Papua New Guinea
 

       
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Brief Facts
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Education
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History
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Travel
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Geography
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Fiscal Provisions Applicable to the Mining Sector
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Mining
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Royalty
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Climate
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The Mining Act and Mining Advisory Board
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Population and Language
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Licence types
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Government and Judiciary
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Geological Framework

Port Moresby

Brief Facts

 

Full name: The Independent State of Papua New Guinea
Monarch: Queen Elizabeth II
Prime Minister: Peter O'Neill
Minister for Mining: Byron Chan
Capital: Port Moresby (population 804,000)
Population: 7 million, 85% of whom are rural based (growth rate: 2.7%)
Geography, Total Land Area: 178,703 sq mi (462840.8km2)
Mean Temperature: 26°C
Currency: Kina
People: 95% Melanesian, 5% Polynesian, Micronesian and Chinese
Languages: 805 indigenous languages plus Pidgin, Motu and English
Government: Independent State and member of the Commonwealth (Independence from Australia 16 Sept 1975)
Self-governing since:  1 December 1973
Legal System: Based on English common law
GDP PPP: US $11 billion
GDP(PPP) per capita: US $1,649
Inflation: 8.3%
Major industries: Gold, oil, copper, coffee, silver, copra, palm oil processing and logging
Trading partners: Australia - 28%, Japan - 9.5%, China - 5.5%, Germany - 3.5%


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History

The first inhabitants of the island New Guinea were Papuan, Melanesian, and Negrito tribes, who altogether spoke more than 700 distinct languages. The eastern half of New Guinea was first explored by Spanish and Portuguese explorers in the 16th century. In 1828, the Dutch formally took possession of the western half of the island (now the province of West Papua [Irian Jaya], Indonesia). In 1885, Germany formally annexed the northern coast and Britain took similar action in the south. In 1906, Britain transferred its rights to British New Guinea to a newly independent Australia, and the name of the territory was changed to the Territory of Papua. Australian troops invaded German New Guinea (called Kaiser-Wilhelmsland) in World War I and gained control of the territory under a League of Nations mandate. New Guinea and some of Papua were invaded by Japanese forces in 1942. After being liberated by the Australians in 1945, it became a United Nations trusteeship, administered by Australia. The territories were combined and called the Territory of Papua and New Guinea (PNG).

Australia granted limited home rule in 1951. Autonomy in internal affairs came nine years later, and in Sept. 1975, Papua New Guinea achieved complete independence from Britain.

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Geography

Papua New Guinea lies in the southwest Pacific, just below the equator, between Asia and Australia.  Papua New Guinea is located between latitudes ~ 1° South and 12° S and longitudes 141° East and 158° East and comprises the eastern one-half of the island of New Guinea, which is one of the largest islands in the world; the archipelago includes an additional 3 large islands (Bougainville, New Britain, and New Ireland).

Papua New Guinea occupies the eastern half of the island of New Guinea, just north of Australia, and many outlying islands. The Indonesian province of West Papua (Irian Jaya) is to the west. To the north and east are the islands of Manus, New Britain, New Ireland, and Bougainville, all part of Papua New Guinea.

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Mining

PNG is located on a major tectonic boundary between the Pacific and Australian crustal plates. There are seven active mining operations in PNG including Ok Tedi (copper), Pogera (gold), Lihir (gold), Tolukuma (gold), Kainantu (gold), Simberi (gold), Sinivit (gold).

PNG is geologically highly prospective for both on land and offshore minerals. The mining industry is a major contributor to the export income (80%) and about 21% of the gross domestic product (GDP). Mineral production has remained steady in recent years at about 67 tonnes gold and 165,000 tonnes of copper contained in copper concentrate. PNG is ranked as the 11th largest gold producer in the world in 2009.

