The saying "it never rains but it pours" is particularly relevant in PNG.
As if the Hela area problems with the gas project were not threatening enough to make investors anxious, I now see why Peter was very negative in some comments he made to me regarding the upcoming changes to the mining regulations. The summary attached with comments by Greg Anderson is disturbing to say the least...they say DRC is a worry, well, PNG in this instance could teach DRC a thing or fifty. I wrote about the gas situation some days ago but it got lost in posting. It itself is a nightmare, having the potential to make the Bougainville rebellion look like a minor glitch....Hela (close to Bulago etc. ) has potential to be a complete disaster unless, for once in their lifetimes, PNG govt and all stakeholders take things seriously and get benefits flowing, and to the right people. And Australia too, as one of the major lenders to the gas project. The gas project is a wonderful thing for PNG but has been mishandled , with gas being exported even before the royalty beneficiaries had been identified. Gas to the Hela people has been long known, and has cultural, even traditional quasi religious significance, and sorting out the benefit situation is vital, and doing it super fast . The potential fire power in Hela would make many small country armies look like child's playthings, and the people there regionally have a combative history. If nothing sensible and fore seeing is done this will effect all PNG mainland projects, possibly more than that. The so-called Jubilee report, which PNG PM Peter O'Neill rubbished without having read it, has poked a stick into a hornets' nest.
The respected lawyer Sam Koim puts it like this : "Hela Province is not like Bougainville, he says, where you had an organised and cohesive society. “But the people [in Hela], with due respect, are the last people you want to play games with. They may not be organised, but it needs just a spark.
“I’ve warned the Exxon guys, told them, ‘Don’t be arrogant.’ They think these people up there are ignorant, but the moment they are enlightened, they cannot continue to be suppressed,” says Koim. “They have the weaponry to do it, they have the potential to do it, they have the might to do it.”
(That article is an absolute must read for investors in PNG:
To get back to Peter's comments the attached article quoting Anderson is worrying indeed, for any explorer/miner, but especially for those applying for permits upcoming. Bear in mind Greg Anderson is a straight shooter with much of a life time of experience locally.
Cedric Patjole | Loop PNG | May 19, 2018Changes to the Mineral Resources Act 1992 have created uncertainty in the mining industry, especially with rising mineral prices.Former executive director and now advisor to the PNG Chamber of Mines and Petroleum, Greg Anderson, said this during the Resources Sector Media Workshop.He said the uncertainty created will determine exploration activity as well as whether mineral projects are developed.Anderson gave a detailed presentation on the impact of the MRA Act changes. Positives included:
The extension of Exploration License term from 2 years to 5 years, and maximum size o shore increased to 10,000km2
Documentation required for a Mining License application now prescribed. This includes:
Community engagement plan, LIS, social mapping study
Employment and training plan, goods and services procurement plan, business development assistance plan
Rehabilitation and mine closure plan
Feasibility study and mine waste management plan
Resettlement action plan
Timelines set for a decision on the State equity participation option linked to the application process for a Mining License (as per Kumul Minerals Authorisation Act)
A party to a Community Development Agreement (CDA) (MOA) that fails to sign cannot delay or ‘hold to ransom’ the approval process for the CDA
However he said the negatives significantly outweighed the positives. They included:
The State given the right to compulsory acquire (on ‘commercial terms’) any project upon the expiry of the 25th year of the first term of the ML or thereafter (expropriation)
Royalty increased to 3 percent (bringing it to 3.5 percent with the increased Production Levy in the revised MRA Act )
Limiting of the un-recouped sunk costs for State equity participation to: Only 50 percent of the accumulated exploration costs; and for he current tenement holder only, and for no more than 20 years prior to ML grant
Agreements to include a provision on the protection of minority shareholder rights including when and how dividends will be determined, declared and paid
There are no “grandfathering” provisions - existing operations are required to comply with all aspects of the new Act within 12 months (social disruption)
Very significant increase in reporting requirements; will increase costs and bureaucratic load on the MRA, MAC and explorer/developer. Are these additional plans and reports justified, how are they to be reviewed in a meaningful way, can they be combined or better managed?
