Photo: (L-R) President Anthony Smaré – PNG Chamber of Mines and Petroleum, Paul Hueper – Director of Energy and Mineral Programs for the Bureau of Energy Resources, US Department of State with his colleagues on the right, and MRA’s Managing Director Jerry Garry (centre) at the Prospectors & Developers Association of Canada (PDAC) in Toronto, Canada early in March 2023 promoting investments in PNG’s mineral sector.
Papua New Guinea (PNG) has been ranked as one of the least attractive jurisdictions globally for mining investment according to the Annual Survey of Mining Companies published recently by the Fraser Institute, an independent, non-partisan Canadian policy think-tank.
President of the PNG Chamber of Mines and Petroleum, Mr Anthony Smaré has called for urgent dialogue with National Government and all stakeholders to address this decline in PNG’s international standings. “The results of the Fraser Institute Global Survey shows how much PNG has fallen as an international destination for mining investment and needs to be urgently addressed if we are going to preserve this industry to benefit future generations beyond our current operating projects. If we want this industry to have a future, to continue to provide employment, business opportunities, royalties, dividends, taxes and other benefits for future generations, it is imperative that all stakeholders, led by the National Government, take note of these survey results, and engage in dialogue to urgently address the policy matters deterring investment in PNG, particularly regulatory uncertainty and aspects of our taxation incentives.”
The Fraser Institute’s global mining survey is the most comprehensive report on government policies that either attract or discourage mining investors. This year’s report ranks 62 jurisdictions around the world based on their geologic attractiveness (minerals and metals) and government policies that encourage or deter exploration and investment. PNG is ranked in the bottom seven countries in both Investment Attractiveness and Policy Perception.
In 2018, PNG ranked 41st out of 83 jurisdictions in the Investment Attractiveness Index and has now slipped to 54th out of 62 jurisdictions. PNG has slipped from ranking 61st out of 83 jurisdictions in the Policy Perception Index in 2018 to a new low of 57th out of 62 jurisdictions in 2022.
This decline in PNG’s standings is reflected in the significant drop off in exploration activity in PNG over the last 10 years. Records from the Mineral Resources Authority (MRA) indicate a steady decrease in the number of explorations licenses issued since 2012 from 177 Exploration Licenses (Els) granted and 379 applications awaiting processing to the June 2022 numbers of 158 granted and 112 applications.
The Global Survey assesses how mineral endowments and public policy factors such as taxation and regulatory uncertainty affect exploration investment. The survey was circulated electronically to approximately 1,966 individuals between August 23rd to December 30th, 2022. Survey responses have been tallied to rank provinces, states, and countries according to the extent that public policy factors encourage or discourage mining investment.
An overall Investment Attractiveness Index is constructed by combining the Best Practices Mineral Potential index, which rates regions based on their geologic attractiveness, and the Policy Perception Index, a composite index that measures the effects of government policy on attitudes toward exploration investment.
Neighbouring Australia continues to be the most attractive region in the world for mining investment. Western Australia (2nd), Northern Territory (6th) and South Australia (9th) appeared in the global top 10 on the Investment Attractiveness Index in this year’s survey. Zimbabwe ranks as the least attractive jurisdiction in the world for investment with PNG slightly higher.
The ranking is a result of the survey responses from participants comprising of managers, executives mainly company presidents around the world in companies involved in mining exploration, development, and other related activities. All these respondents indicated that PNG’s legal system, infrastructure, political stability, and quality of the geological database are the main policy factors deterring investment.
Alarmingly, the report is an indication of how low PNG ranks globally, in terms of investability in the mining sector as the survey was designed to identify countries that have the most attractive policies for encouraging investment in mining exploration. And countries that investors assess as relatively unattractive may therefore be prompted to consider reforms that would improve their ranking. The Global Survey can be found here https://www.fraserinstitute.org/studies/annual-survey-of-mining-companies-2022
