PNG employers expect bigger profits in 2012

Papua New Guinea's major employers are bullish about the year ahead, with almost 90% expecting higher profits in 2012, according to a major new business survey, The National reports.

 The PNG 100 CEO Survey, conducted by Business Advantage International and published in the new edition of Business Advantage Papua New Guinea, asked the CEOs of PNG’s major companies across all sectors of the economy to answer questions about their profits, future investment and employment plans, and the key issues facing their businesses.

 Its findings show the country’s major employers are bullish about the year ahead, with almost 90% of respondents expecting 2012 profits to exceed those of 2011.

Remarkably, none of those surveyed expected a decline.

This statistic is all the more impressive when the companies’ 2011 performances are taken into account: two-thirds of respondents said their 2011 profits had exceeded expectations.

 There is evidence from the survey that these stronger-than-expected profits are being ploughed back into business: 57% of respondents indicated that their own investment in new plant, equipment and other assets would increase in 2012, with a further 25% saying investment would at least match 2011 levels.

 There is also good news on the employment front, which is especially welcome given PNG’s low levels of formal employment.

Just over 50% of responding CEOs said they were expecting to increase their headcount during 2012, with a further 40% saying their staff numbers would remain steady.

 While the survey reveals a positive picture of corporate growth, there are undoubtedly some major issues facing PNG’s corporates.

The survey asked PNG’s top CEOs to rank various business issues on a scale from 1 to 5, where 1 meant the issue was not relevant to their business and 5 meant it was mission critical.

 The four most critical issues were, in order:

•    PNG’s skills shortage; 
•  Security/law and order problems;
•   Getting access to necessary expertise; and 
•  The lack of reliability of PNG’s state-owned utilities

“Overall, the business issues uncovered by the PNG 100 CEO Survey are not a big surprise to those familiar with PNG’s business environment,' said Andrew Wilkins, publishing director of the Business Advantage International.

“What may surprise many, particularly those overseas, is that PNG’s top corporates are flying high in the face of such challenges.”

The full PNG 100 CEO Survey is reproduced in the new edition of Business Advantage Papua New Guinea, PNG's annual business and investment guide.

Mining and petroleum paid K12.7 billion to government

By MALUM NALU

The mining and petroleum industry paid K12.7 billion to the national government between 2005-2010, according to the PNG Chamber of Mines and Petroleum, The National reports.

Chamber executive officer Greg Anderson said this when reiterating its view on the Current Mining Act and the Proposed Mining (Amendment) Bill, which seeks to transfer mineral and petroleum ownership from the state to the landholders.

According to the current Mining Act, and Oil and Gas Act, all minerals, oil and gas existing on, in or below the surface of any land in PNG are the property of the state.

The chamber is concerned that transfer of mineral and petroleum ownership from state to landholders would be to the detriment of all concerned, including tangible benefits such as money.

“The mining and petroleum industry paid K9.7 billion in corporate tax, over K1.2 billion in dividends, K1.3 billion in royalties and over K0.54 billion in dividend withholding taxes to the national government from 2005 – 2010,” Anderson told a mining and petroleum workshop for PNG media last Friday.

“This totals K12.7 billion, an average of more than K2.1 billion a year.

“In addition, the industry contributes significant amounts in salary and wages tax, duties and levies, and the tax credit scheme, as well as dividends to some host provincial governments and landowners.”

Anderson said PNG’s mining and petroleum industry was the backbone of the economy and contributed over one-third of government tax revenue.

“It provides about 80% of the total national export income and 24% of the gross domestic product (GDP),” he said.

“Formal employment in the resource sector has increased to well over 30,000.”

Anderson said  benefits provided by the resource projects were diverse and substantial and included: taxes (company tax, royalty, dividend withholding tax, salary and wages tax, duties, production levy), dividends (equity), tax credit scheme projects, special support grants and development levies, employment, education and training, public health programmes, business and agricultural development, and community infrastructure

Trucks owned by IPI Group of Companies, a landowner company success story from Enga province, which benefits from Porgera gold mine

“Papua New Guinea has one of the most-equitable benefit sharing systems in the world for mining and petroleum developments,” he said.

“It includes the national government, affected provincial and local level governments, and the impacted communities.”

Nautilus finds Chinese buyer for minerals

By MALUM NALU

Nautilus Nautilus Minerals, which is set to start revolutionary underwater mining at Solwara 1 in the Bismark Sea between East New Britain and New Ireland provinces in 2013, has already secured a Chinese buyer for its first three years of operation, The National reports.

This was confirmed by Nautilus country manager Mel Togolo at a mining and petroleum workshop for PNG media at the Gateway Hotel in Port Moresby last Friday.

He said indicated resource was one metric tonne at 7.2% copper and 5 grammes/tonne gold while inferred resource was 1.5 metric tonnes at 8.1% copper and 6.4 g/t gold.

The material will be treated by conventional grinding and flotation and will produce a copper concentrate of 25-30% with recoveries of between 85-90%.

Fifty per cent of the gold will be recovered in the copper concentrate.

Nautlilus deep-sea production scheme

“We have recently signed a landmark offtake agreement with Tongling Nonferrous Metals Group Co for a period of three years commencing upon the first delivery of product from Solwara 1,” he said.

“So in the first phase there will be no treatment at site, no tailings and minimal shore based infrastructure required.

“We currently estimate the operating cost to bring material from the seafloor and get it to shore will be approximately US$80/tonne, and then on top of that there will be shipping and processing costs.

“We have not produced a feasibility full feasibility study outlining the project economics, but our competitors are producing copper at a cost of around $1 per pound and we would expect to be very competitive.”

Togolo said based on current metal prices, a tonne of Nautilus material currently was worth about US$, 1,000.

