CABINET has approved the arrangement for the state to take up equity in the Solwara1 project that it hopes will be the first in the world to lead to mining of the seafloor, The National reports. The project, by Canadian developer Nautilus Minerals, involves mining for gold and copper found in high concentrations in massive sulphide deposits over a 59km2 section of the Bismarck Sea, at depths of about 1,600m, 50km north of Rabaul.
Prime Minister Sir Michael Somare’s announcement yesterday of the cabinet approval followed an earlier announcement last month by Mining Minister John Pundari that the government would take its full 30% stake in the venture – more than US$100 million.
Sir Michael said in a statement that Solwara1 was among the priority projects to create jobs, increase revenue earnings and boost foreign exchange.
“The project will be mining very rich seafloor massive sulphide (SMS) deposits and will generate over US$140 million directly into the economy.
“The approval of the arrangement has preserved the right of the state to acquire up to 30% equity in the whole value chain of the project,” he said.
“Being the first offshore mining project to be granted to mine massive sulphide systems on the sea floor, the government had ensured that the people of Papua New Guinea benefit through the state’s participation in the whole value chain of this milestone mining project.”
He said the state’s right for equal participation would be exercised through its nominee Petromin PNG Holdings Ltd .
This was consistent with current policy and law that Petromin was the state nominee for designated mining and petroleum projects.
Sir Michael also said Solwara1 was a first of its kind, involving an equity position by the government.
“This is the first time that the government has taken an equity position in a medium scale mining project that will be developed under a mining lease,” he said.
“This now sets a policy precedent that the state will take equity participation in future mineral projects that are to be developed both under special mining lease and mining lease, for both onshore and
offshore mining developments.”
Nautilus Minerals capital investment in the project would be about US$387 million over the lifetime of the mine.
Early this year, the government granted a 20-year mine lease for the project as well as set certain conditions in the mining lease to guide and control development.
“I must commend Pundari, for successfully securing the project development as well as ensuring the state’s equity participation in this project,” Sir Michael said