Mining’s contribution to PNG's economy set to improve this year

RamuNico Kurumbukari Mine 

PAPUA New Guinea’s mining and petroleum companies continue to underpin the diversity of the country’s growing economy despite tough market conditions in all resource sectors, according to the PNG Chamber of Mines and Petroleum.

Executive director Greg Anderson said the environment was tough for companies producing crude oil and natural gas, however the PNG LNG project was doing relatively well because of its low cost structure.

He said project’s big success last year was in lifting production to an average of 7.4 million tonnes a year, 7 per cent above nameplate capacity of 6.9 million tonne per year.

“The National Government’s 2016 budget forecast that direct corporate tax from the entire resources sector would total K260 million this year compared with K1.9 billion in 2011,” Anderson said.

“This does not take into account business and taxes generated through the many providers of goods and services to the resources sector.

“Oil and gas majors are making significant cuts to operating, capital and exploration expenses and much of the activity of the junior explorers has come to a standstill.

“Nevertheless, National Government statistics point to the continuing importance of mining and oil and gas companies to the overall economy.”

He said gold, once Papua New Guinea’s top export, had been overtaken by LNG exports, since the September quarter of 2014.

“According the Papua New Guinea Treasury Department, LNG exports were valued at K6.3 billion (gold – K5.46 billion) with associated condensate sales worth K1.38 billion in PNG.

“As a result, total PNG exports soared from K13.3 billion in 2013 to K21.6 billion in 2014.

“According to data from the Bank of Papua New Guinea, LNG exports by the September quarter last year were already valued at K7.59 billion with condensate sales worth an additional K1.16 billion, taking total PNG exports to K17.5 billion.”

Anderson added that the mining sector’s contribution to the economy was expected to improve this year with recommencement of Ok Tedi mine, better gold production at both Porgera and Lihir and name-plate production at Ramu nickel-cobalt project.

He said the resource or the commodity prices of the most the resources sector were focused to start picking up prices this year.

“That would be a great result for the government and the economy to diverse investment from the resources to other sector to benefit on the long run,” he said.

“That is a relief and good news for Papua New Guinea’s economy that is dependant on the resource sector in making its national budgets and investing in major infrastructures that would lift the nation.”
Read more on >> Pacific Mining Watch
The National / PNG Today