Govt looks at Xstrata project takeover
MINING Minister Byron Chan has told parliament "the government is looking at taking over" the $5.6 billion (K11 billion) Frieda River copper-gold project, which is 81.82 per cent owned by GlencoreXstrata.
Mr Chan -- the son of former prime minister Sir Julius, who is also a parliamentarian -- said the mine "is on the market", and that the government had the "expertise, knowledge and experience with finance and partners" to develop it.
The project, in a remote area between the East and West Sepik provinces, is forecast to produce 204,000 tonnes of copper and 305,000 ounces of gold a year over an initial 20-year mine life -- making it one of the largest such deposits in the Asia-Pacific region.
The core feasibility study was finished late last year, but further research is required before construction and production plans can be completed.
"The project has not been prioritised by the company because of current developments in the world market," Mr Chan said.
Glencore's chief executive, Ivan Glasenberg, said this year that the company was "afraid of greenfields" that were risky and had capital overruns.
The PNG government has a legislated right to buy a stake of up to 30 per cent in all mines and has moved recently towards effective control of the large copper-gold mine at Ok Tedi, about 100km from Frieda, which employs a seasoned management team and workforce.
A Glencore spokeswoman said yesterday: "We are assessing the interest of other investors in the Frieda River project, but there has been no decision at this stage to divest any part."
John Gooding, managing director of Highlands Pacific, which owns the other 18.18 per cent of Frieda, with a pre-emptive clause, told The Australian yesterday: "This is a really proactive government in PNG that has been getting fairly frustrated with the delay in this project, about which we've been pretty disappointed as well.
"We see the government's interest as a positive. We believe in the project, and we work well with the government."
While PNG's economic growth spurt is being driven chiefly by ExxonMobil's construction of the country's first liquefied natural gas plant, its longer-term sustainability as a global resource centre hinges heavily on the development of the next generation of mines.
The delays at Frieda have compounded concerns already triggered by the troubles of Newcrest, half of whose assets lie in PNG. Mr O'Neill said recently: "When a company as big as Newcrest faces serious problems, we have to be concerned at the possible impact on our resource sector and our economy generally."
Source: The Australian