Aviation pioneer Lawrence Hargrave found a speck of gold and specimen of copper at the furthest point of D'Albertis' exploration voyage in the Ok Tedi River in 1876. Papua New Guineans, returning from labouring on Queensland plantations, may have identified the first meaningful quantities of gold in PNG at Sudest Island.  By 1895, gold had also been identified on Woodlark Island. Lode mining for gold began on Sudest Island as early as 1890; miners began to work the lodes at Woodlark in 1900 and on Misima in 1904.  These operations remained active until World War II. 

In 1910, a Canadian-Australian, Arthur Darling, identified gold in what became the Morobe Goldfield. The Morobe Goldfield reached its peak production in 1938 when 700 expatriate and 6218 national miners produced 404,000oz gold. 

Prospecting by Ned Rowlands in the Eastern Highlands led to the discovery in 1928 of gold near Kainantu, while in 1930 the Upper Ramu River was declared a provisional goldfield, and from 1934 the Sepik and Torricelli regions were explored as was Porgera during the 1960s. In 1983, continued geological studies by a consortium of Placer (now Placer Dome), Renison Goldfields Consolidated (RGC) and MIM identified the Zone VII high-grade mineralisation, dramatically improving the conomics of the project.

In 1964, following the advice of Jack Thompson and a 1930s report of alluvial gold and lode copper on Boungainville, Phillips identified the Panguna porphyry Cu-Au deposit.  Panguna went into production in 1972, and had produced 30 Mt of copper and 9.6 million ounces of gold by its closure at the end of 1988.

The Australian Bureau of Mineral Resources (BMR) provided geological services to PNG from 1948 to 1972. BMR geologists discovered the Yandera copper mineralisation, were responsible for the preparation of most of the 1:250,000 scale geological maps of PNG, and in 1962 discovered the Ramu lateritic Ni-Co deposit. Again in 1966, the BMR geologists recognised mineralised float in streams which subsequently led to the discovery of the Frieda porphyry Cu–Au system.

In 1968, Kennecott Copper Corporation geologists followed a cupriferous float train from the junction of the Ok Menga and Ok Tedi drainages to identify the Ok Tedi porphyry Cu–Au intrusion at Mt Fubilan.

From the mid 1960s to the early 70s, vast areas of Papua New Guinea were subjected to first-pass prospecting for porphyry copper style mineralisation.  This work was carried out at a time of relatively low gold prices. Thus, the exploration programs gave little or no consideration to gold as a possible exploration target.

Much of the arlier porphyry copper exploration did not include assying for gold as it was not considered conomically significant at that time. Geochemical studies by the BMR (Wallace) played a distinct role in discovery of the gian Ladolam gold deposit on Lihir Island, while the application of new conceptual geological models led to discoveries such as Raferty's at Wafi in 1989.

Tolukuma, discovered during helicopter-supported regional reconnaissance geochemistry in 1985, saw mine construction begin in May 1995.  The mine now operates without a road link, depending entirely on helicopter support.

The 1987 stock market crash brought the 1980s gold exploration boom to an abrupt end in Papua New Guinea and indeed throughout the world.  Mergers, acquisitions, a declining commitment to explore, and lacklustre investor sentiment in the mining sector, reigned throughout the nineties.  Only recently has there been an increase in exploration activity in PNG.

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Climate

The country extends from the equator to latitude 10° south and the climate is typically monsoonal – often being hot, humid and wet all year-round.

Temperatures on the coast are reasonably stable all year (between 25° and 30°C; 77° to 86°F).

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Population and Language

Papua New Guinea is essentially a southwest Pacific Melanesian culture with Polynesian and Micronesian influences.

The population of 7 million people can be loosely divided into four regional groupings:

• Highlanders – living in the mountainous part of Papua New Guinea
• Papuans – from the south coast
• New Guineans – from the north mainland coast
• Islanders – from the offshore islands

Over 800 discrete languages (tok ples) have arisen. In New Guinea, Melanesian Pidgin evolved in the post-German administration times by integrating words of many languages, including German, Malay and Kuanua (Tolai), with basic English. English has been adopted as the country’s official language and it is widely spoken amongst educated people. There are people who understand English in most areas of PNG.

