May 30, 2020 Last Updated 7:29 AM, May 29, 2020

The Papua New Guinea government’s decision not to extend the mining lease on the economically important Porgera gold mine has shocked the joint venture operator, but the K17 billion (US$4.8 billion) Wafi-Golpu project is likely to be signed off in September.

The current Porgera lease expired last August, but Barrick New Guinea Ltd (BNL) had sought a 20-year extension as far back as June 2017. Barrick’s CEO, Mark Bristow had met with Prime Minister James Marape four times after his election last June to negotiate an extension.

In a shock statement on 24 April, the government said it had carefully considered the issue and decided it was "in the best interests of the State, especially in lieu of the environmental damages claims and resettlement issues", that the lease not be renewed. That weekend, Marape sent in 100 troops to secure the mine site.

Over the 30 years of the mine’s operation, there have been numerous controversies, claims and counter-claims about water pollution, environmental and social problems, questions around local economic returns and violent clashes in the area, according to ANU analysts John Burton and Glenn Banks.

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Papua New Guinea has been advised to tweak its macroeconomic policy and throw more weight behind agriculture, as it has the potential to enable more diversified and inclusive development.  

The World Bank makes this recommendation  in its latest newsletter Pacific Possible. It warns of rising economic uncertainty and fragile growth in PNG and recommends that authorities focus on structural transformation of the economy, especially in the agriculture sector, to help absorb any shocks.  

"Around 87 per cent of Papua New Guineans live in rural areas, and 75 per cent of these are engaged in a variety of subsistence and cash income agriculture activities. Staple products are the main source of subsistence, provide food energy and protein, and are a source of food security for rural villagers when income-earning opportunities are limited," the reports states.

"While most rural villagers combine these traditional subsistence and cash income activities, there is a small but increasing number producing value-added products such as high-value coconut products and spices."

Agriculture is one of the priority sectors in the government’s Medium-Term Development Plan for 2018–22 (MTDP III.

"To utilise the potential of agriculture as a source of income and job creation, the authorities should consider a proposed set of policy options and responses for securing sustainable rural livelihoods in food and agriculture," the World Bank says.

The resource-rich nation of over eight million people is home to a number of multi-billion dollar minerals projects and is vulnerable to substantial commodity price shocks, natural disasters and uncertainty in the performance of new and existing minerals projects. 

Its agricultural sector includes fresh food and export products like coffee, cocoa, palm oil, and copra and copra oil. 

Battle for power

Australian, Japanese firms fight over deposits

THIS year marks the 70th year of the end of the war in the Solomons. Yet the battle over natural resources in these islands ended in the courts just months ago and there were no winners.

In fact the biggest loser has been the Solomon Islands in terms of lost opportunities for investment and job creation. The Australian media has tried to portray this as an epic David versus Goliath battle. In this case a small Australian mining company has been stripped of its rights to one of the Pacific’s biggest greenfield nickel laterite deposits, after a decision by the Solomon Islands Court of Appeal.

ASX-listed Axiom Mining has battled long and hard with the Japanese giant, Sumitomo Metal Mining (SMM) Solomon Islands Limited for control of the deposit in Isabel Province. Three overseas judges of the Solomon Islands Court of Appeal quashed ministerial approval of Axiom’s prospecting licences, finding that the transfer of land registration to Axiom’s landowner partners had not been completed properly and so was invalid.

“It is a setback, but it is not a major or material setback from our point of view,” said Axiom Mining’s chief executive officer Ryan Mount. ‘Most important case’ on land since independence.”

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Cyanide risk

Closed Gold Ridge mine triggers concern

UNTIL April 2014, Gold Ridge was the sole operating mine in the Solomon Islands and contributing approximately 20 per cent to the nation’s Gross Domestic Product. But not all that glitter is gold. After the departure of the Australian Mining Company St Barbra – the mother company of Gold Ridge Mining Limited (GRML) – the risk of cyanide leak from the tailing dam has exacerbated by the day partly due to the recent spell of rainy weather.

When Tropical Cyclone Raquel hits Solomon in June, the Minister of Environment, Climate Change, Disaster Management and Meteorology Samuel Manetoali declared a “state of disaster” at the mine site situated 30 kilometres south-east of the capital Honiara. This followed threats of rising water from the tailings dam due to the heavy rain TC Raquel brought in. Controlled draining of the dam has been long overdue after GRML abandoned Gold Ridge last year and offered to sell it for a mere AU$100. Gold Ridge Community Investment Limited (GCIL) comprising landowners then purchased the mine and signed a ‘sale deed’ plus a ‘deed of indemnity’ in May 2015 with St Barbara.

St Barbara agreed to fund on behalf of GRML the manufacture, delivery and installation of a replacement water treatment plant at a cost of approximately AU$1 million. St Barbara also agreed to provide technical advice and assistance to GCIL for a period of six months following the sale.

Questions still remain however on just how St Barbara could abandon the mine then offered to sell it for a mere $100. Policy Secretary for Resources Sector in the Prime Minister’s Office, Chris Vehe revealed to Islands Business the total ore reserve at Gold Ridge could be used up in three years if current processing plant capacity is re-engaged by a new investor. “On top of that gold deposits in Gold Ridge are of low grade when compared to other world class deposits in other parts of the globe. 

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Scientists say both can operate side by side

As interest in deep sea mining grows, one question that comes up time and time again is what impact would deep sea mining have on fisheries? Deep sea mining is a new industry as opposed to fisheries, which has long been a leading source of government income, exports, jobs and food security. So naturally people want healthy fisheries more than any new and potentially risky, extractive industry to go ahead. But do you have to decide between one or another? The answer seems to be no, according to experts. “It is not anything like a case of fish OR mining: both can easily operate side by side because mining at sea depths of 1500 to 5000 metres will not affect fishing near the surface waters.

Good management can allow both to coexist,” says Professor Mike Petterson, Director, Applied Geoscience and Technology Division of the SPC (Secretariat of the Pacific Community). Dr Malcolm Clark, Principal Scientist at New Zealand’s National Institute of Water and Atmospheric Research (NIWA) explains in more detail: “The main Pacific fisheries are pelagic, with skipjack, bigeye, yellowfin and albacore tuna extending to depths of about 300 metres. “Deep snappers are found closer to the seafloor, to depths of about 400 metres. Other deep sea commercial species such as alfonsino and bluenose can go deeper still, to 700 metres.

“The main potential seabed mineral resources in the western Pacific occur deeper than these fisheries: seafloor massive sulphides at 1000 metres and deeper, and manganese nodules at around 4000 metres. “Many of the most damaging impacts of seabed mining (the physical disruption and dense sediment plumes generated) will occur at the seafloor, and in most cases this will be too deep to directly affect Pacific Islands fisheries.”

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