PAPUA New Guinea, which should enjoy more than 6% economic growth for the second successive year, is eyeing more mining projects in the coming decade than all the activity in the past four decades. By Brian Gomez
This should not be surprising to industry observers. A good case can now be made that PNG has the best mineral exploration investment climate of any developing country in the Asia-Pacific, possibly excluding Latin America.
This may sound like a bold statement but could well be the case, partly because of the country's fantastic geological prospectivity.
In terms of export-oriented mining activities, PNG is best compared in this region with Indonesia and the Philippines.
Despite its high geological prospectivity, the Philippines in recent times is no match for PNG in terms of the investment climate, as highlighted by the recent attack by dissident forces on Xstrata's Tampakan copper-gold project in Mindanao. This is the second such attack on an Australian-led operation in three months.
Australians, with a close knowledge and involvement with Indonesia, have also noted that in recent times devolution of powers to regional authorities has created a lot of uncertainty in that country.
Foreign investment in mineral exploration has been falling for some years and overall expenditure these days are of the same order as in the Philippines and PNG.
Projects in next decade will overshadow historical output. Clearly there has been a strong upward trend in exploration spending over the past four years in PNG, where only three major mines – Ok Tedi, Porgera and Lihir – have been built since the historic Bougainville Copper mining operations commenced in 1972 and shut down in the 1980s.
According to PNG's Treasury and Finance Department there are 13 advanced exploration projects that are nearing pre-feasibility or feasibility stages.
Ramu Nickel, a US$1 billion project, will be the first big, new mine to commence production late next year, just over 11 years after the last major mining project, Lihir Gold, began production in May 1997.
Marengo Mining's Yandera copper-molybdenum project, which will also cost around US$1 billion to build, expects to complete its feasibility study by 2009 and begin mining in 2011.
Also looking at a similar time frame and similar costs, is Harmony Gold's Wafi-Golpu copper and gold projects, while Xstrata is committed to completing its feasibility study on Highland Pacific's billion tonne Frieda River copper-gold project in 2012.
Even before Marengo come onstream, Nautilus expects to have started copper and gold production from its world-first undersea mining project at Solwara-1 in the Bismarck Sea.
These five projects should be well into production in the next decade. Their overall exports are likely to be significantly larger than the four giants set up in the past four decades.
A whole host of other projects are near the starting blocks, not forgetting the medium-sized Hidden Valley gold project starts up early next year.
Among the advanced gold exploration projects are Mt Kare, Woodlark, Imauna, Sehula, Wapolu and Esalla; copper-gold projects include Kodu, Mt Nakru and Simuku plus the Wowo Gap nickel-cobalt project.
While PNG is becoming a more favoured destination for exploration, there seems little doubt gold explorers will get much more bang for their buck than in Australia, where they currently spend at least 10 times as much.
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