Saturday, March 16, 2013

‘PNG eyes new Ok Tedi player’

Source: The National, Friday, March 15, 2013

CONTROVERSIAL Australian journalist Rowan Callick, who has been accused by the anti-mining lobby of being pro-BHP Billiton and Ok Tedi Mining Ltd, yesterday suggested that the PNG government is trying to bring in a new operator for the Ok Tedi mine.
In an article in The Australian, titled ‘PNG learning not to count its chickens before they hatch’, Callick – whose interview with former OTML chairman Ross Garnaut led to Garnaut’s banning from PNG by government –  said this was evident in relations between the newly-elected Peter O’Neill government and OTML.
“Recently, we’ve seen the newly elected government ban Ross Garnaut from entering PNG, while he was the chairman of Ok Tedi, and effectively direct pressure on BHP Billiton, which had set up a trust to run the mine, to accede to the changing of the constitutional arrangements that hold substantial dividends back until the mine closes, and also constrain government access to the funds available now for local development,” he said.
“Finance Minister James Marape has this month sought to redirect some of those funds, which have recently been used to buy boats and aircraft for local use, to a new lobby group.
“Hundreds of millions of dollars are now coming into play in this dispute, as the government places pressure on Ok Tedi in one area after another, including the ultimate sanction of refusing to allow an extension of the mine after its approvals end this year.
“Then a new operator could be invited in. But from where?”
Callick said although copper was today’s most sought-after mineral, there was not a long list of aspirants.
“A Chinese buyer is probably most likely,” he said.
“But with Ramu Nickel, operated by Chinese government corporation MCC, enjoying a 10-year tax holiday, this will mark the starting point in any negotiation with Beijing.
“Just 100km from Ok Tedi lies another huge copper-gold resource – Frieda River.
“But unfortunately for PNG, this is mostly owned by Xstrata, which eventually completed just before Christmas, after some postponements, a feasibility study, but which is destined for imminent merger with Glencore.
“And Glencore will not want a bar of even such a vast, promising resource as Frieda.
“Its chief executive Ivan Glasenberg, who will head the merged entity, said last week: ‘We are afraid of greenfields,’ which are risky and have capital overruns, and have deals ‘which kill the NPV (net present value) on those projects’.
“Glasenberg is a trader not comfortable with waiting five years for a return.”

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