to follow a future that is sustainable, in that we anticipate to get into various mining as many as possible, especially in gold and copper.
We we want to focus on gold and copper.
The plan is that we want to participate in Wafi-Golpu and look around for some other prospective.
We concentrate on Ok Tedi and build that up, then look at others, especially gold and copper projects where we can buy into existing exploration licences.
In accordance with existing policy, the Government wants to exercise its option to take up the full 30 per cent equity in the K18.5 billion Wafi-Golpu project in Morobe.
If we secure 30 per cent in Wafi, then it is likely that some percentage will go to the Morobe government and the Special Mining Lease (SML) area landowners.
So we will be left with the balance to keep for the rest of PNG.
We are not going to participate in Solwara 1 anymore because that was before my time.
I found that they spent a lot of money but nothing is done.
The amount was around K300 million or K400 million that the KMHL borrowed to pay for it.
So we are not keen on taking that up.
Kumul Minerals will not be operating without Ok Tedi Mining Ltd because that is the only company that gives us the money to operate.
Without it, we cannot.
It died but Ok Tedi gave life to it.
So we are now resurrected.
It gives us dividend every year which we divide among the shareholders made up of KMHL which holds 67 per cent.
The landowners and the provincial government hold 33 per cent,
Kumul Minerals was dead.
We are resurrecting it.
This is the second year of operation.
We only had one staff working, keeping the company alive.
So we put together a team of workers, office equipment – internet systems, computers, office tools, company structure, plan, policies, board and governance.
While that was going on, we were also negotiating on Porgera.
Downstream processing of gold in the country will increase the value of the Kina.
From KMHL’s point to view, a gold based-economy must be encouraged.
Eventually, we want to go into downstream processing and refine gold and establish gold bullion here,
When they say, we have to create an export-based economy, all they are saying is that you sell a lot of things from here to get the American dollar so that with the American dollar, the Government can pay off its loans.
Importing companies and citizens too can buy things made overseas to bring here.
An export-based economy means you export to get the American dollar.
So using the American dollar, we can buy things made overseas.
This is to make us become customers of overseas products, and customers of foreign financial lending institutions.
“From KMHL’s point to view, a gold based economy must be encouraged… we are saying, let us have a gold-based economy to strengthen the Kina since gold is international currency, more precious than American dollar.”
– Dr John Kuwimb
For KMHL, we are saying, let us have a gold-based economy to strengthen the Kina since gold is international currency, more precious than American dollar.
Why are we exporting gold?
We should be keeping all the gold in the country.
Gold will then back up the Kina and take back the country from the dollar.
With a gold-based economy, the purchasing power of the Kina will be very strong.
The government will pay off its debt quickly when a Kina is paying for a dollar. Right now, the Kina has become a slave of the dollar through the floating exchange rate regime.
Gold is the saviour of the Kina.
Therefore, all the gold produced in this country must be refined and kept here to rescue our economy.
The biggest challenge I find is that we have lack of knowledge.
I believe the Bible verse that says: “My people are destroyed from lack of knowledge.”
That is the biggest problem that we are facing.
Section 5 of the Mining Act says that the State is the owner of all the minerals.
Yet we transfer that ownership to companies who apply for exploration license.
Once they find minerals, we give them development tenements, or special mining leases and mining leases.
Through that, they get the minerals and they own it and take it away and sell it, without paying the
original owner State anything – or apart from the little the tax and all others.
So if the Government wants to take up 30 per cent equity as in Wafi, then we pay for it.
So why are we paying for what we own by law?
Can you buy what you already have?
In the oil and gas industry, section 6 of the Oil and Gas Act says that the State owns the oil and gas in the ground.
When you give a petroleum exploration license, then they find that there is enough oil or gas to
be developed and give a petroleum development license, then
the license holder becomes the owner.
That is why we go and borrow money to pay for any equity we take up.
Equity means share.
If we want to buy shares.
That was why the UBS enquiry comes from us seeking to borrow money to pay for what is already ours by law.
What we should have done was to say: I am the owner of the resources. I give you a contract to look for my minerals.
If you find it, I will give you a contract to take it out.
The amount I will pay you is specified in the contract.
Just like you are a holder of a land.
You hold a title.
You give a contract under which a carpenter builds a house.
Just because a carpenter builds a house doesn’t mean that he owns your land.
He just gets paid for building your house.
So any company can come and look for my minerals.
That doesn’t mean that you own my minerals.
I pay you for looking for it, and for discovering it and for taking it out.
In service contracts, you give contracts to companies to go and look for minerals for you.
That is the kind of arrangement that Kumul wants to pursue in the future.
The current system is not good.
Lack of knowledge is our number one problem.
You got to know, you just can’t be ignorant.