Newcrest pleased with outcomes
As the operator of one of the biggest mines in the country, Newcrest continues to pride itself with the investment it continues to make in the country. The National’s Business Editor SHIRLEY MAULUDU discussed with Newcrest Country Manager PNG Stanley Komunt the company’s operation this year, its view of the economy and its plans.
Q: Generally, how has Newcrest been doing during this year in terms of its operations in the country?
KOMUNT: This year has been one of growth and improvement on many levels at Newcrest, as our employees have built upon the solid foundations for transformation laid in previous years. Newcrest’s strategy maintains focus on our long-term commitment to the safety, health and wellbeing of our people.
Newcrest’s safety transformation plan has now been in place for almost four years, encouraging all our people to take ownership of their own safety and that of their workmates.
Since the inception of the plan there has been zero fatalities or life-changing injuries which reflects the focus Newcrest has on everybody going home safe and healthy every day.
Recently, Newcrest announced a management restructure with Craig Jones taking on the role of Chief Operations Officer (PNG), which reflects the importance Newcrest places on its operations in PNG.
Newcrest is pleased with the contribution it has made to the economic input and social development of PNG in 2019. Operations on Lihir employ 5,000 employees with approximately 90 per cent of the workforce being Papua New Guineans.
Those Papua New Guinean employees come from every province in the country, which means that the economic benefits of their employment flow to all corners of PNG. Those benefits amounted to K228 million in salaries and wages taken home by our Papua New Guinean employees during this financial year.
In addition, Newcrest supported PNG contracts and local suppliers in the amount of K632 million. During this financial year, Lihir invested in community infrastructure and services, including roads and bridges, airports education and health infrastructure. The Lihir team, working with the local government wards, invested in village development schemes, providing housing, power, water supply and sewage systems.
This year, a total of 158 houses were completed. On a national level, Newcrest continued to support a range of programmes that supported the Government’s national development aspirations. These programmes are in the areas of health, education, protection and empowerment of women and development opportunities for youths. A highlight for the year was Newcrest’s Naming Rights sponsorship of the historic wins by the Kumuls and Orchids against the GBRFL Lions and English Women’s Rugby League team in Port Moresby on Nov 16.
Q: With Lihir mine being Newcrest’s largest operation in PNG, generally, how has the production been like this year compared to last year or previous years?
Lihir achieved the target of an annualised 15mtpa (metric tonnes per annum) sustainable mill throughput rate in the June 2019 quarter. Having achieved this target, Lihir is looking to stabilise throughput at or slightly above these levels and increase focus on lifting recovery rates to maximise overall gold production in the future. Gold production was slightly down on the previous year by 2 per cent at 932,784 ounces.
Q: With Newcrest owning 50 per cent of Wafi-Golpu operation in Morobe, what is the status of Wafi-Golpu?
Recent developments have resulted in a delay to permitting of the Wafi-Golpu project. These developments include a period of internal political contest, as well as the delay associated with legal proceedings between the Government and the Morobe government regarding the internal distribution of PNG’s economic interests in the project.
These developments have compelled the Wafi-Golpu Joint Venture (WGJV) to defer and revise the work programme it had planned to commence in the 2020 financial year. General operation of the site, community programmes, environmental monitoring and engineering activity all continue, although at a reduced scale. The project team in Brisbane has been redeployed and reduced in order to mitigate the costs of the delay. The PNG Government continues to signal its support for the project and the WGJV is well placed to resume discussions with the PNG Government given the constructive progress already made on the various agreements required for completion of the permitting process and the grant of a special mining lease.
Q: Apart from Lihir and Wafi-Golpu, are there any other potential areas in the country that Newcrest is planning to explore or venture into?
Newcrest is currently focused on operations at Lihir and the development of the Wafi-Golpu Project, which will represent the next generation of mining in PNG.
Q: Generally, from Newcrest’s perspective, how has the mining sector in the country been doing in the past few years?
The mining sector makes a significant contribution to both direct and indirect state revenues in PNG which benefit all Papua New Guineans. The sector directly employs over 20,000 Papua New Guineans and many more are employed in sectors dependent on resources, including landowner businesses. Resource development brings with it key infrastructure and contributes to a wide range of community development programmes in host communities and provinces. This includes health, education and agriculture infrastructure as well as numerous health care and medical outreach programmes, scholarships and student support, agriculture outreach, and law and justice programmes.
The industry has been a key partner of the government in ensuring basic services like health and education reach the rural communities in project impact areas. A material reduction in the level of investment in the minerals sector has a flow-on effect to other sectors and industries including agriculture, construction, transportation, infrastructure (including power, water, and roads) retail, and professional and technical services as well as local employment. Therefore, it is vital the industry and government work together to achieve the desired outcomes on future growth in the mining sector.
Q: What is Newcrest’s thoughts on the revised Mining Act?
As a mining company that operates in many jurisdictions around the world, Newcrest believes that world class mining policy and legislation are essential to encourage foreign investment. A sound legislative framework offers not only a fair distribution of returns between the developer and the state, it ensures security of tenure to its investors and stability of investment terms. The Mining Act 1992 has provided a strong foundation and is still recognised as a generally robust and workable legislative framework. Newcrest respects the PNG Government’s desire to modernise legislation and would welcome the opportunity to engage with the Government in refining the proposed Mining Act to achieve outcomes that meet the needs of PNG whilst continuing to encourage investment in the sector.
Q: Is the foreign exchange supply an issue for the company during this year?
Newcrest is one of the largest suppliers of foreign exchange to PNG, contributing US$361.5 million to the national account through acquisition of K1.22 billion of currency during this financial year.
Q: What is Newcrest’s general view of the country’s economy this year?
Newcrest understands that the PNG economy is in a challenging period, with the Supplementary Budget released last month outlining further budget cuts to key sectors which will be a painful period for all Papua New Guineans. The outlook, however, is positive with PNG set to have a strong and prosperous future with key resource projects set to begin construction phase in 2020.
Q: What is the company’s outlook for 2020?
Newcrest’s aspirations for 2020 are to strengthen our commitment to building sustainable futures for the communities in which we operate. Newcrest continues to enable our local communities on Lihir and surrounding areas to meet their own long term aspirations and needs, working collaboratively to achieve those visions for post mine closure. From an operational point of view, gold production for the 2020 financial year is expected to be largely in line with that achieved this year. Newcrest continues to strive to be the Miner of Choice for our people, shareholders and host communities, partners and suppliers in 2020.