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Government and Judiciary

Papua New Guinea became an independent parliamentary democracy on 16th September 1975. There are three levels of government – national, provincial and local.

The National Parliament, sometimes referred to as the House of Assembly, has 109 seats; 89 members are elected from open electorates and 20 from provincial electorates.

Each of the provinces has a provincial assembly, governor and a bureaucracy to handle provincial matters.

The highest judicial body is the Supreme Court. The Chief Justice is appointed by the Governor General on the proposal of the National Executive Council after consultation with the minister responsible for justice.

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Education

Papua New Guinea recognizes the importance of basic education, with about 70% of children attending primary (community) school and about 30% passing onto secondary school.

Tertiary institutions that train professional geologists, engineers and metallurgists include the University of Papua New Guinea at Port Moresby and the University of Technology at Lae.

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Travel

The isolated mountain and island communities of Papua New Guinea      

and the mining industry have a long and enthusiastic relationship with

air travel. The national carrier Air Niugini provides national and

international services including Australia - to and from Cairns

(1.3 hours flying time), Brisbane (3 hours flying time), Sydney

(4 hours flying time, ex Brisbane).

 

 

 

Port of Kimbe by air,  New Britain Island

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Fiscal Provisions Applicable to the Mining Sector

A summary of the mining fiscal terms for new mining projects are presented in the Table below.

Income tax rate

30%

Dividend withholding tax rate

10%

Accelerated depreciation allowance

25% DB Pool

Royalty rate

2%

Mining levy

None

Capital gains tax

None

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Royalty

The holder of a special mining lease or a mining lease must pay a royalty to the state equivalent of 1.25% of the net proceeds of sale of minerals (calculated as net smelter return or fob export value, whichever is appropriate).

At least 20% of the royalties from a project are distributed to the landowners of the project area; and the province in which the project is located.

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The Mining Act

The principal legislation in Papua New Guinea that regulate mining activities are the Mining Act 1992 and the Mining Safety Act (Ch. 195A).

Under the Mining Act, the State owns “all minerals existing on, in, or below the surface of any land in Papua New Guinea”. The State’s Minister for Mining can issue various types of leases or licenses (mining tenements) to interested companies on application, to enable them to engage in various exploration and/or mining activities in Papua New Guinea.

The Mining Advisory Council (MAC)

The Mining Advisory Council functions are to advise the Minister on such matters as the Minister may refer to the Board, and such other matters as specified in the Act (e.g. make recommendations to Minister on various applications for grants / extensions of mining tenements).

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Licence Types

The various types of licences issued under the Mining Act on recommendation from the Mining Advisory Board include:

Exploration Licence (EL)                            granted for a term not exceeding 2 years and may be extended for periods up to 2 years

Mining Lease (ML)                                      granted for a term not exceeding 20 years, which may be extended for such period not
                                                                        exceeding 10 years.

Exploration Licence (EL)

The area of land in respect of which an EL may be granted must not be more than 750 sub-blocks (one sub-block = about 3.41km2). When applying for an extension of the term of the EL, not less than half of the area held at commencement of that term must be relinquished. Where the area of an EL has been reduced to not more than 30 sub-blocks, the EL holder will not be required to make any further relinquishment on renewal.

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Geological Framework

Papua New Guinea’s unique geology and substantial mineral resources result from its position on the interactive tectonic boundary between the cratonic Indo-Australian Plate to the south and the oceanic Pacific Plate to the north. (Fig. 1)

Fig.1 Papua New Guinea in relation to major geological elements of South East Asia and Australia.

 

The geological framework of Papua New Guinea comprises a series of geological terranes (discrete geological regions) that are commonly separated by geological elements (structures, etc.) (Fig. 2).

Fig. 2 Geological framework of Papua New Guinea.

New Britain is typical of the other Melanesian Island arcs.

In central New Britain, several 30-22Ma age porphyry copper style mineralization occurrences were prospected during the 1970s and 80s. Some of the occurrences are partly obscured by Pliocene Ania Tuff. Many of the porphyries are the current focus of exploration activities.

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