Monday, December 31, 2012

The changing face of Lae

There is little control of the current business boom in Lae, writes MALUM NALU

THE changes taking place now in Lae, Morobe province, are quite phenomenal, as I found out when I was back home from December 13-16 to attend the 2012 Ahi Festival.
Lae's new landmark taking shape along 2nd Street.-All pictures by MALUM NALU

Lae is slowly, but steadily, getting back its "garden city of Papua New Guinea" tag, its infamous potholes are disappearing, and business is booming.
Crime and social problems, however, infest this garden of good and evil.
Concrete roads of 7th Street.

The amount of money pouring into Lae as a direct result of major projects such as the PNG LNG project, Hidden Valley mine, Wafi-Golpu mine, Ramu Agri Industries, Lae Port Tidal Basin, new fish canneries at Malahang, and several others in Morobe, Madang and the five Highlands provinces means that the city is in for a bonanza.
The Lae Port is near saturation point, with major stevedoring company, Riback, now using the old Lae Airport as its container yard.
Riback Stevedores' container yard at the old airport.

New buildings are going up everywhere, the recently-concreted roads are chock-a-block with brand-new vehicles, and there is an air of optimism in just about everyone I talked to.
Lae Chamber of Commerce and Industry, however, believes that there is little control of the current business boom in Lae at the moment.
Chamber president Alan McLay said this when I asked him to comment on the boom in business in Lae brought about by all the economic developments.
Coronation Drive, Top Town.

"The so called 'business boom' in Lae is progressing at the moment to meet the demands," he said.
"The LNG project has certainly meant more transport and logistics type operations and we have seen major developments of these industries along the Nadzab corridor in recent years.
"The government's inability to provide adequate land for development in Lae has meant that companies have directly negotiated land with local communities and individuals in this area, to meet the demands.
Coronation Drive, Top Town.

"Our concern is that this recent development has proceeded unplanned, which brings forth a whole range of issues."
McLay said these issues included:
•All of this development has taken place beyond the current city boundaries, which means that it is under the jurisdiction of the rural local level governments (LLGs), which do not provide sanitation and garbage, and other services to businesses;
Riback Stevedores' container yard at the old airport.
Huon Road.

•The unplanned development means that there is no allocation of land for schools, recreation parks, etc; and
•There is no protection for the landowner for unscrupulous dealings, and con artists who will rob them and their families of their future inheritance.
"The LCCI believes that there must be an urban development plan for the Lae Urban area," he said.
The LCCI also expressed concern at the" near dictatorial control" of the Lae Roads development by contractors.
7th Street.

It also wants to see the Lae Urban Local Level Government (LULLG) honor its agreement to maintain roads in the city.
McLay said the control of roads by contractors was leading to a whole range of detrimental issues, including:
Potholes along Malaita Street.

•Unannounced and unnecessary lengthy closure of roads for reconstruction which has lead to congestion;
•Unnecessary cutting of trees for ease of construction which affects not only the beauty of the city but also relief from the hot sun;
•Pedestrian crossings in wrong and dangerous locations;
•Road marking in wrong and inappropriate paint which is difficult to see and quickly wears off; and
•Lack of erection of appropriate and easy-to-see street signs.
"The LCCI would like the LULLG to make an effort to honor its agreement to maintain the roads in the city, especially the industrial roads that were graciously rehabilitated by AusAID over a decade ago and the residential road," McLay said.
7th Street.

"It would be wonderful to have the old 'pothole gangs' back on the roads, attacking the potholes before they develop into major impediments to the traffic," he said.
"We note that the first recommendation of the report on the Lae City Roads Rehabilitation Project (LCRRP) was for the establishment of a provincial management unit (PMU).
Drive down the hill from Top Town.
7th Street.

"We would like to see the PMU established, which would consist of local stakeholders, to manage the Lae roads project, to give the roadworks that vital Local and professional input, that is sadly missing from the project at the moment. "
McLay said the chamber was pleased to see work recommencing on Lae roads after the projected was halted for investigation last year.
"We are pleased to see the work re-commencing on the Lae Roads under the Lae Roads Rehabilitation Project that was halted after the investigation last year," he said.
"We are happy to see a further K100 million allocated in the 2013 budget, which should see the completion of the major trunk roads in the city.
" The benefits of a good roads system to business is enormous : punctuality of staff and less dust related diseases  equals  less absenteeism; speedier vehicle movement  equals less delivery time; less vehicle maintenance and replacements; less crime due to slowed down vehicles, etc."
Crime and social problems, however, infest this garden of good and evil, and during my four days there, there was a series of armed hold-ups around town and a major ethnic conflict at the notorious Bumbu Settlement between Sepiks and Morobeans.
Bumbu River along Butibam Road.

