OBG talks to Byron Chan, Minister of Mining

Interview: Byron Chan

What factors, in your opinion, are driving the proposed changes to the country’s mining laws?

BYRON CHAN: A major exercise currently taking place is the review of the mineral policies and legislations recently enacted by the government. This includes the review of the 1992 Mining Act, the 1977 Mining (safety) Act, the Mineral Policy of Papua New Guinea and the development of the Offshore Mining Policy. The review process is ongoing and my department is working on finalising a draft before taking it to parliament.

Our regulatory framework is outdated and we are trying to modernise the country’s mining laws. We have seen that many developing mining economies are going through similar legislative upgrades. Therefore, it is crucial for PNG’s regulatory framework to be upto-date and to be brought in line with the growth the mining sector has experienced over the last 15 years.

The policies we are trying to adjust will be captured in various equity and benefit-sharing components between the public and private sectors. The global mining industry has gone through tremendous changes. Continued strong demand for commodities coming from both developed and newly emerging states, technological advances, such as our deep-sea mining project, and the competing interests of economic growth and environmental protection are all very important issues that the country must address.

What are the opportunities in PNG’s mining sector outside of traditional copper and gold mining?

CHAN: We have many resources in PNG: we are venturing into nickel, there are traces of platinum, there is also talk of uranium, and we recently discovered rareearth minerals. We realise the importance of resource diversification and are moving away from the traditional raw materials of gold and copper. We have already had some interest in exploration by foreign firms, and there are firms exploring for coal, bauxite and ironsand, but at this stage a lot of work is still needed. Information is withheld by exploration companies, so with information not widely available and accessible, it impedes the attraction of foreign firms to PNG. However, this is only temporary, and within the next 10 years we expect around six major mining operations to begin.

What impact will the recent elections have on investor confidence in the mining sectors?

CHAN: The current confidence in the country is quite high regardless of the elections. I believe this is because we have shown that PNG is politically mature. This maturity has brought stability without major social disturbances or mass protests as have been seen elsewhere over the last 18 months. With the new government policies and initiatives we are pursuing, with the exception of current regulatory and legislative updates that are proposed and will be put to the vote in parliament, we do not expect to have major changes to our mining sector policies that will discourage the attraction of foreign companies and investments.

How can mining officials and operators ensure that projects benefit local communities?

CHAN: This is an issue we are trying to address through the current mining amendment by giving greater equity, from 2.5% to 5%, to the owners of the land on which the mines are located. Under the current law, the state is entitled to enter into any mining venture and acquire up to 30% at any time throughout the life of the project. If the state does not wish to be part of the venture, the option is passed on to the landowners and provincial governments, which can obtain up to 30% ownership of any mining project.

We hope that if the state is involved in the project this will give investors additional confidence and reassurance. Looking briefly at PNG’s mining potential in comparison to other nations, along with the renewed interest in the country, I believe that we have the potential to become a well-developed nation if we can properly and effectively harness these mining projects and maximise the benefits that are available to us.