OK Tedi posts net profit of K1.24 billion

Ok Tedi remains PNG’s biggest tax payer despite 40% plunge in net profit

By BRIAN GOMEZ in Sydney

Ok Tedi Mining Ltd has announced after tax profit of K1.24 billion, down 40% from K2.03 billion in 2010, on sales revenue totaling K4.5 billion, down from K5.09 billion in 2010, The National reports.

The company, which is now fully PNG-owned following the buyout of the 18% stake held by Canada’s Inmet, also maintained its status as PNG’s biggest corporate tax payer.

Corporate tax last year amounted to K604 million, down 30% from the K840 million the company paid into government coffers in 2010.

The comparable corporate tax figure for the country’s second biggest corporate tax payer, Oil Search Ltd, was K509 million, up from K196.6 million in 2010.

Other payments made by Ok Tedi show the incredible depth of the contribution the company is making to PNG even though its operations is scheduled to be shut down by early 2014 in the absence of a government agreement to allow its operations to continue.

After paying off K881 million to purchase the remaining foreign equity in the venture, Ok Tedi paid out dividends totaling K774 million to PNG Sustainable Development Corporation and to the national government.

Additionally mining royalties, which fell by 8%, amounted to K42.9 million paid to the Fly River provincial government and a similar sum paid out to mine area landowners.

Other payments for compensation and benefits amounted to K70 million.

OTML reported that total taxes paid to the national government, inclusive of pay-as-you-earn deductions from employees and the mining levy, amounted to K1.2 billion.

It also noted that purchases of goods and services from PNG suppliers were valued at K988 million last year.

The annual results statement from OTML did not make any reference to badly-stalled negotiations with the national government on the possibility of mining operations continuing until the end of the decade in the light of ongoing feasibility studies.

However, it said copper and gold production had fallen by 18% and 14% respectively to 130,456 tonnes of copper and 417,236 ounces of gold after a month-long shutdown caused by the rupture of the pyrite concentrate pipeline in May.

Copper concentrate shipments fell by 10% due to lower head grades, suspension of production and a force majeure declared by Japanese smelters in the wake of the tsunami that hit that country.

OTML realised an average copper price last year of US$3.73 per pound, slightly higher than the US$3.68 per pound received in 2010.

“Net cash generated, before dividends and share buyback, was down by 33% compared to the previous year, mainly due to lower shipments and foreign exchange impacts of a stronger PNG kina against the US dollar,” it said.