| Subject: Commodities boom eludes minerals-rich PNG |
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Date Posted: Thu, Dec 07 2006, 03:23:56pm
http://today.reuters.com/news/articleinvesting.aspx?view=CN&storyID=2006-12-06T070844Z_01_SYD291177_RTRIDST_0_PAPUA-NEW-GUINEA-MINERALS.XML&rpc=66&type=qcna
SYDNEY, Dec 6 (Reuters) - The economic good times sweeping across Australia, thanks to a boom in mineral prices, have barely touched its impoverished neighbour Papua New Guinea, despite abundant reserves of oil, copper, nickel and other industrial commodities.
"There are zillions of dollars in resources and it's like we are living in stone caves," said Loma Vanuabalavu, chairman of the Porgera Landowners Association in the gold-rich Highlands region.
Long gone are the hopeful claims around the capital Port Moresby that PNG was destined to become the "Middle East of Asia."
Seven years after the former prime minister, Mekere Morauta, was sworn in vowing to end corruption and promote foreign investment in the mining and oil sectors, few foreigners have showed up.
In fact, one of the biggest foreign miners active in the country, BHP Billiton Ltd./Plc. (BHP.AX: Quote, Profile , Research)(BLT.L: Quote, Profile , Research) has pulled out, donating its majority stake in a big copper mine in 2002 to local villagers rather than face further environmental lawsuits tied to pollution of once-pristine fishing waters.
A world-class copper mine run by another foreign miner, Rio Tinto Ltd./Plc. (RIO.AX: Quote, Profile , Research)(RIO.N: Quote, Profile , Research), was left rotting in the jungle on Bougainville island after secessionist rebels staged a bloody uprising more than two decades ago. Last year, Rio Tinto sold out of one of the country's largest gold mines, Lihir Gold Ltd. (LHG.AX: Quote, Profile , Research), perched on the tiny island of Lihir.
STARVING FOR MINERALS
As the world was starved of minerals to fuel industrial growth in Europe, the United States and China, PNG's mining activity contracted 4.5 percent last year, led by a drop in gold mining, which accounted for 21 percent of all exports, according to PNG's Chamber of Mines and Petroleum.
In Australia, export revenues from the sector leapt 18 percent, delivering record profits to miners of everything from zinc and uranium to iron ore and coal.
The biggest project on Papua New Guinea's horizon, a pipeline across the Coral Sea linking the main island's rich natural gas fields with eastern Australia, remains only a blueprint for ExxonMobil Corp. (XOM.N: Quote, Profile , Research).
ExxonMobil has put the $3.5 billion project "on hold" as it assesses the rationale of shipping gas to an already coal and gas-rich Australia, Peter Graham, ExxonMobil's project executive for the pipeline told an investment conference this week in Sydney aimed at drumming up interest in PNG's minerals sector.
"We are lifting up every rod to make the project work," said Graham.
The pipeline hit a roadblock earlier this year when Australia's AGL Energy Ltd. (AGK.AX: Quote, Profile , Research), the project's chief architect and main customer, said it might pull out.
"We have been counting on the pipeline to act as a catalyst for other projects," PNG's acting minister for petroleum and energy, William Duma, told the conference.
PNG missed the start of the latest commodities boom -- owing in part to political in-fighting and corruption -- but the current prime minister, Michael Somare, hopes tax and other reforms to the mining sector and robust demand for minerals will lead to billions of dollars in much-needed foreign cash.
But that opportunity may disappear soon.
Already, copper sells for 20 percent below its May record price of $8,800 a tonne. Gold costs about $100 less than its peak of $730 an ounce in May and oil and gas prices also have recoiled.
"If you go out 10 years, there is no shortage of gas in the world," Jack Hamilton, chief executive of PNG LNG Inc., told the conference.
A rising number of HIV-infected mine workers was a cause for concern, according to Keith Faulkner, managing director of the Ok Tedi copper and gold mine on the border with Indonesia's Irian Jaya Province.
"We in the mining sector must work together to fight this plague," he said.
AIDS experts estimate about 100,000 people are infected with HIV-AIDS out of the island's 5.4 million people -- most of whom live a rural subsistence life -- and the country is on the verge of an epidemic that could kill millions.
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