The escalating law and order problem in Lae, especially ethnic clashes in urban settlements, irks McLay.
"The overflowing settlements and the resulting clashes is a major concern, which is taking so much time and effort by the under -strength and underequipped police, who have found they are left wanting when addressing the normal crimes in the city," he said.

"The squatter problem has been allowed to develop unchecked by the previous politicians and administration and now it has become a major issue.
"The police alone cannot handle this problem as they are not trained to handle social problems - the politicians and administration must find a way to relieve tensions in the settlements.
"The police must be equipped better to combat crime, which is having an enormous upsurge at the moment.
Coronation Drive, Top Town.

"We understand the Morobe Governor has promised a good relief package to the police.
"Now the police headquarters must look at increasing the numbers of police and build up their equipment.
"Good business relies on a low crime rate, which is currently at an unacceptable high."
McLay suggested:
•Morobe Governor Kelly Naru and Lae MP Loujaya Toni must look at political solutions to decrease the ethnic tensions and the crime and
•Local authorities must relax fees and license regulations, to make the process simple and effective, so that business can operate in a less-bureaucratic system.
We hope and pray for a prosperous and peaceful Lae in 2013 and beyond.
Coronation Drive.

Thursday, December 27, 2012

Frieda River partners to hold talks with PNG government


Partners in the multi-billion dollar Frieda River copper-gold project in East Sepik province will hold discussions with all parties, including the Papua New Guinea government, to determine the project’s development path and the desire of the PNG government to take up to a direct 30% equity stake in the project.”
Highlands Pacific managing director John Gooding said on Monday that subject to such discussions and future applications and approvals in 2013/2014, “we believe Frieda’s development could commence middecade with first production later this decade”.
John Gooding

“Frieda is a great project and vital to the future of a growing PNG economy, given Ok Tedi mine’s declining production and the delay anticipated with new emerging projects, like WafiGolpu that are unlikely to be into full production until later next decade,” he said.
“Frieda’s upfront capital spend is reflective of a greenfield start up and also of the major depreciation in value of the US dollar in the past 35 years which has seen new projects worldwide increase in US dollar cost terms.
“The estimated life of mine C1 (net direct cash cost cash) cost of US111 c/lb of copper is on a par with both current world production and also with new greenfield developments.
However, in Highland’s view this underplays Frieda’s low cost profile and cash flow in its important early years, particularly given the 356,000 tonnes of copper and 554,000 ounces of gold in the second full year of the proposed mine schedule.”
“The commodity price assumptions used by Highlands for the Frieda Project, of US$3.00/lb copper and US$1,500/oz gold, are comparable with the $3.10/lb copper and $1,250/oz gold used in the PreFeasibility Study for another great emerging PNG project WafiGolpu, which has an estimated payback period of 16 years compared with Frieda’s 4.8 years.”
Gooding said the  project would produce substantial cashflows at the forecast metal prices for almost 20 years on the current resource, with potential to increase the mine’s life further with additional resources both at depth and along strike given appropriate economic conditions at that time.”
“Highlands believes the investment case for Frieda is compelling, given that copper remains one of the few global commodities that almost all analysts agree is facing a long term and structural supply deficit and given the flight to gold in the past decade as a safe haven,” he said.
“Projects of Frieda’s scale and resource quality are rare due to its low strip ratio, clean concentrate produced and its multidecade open pit operation which lowers its risk profile.
“Rare also because it is in a jurisdiction with a stable foreign investment climate, clear rules of law and a new supportive and motivated national government that has the best interests for its people by pursuing a promining and investment strategy for the growth of the nation.”

