27/02/2008 - 22:00

Miners target PNG riches

27/02/2008 - 22:00

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While many outsiders perceive Papua New Guinea as politically and socially unstable, the country continues to attract interest from mining companies keen to develop major resource projects.

Miners target PNG riches

While many outsiders perceive Papua New Guinea as politically and socially unstable, the country continues to attract interest from mining companies keen to develop major resource projects.

Among these are Perth companies Frontier Resources and Marengo Mining, which say building strong relationships is the key to success in PNG.

They are hoping to join mining companies that operate successfully in PNG, including Brisbane-based Lihir Gold, which employs 3,400 staff and contractors at its gold mine on Lihir Island.

Lihir’s success is starting to counter memories of project difficulties in PNG.

BHP Billiton famously withdrew from PNG in 2002 following community concern over the environmental impact of its giant Ok Tedi copper mine, while CRA (now Rio Tinto) had to close its giant Bouganville copper mine in 1990 following separatist violence.

Frontier is focused on developing the Kodu copper-gold deposit, which has attracted controversy recently because of its proximity to the Kokoda Trail.

The PNG government has delayed the renewal of Frontier’s exploration licence, even though the company believes it has strong support from local landowners.

Managing director Peter McNeil said it was important the local people understood the company’s approach, objectives and desired outcomes.

“The most important thing to do is to develop a relationship of trust with them and, after that, your life is generally much simpler,” he said.

Mr McNeil believes PNG is generally pro-mining but acknowledges that working there has its challenges.

“Because a very high percentage of land in Papua New Guinea is owned by customary clan-based groups, you have to be careful because no matter where you go, you are dealing with someone’s private property,” he said.

“Before you can go and commence work you have to find out who owns it and that can be difficult sometimes because there is no land register to look up and landowners may live several to many kilometres away from where you actually want to go.”

Since 2002, the PNG government has introduced a new environment act and tightened environmental regulations.

Marengo Mining, which is looking to develop the Yandera copper-molybdenum project at an estimated cost of $1 billion, first went into PNG three years ago and spent time building relationships with industry and government. 

Managing director Les Emery said the company had taken a long-term view with a focus on shared relationships.

“People need to see you there and become a part of the community,” he said.

According to Mr Emery, bigger companies make the mistake of going in with the wrong approach.

“Every company has a culture and our culture at Marengo is a get on with everyone approach,” he said. 

“We are not confrontational and big headed and that works well in a place like Papua New Guinea.”

Mr Emery said the company had become entrenched in the culture and planned to stay.

“We have a national PNG flag in our office and we have no plans to go to any other country because we are happy with PNG,” he told WA Business News.

Although the country has massive unemployment and high rates of crime, Mr Emery said the negative perception of the country and the reality were different.

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