“We expect to produce around 1.3 million tonnes per year, leading to production of 80,000 tonnes of copper and 150,000 ounces of gold a year.

“So there will be a healthy margin, giving us a payback of about a year to 18 months.

“The capital cost of the seafloor production system will be $407 million, including a $50 million contingency.

“The government will contribute 30% of that.”

Togolo said in phase two of the project, Nautilus could then look at potentially constructing its own concentrator facility to enable it to capture more of the value from the project.

Nautilus now controls an area in PNG, Vanuatu, Fiji, Tonga, New Zealand and the Solomon Islands of over 600,000 square kilometres, about the size of France, “which makes Nautilus one of the largest landowners in the world”.

“Our exploration success to date has identified 19 prospects in the Bismarck Sea and a further 16 prospects in Tonga,” Togolo said

“Already in 2012 Nautilus has been out on the water in the Bismarck conducting further exploration activities over our tenements in the Bismarck with a drilling campaign scheduled for later in 2012.”

Parliament sitting set for 2pm

Special Parliament sitting set for 2pm today.
Somare camp says O'Neill/Namah faction does not have the right to recall parliament.

PNG court undercuts prime minister's power

From AAP

PAPUA New Guinea's Supreme Court has again ordered the return of Sir Michael Somare to the prime ministership.

The country's parliament has been recalled for a special sitting today in response to the controversial ruling yesterday, which came as candidates began campaigning in earnest for the June national elections.

Two of the five judges abstained from making a ruling, with Justice Bernard Sakora saying that to participate would contradict his oath as a judge.

Three judges - chief justice Sir Salamo Injia, Les Gavara-Nanu and Nicholas Kerriwom - ruled yesterday that Sir Michael remained an MP despite being dumped last year and that Prime Minister Peter O'Neill's ascension to the top job remained unconstitutional.

Sir Salamo said the decision was legally binding and should be obeyed by public servants, government agencies and the Speaker of parliament.

Mr O'Neill, who yesterday was in his Southern Highlands electorate of Ialibu-Pangia for his nomination as a candidate in the upcoming poll, said the decision by the three judges smacked of "judicial corruption" and was an attempt to disrupt the election.

A spokesman for Mr O'Neill said parliament had been recalled for 10am today, a week after it was dissolved for the June 23 poll.

Mr O'Neill also called on Mr Somare's parliamentary supporters - many of whom have boycotted parliament since the August 2 vote to dump the Somare government - to attend the session.

Mr O'Neill is reported to have said the election would go ahead as scheduled and that parliament is convening to officially disregard the Supreme Court ruling.

The government has been trying to remove chief Justice Sir Salamo Injia since November.

Police arrested him earlier this year, alleging he had misappropriated funds belonging to the family of a dead judge.

The court dismissed the case, calling the police investigation an abuse of process.

In court yesterday deputy chief Justice Gibbs Salika abstained from reading his decision, saying his "conscience dictated" he could not be part of it. Justice Bernard Sakora used tougher language, saying to participate would be to "disregard (my) judicial oath, legal ethics and the laws of the constitution".

AAP understands government lawyers applied to delay yesterday's decision after The Sunday Chronicle newspaper printed emails allegedly sent between Sir Salamo and Justice Nicholas Kerriwom in February, in which Justice Kerriwom called the government illegal.

In March parliament voted to give itself the power to effectively suspend judges, a move that has been condemned internationally.

When the same bench ruled 3 to 2 on December 12 to reinstate Mr Somare, it briefly left the nation with two prime ministers, two cabinets and two governors-general.

After the majority of parliament refused to accept the court's decision, Sir Michael's cabinet instigated a military mutiny, which ultimately failed.

Comment is being sought from the Somare camp.

In Port Moresby today: Monday, May 21, 2012

The god, the bad and the ugly of Port Moresby as seen through my camera lens today.
May they inspire you towards create a better Port Moresby and Papua New Guinea for us all!

Miracles still happen! The usually filthy front of BSP Waigani, painted red by buai pekpek, was unusually clean today. Way to go guys and gals!

Clean, for the first time in many moons, is the front of BSP Waigani!

Still signs of thrash along Waigani Drive!

Add caption

Breaking news: Somare reinstated as prime minister

Sir Michael Somare was reinstated as prime minister by Supreme Court tonight.

Three judges voted for and two declined to vote. 

The two judges said they did not vote because the judiciary had been compromised.

O'Neill held a press conference tonight. 

"Judges Gibbs Salika and Bernard Sakora accused Chief Justice Salamo Injia and Nicholas Kirriwom of lacking integrity and disqualified themselves from today's referral decision to determine legitimacy of O'Neil-Namah governmentt," reports Susuve Laumaea.

"Government has called emergency Parliament session tomorrow to deal with what is now widely seen as tainted and corrupt."

 A majority opinion of three Supreme Court judges - Chief Justice Sir Salamo Injia, and Justices Sao Gabi and Nicholas Kirriwom – was that the election of O’Neill as Prime Minister was illegal.

Deputy Chief Justice Gibbs Salika and Justice Bernard Sakora declined to publish their opinions.

The majority ruling was that: “The re-election of Peter O’Neill was made in breach of the binding opinion and declarations and orders made by this court on 12 December 2012.

“Parliament should have exercised patience and await the judgment of the court, and complied with the binding opinion and declarations and orders by allowing Sir Michael to resume his seat in parliament before a motion, if any, is entertained by the speaker to remove him as prime minister in accordance with the constitution.”

The court also interpreted that the Prime Minister and National Executive Council (Amendment) Act passed to set a minimum age limit at 72 being unconstitutional as it stopped a person’s “right to stand for elective public office".