go frontier, page-15

I told you so back 2 weeks ago.

Below is from a PNG local business newspaper, ie the PNG govt is well aware of the economic consequences of non-renewal of FNT EL.


Life after Ok Tedi mulled over
PAPUA New Guinea’s Ok Tedi Mining Ltd (OTML) is scheduled to close its openpit mine in 2013 but might still have considerable life in her yet, in the form of underground mining.
The issue of how the nation will cope after the loss of its biggest revenue earner continues to be debated.
However, fortunately, PNG seems to be well prepared.
OTML ownership is divided between the PNG Sustainable Development Program (PNGSDP) at 52%, provincial governments and landowners at 30%, and Canadian-based Inmet Mining at 18%.
Two thirds of the dividends net of taxes and administrative costs of the created company go to the long term fund so that development can be supported for up to four decades after the mine closes.
Despite the high ideals of the PNGSDP, the economic consequences of the Ok Tedi closure will still be significant, according to PNG Chamber of Mines and Petroleum executive director Greg Anderson.
“It’s a huge contributor,” Mr Anderson said.
“It’s going to be very hard to replace it, I don’t think the increments in Lihir and the other mines will help, but it’s such a huge powerhouse at the moment.”
In his presentation “Ok Tedi, More than a Mine” at the PNG Mining Seminar in Port Moresby last year, OTML managing director Alan Breen outlined the benefits provided by “one of the world’s great mines of the last 25 years”.
“Currently OTML contributes almost 25% of the nation’s export revenue and 15% of the gross domestic product (GDP). Last year (2006) regional and national government taxes, royalties and dividend payments totalled K1.5 billion. This year will be similar.”
While a possible loss would paint a bleak picture of the future of PNG’s economy, it now seems ironic that so much planning has taken place for the consequences of the mine’s closure when recent revelations suggest Ok Tedi might still have considerable life in her yet.