• PNG Business News

Chamber of mines ready to work with government to address proposed changes to the mining act

Senior Vice President of the PNG Chamber of Mines and Petroleum Mr Anthony Smare has urged stakeholder including government on the need to understand well the implications of proposed changes to the Mining Act.

Mr Smare made the remarks during a media briefing earlier this month at the Hilton Hotel in Port Moresby.

Present during the briefing was vice president Richard Kassman, President Professor Albert Mellam and chambers Tax Counsel Andrew Harris, who spoke on the implications proposed changes to the Act would have on the sector and PNG’s investment attractiveness.

According to Mr Smare, the mining (and petroleum) sector is in a large way responsible for where PNG is now, in terms of development and progress as a nation.

“The challenge is to protect the resource sector so that it can continue to play a significant role for the next 50+ years, into the future.

“We must understand well the implications o the changes we propose to it will not hurt us later,” Smare said.

He said changes in 2002 made the sector more attractive for investors. These included changes to the mining act, additional profit tax and setting up of national regulator Mineral Resources Authority (MRA), which was a big step forward in attracting foreign investment.

It was during this period that the majors left and Barrick Gold bought off Placer Dome that saw other players start come into PNG.

From an average of K30-40 million in the sector, this increased to K600 million.

Investment in the mining sector has dropped to K400 million and last year reached a low of K300 million.

“The industry has a very long lead time in terms of exploration, there is a lot of work to build prospects,” Smare said.

Citing examples, he said, Wafi had its first discovery 40 years ago while Porgera had its first gold prospect in 1936, so exploration has a very long lead time.

“The industry does not oppose changes but any change must be fact-based on open communication, collaboration and must be modelled.

Also commenting Kassman said ‘we need a holistic approach to any changes to legislation that will impact the industry and investor confidence’.

“There are big issues like landowner identification and social mapping that needs tremendous discussion. We need to have these hard discussions,” he said.

He said these discussions must include how money is dispersed, address bottlenecks in systems and processes, we must include discussions with provincial governments.

“When we discuss the hard issues then we can look at the more technical aspects of mining.

“We are yet to have these discussions and we encourage the government and people to have these discussions,” he said.

Speaking on the Extractive Industries Transparency Initiative (EITI), Kassman said as industry we must declare all payments we make, then State will confirm before making a report of audited statements. We are currently working on the EITI 2018 report to be published Q4 2019.

“We must review what is working in other countries and develop something that will work for PNG,” he said.

“We must do this in a staged process, in collaboration so people and stakeholders including investors and developers, provincial governments and others have fact based information.

Mr Smare said the industry wants to ‘open the door’ to regular dialogue and meaningful discussions with the PNG Government, as we are deeply concerned about several of the proposed changes to the Mining Act.

The chamber is of the view that the proposed changes are internationally uncompetitive, are a serious deterrent to investment in future mining projects in PNG and will threaten the existing operations of current mines in the country.

The most significant issues in the current draft Mining Act are:

1. Increased tenure of risk for mining companies

2. Inadequate transitional arrangement to protect existing operations

3. Increased costs to business which will impact on investor confidence

In a statement, the chamber said the changes to the Mining Act undermine the message to investors that PNG offers a stable, predictable and consistent regulatory and investment framework.

It said the industry has maintained these concerns throughout the consultations process and have suggested that the Government undertake its own independent comprehensive modelling of the risks and financial implications of the changes being proposed, in the context of the broader fiscal regime.

The industry, it said is ready to participate constructively in the review of the Mining Act promised by Government in its 100 day plan and looks forward to opening the door to do so.

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