Any changes to Government policy take precedence over the MDC (totally annuls the sanctity of the MDC). MDC subject to five year reviews
There is only one tenement for mining, the ML (SML abolished; one size ts all) & the MAC now approves all tenements (Minister formally grants tenement but has to abide by decision of MAC). Industry endorses MAC’s role in approval of ELs & smaller mining projects but believes direct NEC approval & grant of ML needed for larger projects
[/table]
International FIFO banned under an ML (also financial impact)
Unworkable obligation to commence development and maintain production leading to cancellation of ML “Reservation of Land from Mining” provision that does not protect the right of: existing EL applicants for grant or renewal (they are terminated); existing ML holder to renew when a reservation is in place (cannot lodge an application which could result in the forced closure of a mine)
Unsatisfactory conditions for ELs: maximum size of onshore EL reduced 50% to 1,250km2; requirement for year 3 external audit, at renewal (MAC), or anytime by MD fee of K5,000 to surrender an EL; no consolidation of ELs
Unsatisfactory Compensation Agreement that must take into account “possible changes in the landholder structure"
Powers and duties of authorising o cers excessive and in some cases open to abuse.
Penalties are excessive and punitive, eg. A person, engaging in FIFO (not defined) can be locked up for 15 years;
not a tenement holder, can be locked up for 2 years for not providing information the MD deems “useful for the enforcement of this Act”
The definition of “offshore” will lead to confusion with existing projects that are onshore/onshore and the application of the “CAB” needs to be clarified
Impractical “Transparency Initiative Publications” - IRC, PG, developer, LOA must submit quarterly benefits report or CEO/chairman ned K25,000
“The Mining Sector is strongly opposed to the revised mining act of which I have just outlined. It is internationally uncompetitive, extremely so, especially with all the tax changes that have gone on as well. It will be a strong deterrent to any future mining projects and a serious impediment to the operations of the current mines,” Anderson said.
Anderson said currently mineral prices were on the rise as witnesses five years ago before a slump. And the uncertainty created by the legislative changes affected exploration and mine development.
“This present all of us with a serious dilemma. We’ve got a rise in commodity prices, the cycle was recovering and coming back in our favour like it did in 2003 and we captured it beautifully.
“Now we’ve got all these uncertainties facing us; how are we going to capture this rise in commodity prices, build new projects and expand our exploration sector?”
He said the PNG Chamber of Mines had done two independent reviews and had encouraged the Government to carry out its own review to authenticate the veracity of those reports and recommendations.
Anderson said the Government must renew discussions with a multi-disciplinary team drawn from all relevant key government organisations, with all meetings chaired by an eminent, independent chairman."
I have a significant investment (by my standards) in FNT, but also in other parts of PNG, and I never knock these projects, but we all need to keep our eyes open, and any small word to get some involved people in government and others with power to make PNG a more attractive investment destination to get off their asses and improve the perception of investment in the eyes of PNG landowners and citizens does no harm. Lets hope some benefit comes from all our efforts, including our FNT holders. Perception is everything.....Regards to all.
Armed clan near Komo, Hela Province, Papua New Guinea. Photo by Michael MainDisaster strikes the nation’s massive gas projectJo Chandler | The Monthly | May 2018 [/table][/table]
FNT Price at posting:
1.3¢ Sentiment: Hold Disclosure: Held
Cedric Patjole | Loop PNG | May 19, 2018Changes to the Mineral Resources Act 1992 have created uncertainty in the mining industry, especially with rising mineral prices.Former executive director and now advisor to the PNG Chamber of Mines and Petroleum, Greg Anderson, said this during the Resources Sector Media Workshop.He said the uncertainty created will determine exploration activity as well as whether mineral projects are developed.Anderson gave a detailed presentation on the impact of the MRA Act changes. Positives included:
Armed clan near Komo, Hela Province, Papua New Guinea. Photo by Michael MainDisaster strikes the nation’s massive gas projectJo Chandler | The Monthly | May 2018 [/table][/table]
(20min delay)