Ok Tedi: on the cusp of expansion


In November 2012, Ok Tedi Mining Limited (OTML) submitted a feasibility plan to extend the Ok Tedi mine’s life to 2025. With continuation agreements being finalised with Western Province landowners this month, we spoke with OTML’s CEO Nigel Parker about the US$822 million extension project and likely changes to PNG’s mining laws.

Mining Minister Byron Chan speaks with Ok Tedi Mining’s Nigel Parker at the PNG Mining Conference

Business Advantage PNG (BAPNG): Can you talk a little bit about the opportunity presented by the mine extension, not just to OTML, but also to the community?

Nigel Parker (NP): It’s extraordinarily important to the communities because it gives the company a continued presence in Western Province to continue to deal with the environmental issues that we have and it also gives us time to work with the communities to actually get them to start to invest the benefits from the mine wisely.

The river vessels Fly WarriorFly Explorer and Fly Hope are good examples. We manage them, but they’re the community’s vessels and we charter them. We went into aircraft with the same concept: that Ok Tedi would charter aircraft off the communities, therefore displacing our use of commercial aircraft. The people can actually say they’re leveraging their association with OTML to a far, far greater extent by actually having physical assets.

BAPNG: OTML also has some significant assets of its own. What is the process of handing these over once the mine closes?

NP: That’s very much on our agenda: what we will leave for the natural owners. The hospital in Tabubil is a very clear example of that. We’ve made the first tentative move this year, bringing in Madang’s Divine Word University. They are the now managers of the hospital. As part of this programme, they are going to establish a teaching arm, whereby they will be teaching nurses, health education officers and village midwives. At the end of 2013, all being well, OTML will divest the assets of the hospital into the Ok Tedi Development Foundation, and it will become the owner of the hospital. There’s a whole range of assets that we have to transfer to the natural owners, such as power generation facilities, and we want to do that sooner rather than later.

BAPNG: Some of the changes to mining laws being proposed by new Mining Minister Byron Chan seem to feature community and environmental schemes you already have in place …

NP: Absolutely. The Government is very proactive in looking at this. Minister Chan mentioned a financial assurance fund—we have a US$230 million financial assurance fund that’s off balance sheet. This was set up at the time BHP exited the Ok Tedi mine. If one was to study it, you’d actually see at that time they put world leading concepts in place, which the then-Government embedded into the enabling legislation for Ok Tedi. Minister Chan is now looking to embed that learning into industry-wide mining legislation.

BAPNG: Are you comfortable with the process that’s been outlined to revise current mining laws?

NP: I’m very comfortable because the Government is looking at a very mature, balanced approach to some very complex issues. The mining industry shouldn’t be worried about the culture of Papua New Guinea. We have to learn how to work with them, understand them, and assist in the development of their economy. What I think the Government is doing is walking a line between a lot of cultural issues and I firmly believe we will get a very balanced outcome, particularly if we start looking at some of the learning from Ok Tedi in what Minister Chan has outlined: financial assurance funds, women and children’s funds, having environmental impact studies done well, and establishing mine closure funds.

Story continues after advertisment...