Amendments to Papua New Guinea’s Mining Act provide for State to take a more active role

Welcome,

Amendments to the Mining Act 1992 have been passed in parliament, with Mining Minister Johnson Tuke explaining it is a step towards ‘taking back’ Papua New Guinea. Meanwhile, industry representatives have expressed some deep concerns.

The Ok Tedi mine pit. Credit: OTML

Papau New Guinea’s long-expected new Mining Act is yet to materialise but the Government has introduced a series of amendments to the current act.

Mining Minister Johnson Tuke said in a statement that the purpose of the Mining (Amendment) Bill 2020 is to ‘provide a legal basis for the State to apply for a tenement and develop a mine’. He said that the previous act was drafted in a way that only allowed foreign investors to undertake mineral exploration and mining in the country.

‘The vision of the Marape-Steven government is to take back PNG. In the mineral sector, it is absolutely vital that we make these necessary changes to empower the State to participate in the development of our mineral potential,’ Tuke said.

The amendments allow the State to reserve land that is the subject of an ‘expired, surrendered, cancelled or relinquished tenement’. The ‘State Applicant’ is nominated as either Kumul Minerals Holdings (KMH) or a majority State-owned Enterprise.

‘PNG must be mindful that its regulative and legislative platform must be internationally benchmarked and be competitive enough to attract investors. Otherwise PNG will miss the inevitable wave of projects that will follow a recovery from COVID-19.’

The Mining Minister will ‘decide on the merits of each project’ and has the right to ‘reserve certain land within PNG from mineral and exploration activities.’ An application by the State will have priority over any ‘reserved land’.

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All geological and mineral data from existing mining projects is to be put into a repository held by the Mineral Resources Authority (MRA). The State applicant is required to consult landowners, the relevant provincial government and the National Government, but this process is to be considered separate from a developer’s requirement to ‘convene a mining development forum before the granting of a special mining lease.’

In a parallel move, the government has also introduced amendments to PNG’s existing Oil and Gas Act.

Surprise

Mining Minister Tuke

Mining Minister Johnson Tuke. Credit: PNG Parliament

The Papua New Guinea Chamber of Mines and Petroleum expressed ‘surprise’ at the passing of the amendments. It has issued a statement saying that the Chamber last engaged with the government in January this year, when ‘a commitment was made for effective consultation’.

Regarding a new Mining Act, Chamber President Gerea Aopi, speaking at an on-line conference last week, said some areas considered in the January meeting aroused concerns.

‘The most recent version of the draft act that we have seen, the Mining Bill 2019, contains proposed changes that would harm the industry and the PNG economy,’ he said.

‘Some of these are centred around: increased tenure risk for mining companies, inadequate transitional arrangements to protect operations, increased cost of business and employment constraints – in particular, the fly-in-fly-out (FIFO) ban that was proposed.’

Competitiveness

Gerea Aopi

Oil Search’s Gerea Aopi.

Aopi said that the consultative process ‘must be consistent, open and transparent,’ adding that regulation and legislation ‘must be shaped in the context of an increasingly competitive global economy.

‘PNG must be mindful that its regulative and legislative platform must be internationally benchmarked and be competitive enough to attract investors. Otherwise PNG will miss the inevitable wave of projects that will follow a recovery from COVID-19.’

‘PNG must remain an attractive destination to ensure the PNG economy continues to grow. It is really simple. We are either on that train, or we are left at the train station.’

Aopi said ‘exploration dollars’ in the mining sector have dropped sharply in PNG in the period between 2011 to 2017. ‘It fell from K1 billion in 2011 to K300 million in 2017. Judging from the figures we are getting from the MRA, the [investment in exploration] in 2018 and 2019 will also be low.

‘Government and investors need to work together to attract capital. PNG must remain an attractive destination to ensure the PNG economy continues to grow. It is really simple. We are either on that train, or we are left at the train station.’

Last year, risk analysts at Verisk Maplecroft ranked PNG eighth on its Resource Nationalism Index, a list of countries where ‘the risks to business from governments taking greater control of natural resources is highest.’

Comments

  1. Stephen G. Day says

    I wonder does the statement:- “The ‘State Applicant’ is nominated as either Kumul Minerals Holdings (KMH) or a majority State-owned Enterprise” suggest a Majority State Owned Enterprise as one owned in partnership with a “Foreign Entity” like a Chines Government Owned Entity like China Rail or one of the other Chinese Government Owned Companies in PNG ???.

  2. joseph nilemoa says

    About time amendments are made and passed for the good of PNG! … Bold decisions must be made with or without consultation from people like Mr Aopi as such people have been around in senior government advisory roles for donkey years and what happened to our natural resources???

  3. Charles m says

    Splendid way forward stand.

  4. ken Ail says

    Clearly, the Marape-Davis government is shifting aware from mining and focusing on agriculture and beatle nut for raising billions of Kina to put PNG on the world map.

  5. Raymond Bure says

    Being in the lower end of other people’s standards are nothing new. Can’t blame the PNG Govt for trying things out for the PNG people. Haven’t seen much happening since independence.

  6. Chris Jury says

    It will be interesting to see where PNG is this year on the mining investment attractiveness for international companies. Last year it was 54th out of 76 jurisdictions, with Western Australia being ranked first and Tanzania ranked last. I suspect it will fall lower this year, making it much less attractive for investors.

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