Xstrata Copper delivers Frieda River feasibility study


Xstrata Copper has delivered a feasibility study together with the extended 2012 study for the Frieda copper gold project, Papua New Guinea’s largest undeveloped openpit coppergold project, joint venture partner Highlands Pacific announced on Christmas Eve.
The extended 2012 study outlines a project with an estimated initial capital requirement of US$5.6 billion, with a 20year open pit mine life capable of producing on average an estimated 304,000 tpa (tonnes per annum) of copper and 451,000 ozpa (ounces per annum) of gold in its first five years and with an estimated lifeofmine (LOM) average output of 204,000 tpa of copper and 305,000 ozpa of gold. 
3D block model showing Horse/Ivaal/Trukai pit shell from the feasibility study and significant drill intercepts from some of the adjacent copper gold targets

Potential exists to extend the mine life with deeper drilling.
“The estimated project capital expenditure reflects a number of changes since the prefeasibility study was released in November 2010, most notably the substitution of a proposed hydroelectric powersupply scheme with gasgenerated electricity sourced from PNG’s Stanley gas field 180km away,” Highlands Pacific announced.
“ The work done by Xstrata Copper and Highlands during 2012 also identified the potential for additional capital savings in relation to waste disposal which will require further work but could reduce the initial capital spend to an estimated US$5 billion.
“The information presented in this announcement is based on the documents that have been delivered to Highlands by Xstrata Copper.
“Xstrata Copper earned 72% in the Frieda Project in January 2012 and a further 9.82% was contingent on delivery of the feasibility study and the extended 2012 study.
“Highlands and its technical consultants, Behre Dolbear Australia, will now review the documents in more detail for the purposes of the relevant obligations of Xstrata Copper under the Frieda Project joint venture agreements which were varied in November 2011.”
 In Highlands’ view,  the steps to be undertaken to make a final investment decision (FID) for the project include:
           Further discussion between the Frieda River joint venture participants and the PNG government as to the government’s intentions to be involved in the project including any equity;
           Further work and finalisation of some aspects of the execution model;
           Renewal of exploration licences due in May and November 2013; and
           Further discussions with government and other stakeholders on the necessary environmental and regulatory approvals.
Highlands has been freecarried on Xstrata Copper’s US$300 million (approximately) investment in the project and continues to be carried in respect of costs incurred through an arrangement whereby Highlands’ share of expenditure from January 2012 to the lodgement of special mining licence (SML) application is to be repaid in the future from project cashflows when Frieda is in production.
Xstrata Copper has proposed a work programme and budget of US$20 million for 2013.

Agriculture and rural development Initiatives needed for PNG prosperity

PNG Country Party

The Country Party supports the ONeill government's focus on getting the basics right in terms of rural transport, communication and other economic and social infrastructure that will support agriculture and improve majority population livelihood to underpin sustainable development.
The party has two MPs and as a signatory to the Alotau Accord, the Country Party  has policies that will provide people with own food, affordable  locally-produced food, provide income and employment earning opportunities and mitigate poverty and  a positive plan to build a stronger society and  economy.
PNG is generally a primary producing country and prior to and after Independence until early 1990s,  relied on the agriculture, forestry, fisheries and livestock sectors to develop the country and prop up the economy.
We say 97% of land is customary owned and 80% of people rely on that land and agriculture. 
This is the  strength of our society and economy that  will provide for the people and reduce the high  cost of living pressures that face our working class people and our rural  families.
This  means we have to support agriculture and rural business and  the industries that build PNG to where it is today, which many of our political parties do not seem to care about.
Our people have been growing kaukau, tapioca, yam, taro, banana and introduced crops and tree crops like coffee, coconut, cocoa, tea , rubber without tax holidays, freight subsidy, import tax and other tax exemptions.
We should be supporting our farmers, small entrepreneurs, PMV and trade store owners  and our  manufacturing industries to provide incentives as well as to lower cost inputs that general public will benefit.
Our plan will cater for food security and the wealthy and healthy nation so much used in Vision 2050 and government policies without thinking about its meaning.
The Country Party believes that agriculture and rural industries are the heart and soul of the country and so we must always keep the heart beating.
Despite National Agriculture Development Programme (NADP) being an official document, this has not been assessed,  despite the wrong move to provide grants and unplanned inclusion of grants to all districts without measuring its input and impact.
This sector and its contribution to manufacturing will  create  more jobs and improvement in peoples lifestyle.It is feasible and  achievable.
Country Party believes that these are priorities PNG must invest in. 
The national budget and policy statements does not mention it but targets the associated and complementing issues of transport and communication infrastructure and small business and loans at NDB. 
Whether 50, 000 farmers can be granted loans of say K3, 000 in a year remains out of reach due to the stringent application and appraisal process.
We need to fix this issue.
While that is going on, the Department of Agriculture and Livestock (DAL) and commodity boards and agencies must not wait but develop programmes to connect to the governments initiatives to help the rural sector.
We need agriculture and simplified process and access to extension services, accessible and cheaper marketing outlets and markets to change lives of ordinary Papua New Guineans.