Mining Minister on the Sector’s Updates and Outlook

Hon. Muguwa Dilu, MP, Minister for Mining, has given an update on the PNG's mining sector. On his recent public statement, he highlighted the priority sectors of the government. The minister stated that he is committed in supporting policy initiatives that benefit the interest of all parties involved.

"The extractive industry has always accounted for more than 80% of the total export revenue of PNG. It plays a significant role in supporting skills development, wage income tax, employment opportunities, and community project developments."

He mentioned that according to the 2019 PNG Extractive Industry Transparency Initiative (EITI) Report, there was a total of PGK 32 billion in contributions from the extractive industries that year. However, only 18.5% (PGK 6.14 billion kina) of that sum was received by PNG entities. Out of which, only 3.7% (PGK 1.2 billion kina) went to the National Government.

"In that year, mining alone contributed about 44% (PGK15 billion) of the total export revenues and the extractive industries collectively contributed 86% of the export volume out of the country. However, only 7% of that went to government revenue."

"This is a significant concern in line with the theme 'TAKE BACK PNG'. Are we being responsible to the people of Papua New Guinea in comparison to other jurisdictions throughout the world? Why is there a huge disproportionate return for the State against a huge volume of our resources being exported out of the country?"

Regarding mining regulatory framework developments, the minister enumerated two important changes that were made under the administration of Prime Minister Hon. James Marape.

The first one is the Mineral Data Repository Hub for the National Government. In 2020, the Department of Mineral Policy and Geohazards Management (DMPGM) made an amendment to the Mining Act 1992 which mandates all operating mines to submit live extraction and export data in real-time to a central hub at the Mineral Resources Authority (MRA).

The second one is the Alluvial Mining Policy, a policy change in 2021 that restricts and reserves alluvial mining activities for Papua New Guineans only.

He said, "A majority of our people are active participants in the alluvial mining sector. Therefore, this Government has reserved all alluvial mining activities for Papua New Guinean artisanal and small-scale miners only. This also extends to the buying and export of alluvial gold from PNG with the exception of existing foreign operators who are exempted by the State."

Additionally, the Minister noted three priority areas or key government priorities, namely: Porgera Gold Mine, Wafi Golpu Mining Project, and Frieda River Project.

"To advance the PNG mining industry, I have underscored the following key priorities as the new Mining Minister. This emphasizes the National Government’s commitment to these outstanding commitments."

For Porgera Gold Mine, the aim is to ensure the successful conclusion of the Porgera Compensation Agreement in order to facilitate the resumption of gold production at Porgera.

For Wafi Golpu Mining Project, they will work on the conclusion of the project negotiations and the permitting of the Wafi Golpu projects before the end of 2024.

Lastly, for Frieda River Project, the target is the advancing of the Frieda River project license application through to project negotiations with the State.

The Minister also mentioned additional priorities for this year in terms of legislative and policy priorities, namely the Mining Act 1992 review, the review of the Mining (Safety) Act 1977, Production Sharing Regime, Gold Bullion Bank, support for the Alluvial Mining Sector, New Policy Initiatives, and Geohazards Management.

On the Geohazards Management, Minister Dilu said, “Priority will be given to this area which performs a very vital function under the Ministry that undertakes 24/7 monitoring and assessment to safeguard and protect the lives of our people in areas prone to volcanic eruptions, earthquakes, tsunamis, and landslides.”

“Major priorities will be the relocation of the Rabaul Volcano Observatory, the replacement of obsolete monitoring equipment, and the conclusion of the Geohazards Management Policy.”

“The importance of collaboration among all stakeholders within the mining sector is vital in this industry. As the Minister responsible, I stand committed to supporting policy initiatives that benefit the interests of all parties involved.”

As an overview of PNG’s Mineral Production, over the last five years, the average annual metal production has been the following: Gold 2.4 million ounces; Copper 84,500 tons concentrate; Nickel 33,500 tons; Cobalt 3,000 tons; and Chromite 123,000 tons concentrate.

For an outlook on the minerals, PNG expects strong total annual copper production, averaging between 500,000 tons to a maximum of 700,000 tons per annum for a period of more than 30 years, after Wafi Golpu and Frieda River projects are commissioned as operating mines.

“These mega projects will take 5 to 7 years for construction and hopefully by 2030, these projects may become operating mines. Indeed, PNG will become a significant copper producer for critical minerals in the globe, possibly for over a period of three decades.”

He also reported that gold production from PNG declined from over 2 million ounces gold to about 1. 3 million ounces gold per annum since closure of the Porgera mine.

On the other hand, nickel and cobalt production outputs may increase to up to 90,000 and 9,000 tons per annum, respectively if Ramu MCC’s proposal to double its production output will push through and if the Mambare (Oro Nickel) is starts its production.