Png, A Gold Mine Of Resources Ready For The Taking

PNG, a gold mine of resources ready for the taking

by The Korea Herald

13th March 2006

Ever since the reopening of the Papua New Guinea Embassy, Ambassador Kuma Aua has been busy promoting the richness of his country's mineral sector.

Aua has attended meeting after meeting with government officials and mining companies to spread the word concerning the opportunities Korean companies have in buying equities in eight new medium size gold, copper and silver mines.

"These opportunities are waiting to be grabbed by any Korean mineral company," Aua told The Korea Herald in his downtown Seoul office.

During a meeting last month with senior representatives from 15 member companies and organizations of the Korea Resource Corporation, he said that interested Korean companies would have to negotiate directly with enterprises that have been issued Mining Development Licenses by the Papua New Guinea government.

The advantage of doing business with mining companies from P.N.G. is that the landowners have already covered the expensive costs of exploration. Gold, copper and silver has been found in plentiful amounts but these companies cannot proceed and begin mining operations because of a lack of funding. This is where Korean companies can cash in with very little risk, the ambassador said.

One of the places Aua suggested that could offer a very lucrative opportunity for a Korean company is the Panguna mine on the island of Bougainville which is under a new government after a decade long secessionist revolt that claimed some 20,000 lives.

"This is a good investment for companies interested in buying copper," Aua said. "There is 400 million tons of ore and copper to be excavated."

The island, however, has been subject to a mining moratorium since 1971.

"One thing I did before I came (to Korea) was submit a proposal to the government for them to lift the moratorium. I am hopeful the government will lift it -- it's very rich in resources there," he said.

"We are trying to diversify our policy. My government has recently installed a 'Look North Policy' in the hope of attracting business from Asian countries, especially the ASEAN Group and the three large economies of Korea, Japan and China."

He explained that Korea is already heavily involved in P.N.G.'s fishing and forestry sectors, so why not mining also.

"One thing we've been trying to emphasize to Korean companies is their investment is already guaranteed. The exploration is already done, the resources have been found. Now it's just mining it out," he said.

There are several mines scattered across P.N.G. just waiting for foreign investment. Ok Tedi on the mainland has a production rate of 500,000 ounces of ore and 200,000 tons of copper per year but environmental challenges remain.

Also on the mainland is the Porgera mine ready to produce 900,000 ounces of ore per year.

Another possibly lucrative gold mine is on Lihir Island in the province of New Ireland which produces 600,000 ounces of ore each year and has a mining life of over 40 years.

The ambassador pointed out that by buying into mine companies, Korean investors won't be vulnerable to massive world market commodity price fluctuations.

"Companies will be safe because their share of the product is guaranteed by their equity ownership," he said.

Papua New Guinea's recently lowered mining taxes including opportunities for granting a 10 year tax holiday and are very attractive to foreign investors.

During his eight months in Seoul, Aua has made five other presentations on the advantages of mining in P.N.G. which included a presentation to executives from the Samsung Group Resources Division.

To help promote his government's plans he invited his country's mining minister to visit Seoul with representatives of mining companies in April to hold discussions and negotiations with interested Korean mineral importers and investors.

Drumming up tourism is another part of his duties as ambassador.

Papua New Guinea is relatively undiscovered. There are locations in the country which are relatively untouched and hardly visited. He said it is something that would be perfect for those interested in more unorthodox vacations.

Aua has been encouraging tourism officials back home to organize package tours for Koreans to visit different parts of the country.

Flying to Port Moresby is relatively easy from Seoul. It's a two hour flight to Japan and then a nine hour flight to the nation's capital.

"The tours would include a pickup at the airport to take them to their next destination. If they are going to a resort, someone will be at the airport to hand them their next ticket," he said.

Aua, who considers himself a business and trade ambassador, is always out and about trying to drum up business for his country.

He explained that in 2001 the embassy was closed do to financial problems brought on by the 1978-1979 droughts that crippled P.N.G.

"During that time the prime minister looked at where to cut costs. So he closed missions in Kula Lumpur, Seoul, missions in Sydney and Cairns, and the mission in Bonn."

The embassy reopened last year because his government saw the advantage of improving bilateral relations with Korea which the ambassador described as "very very good."

"So my prime aim here is to work very hard to make sure that the government won't consider closing the embassy again," he said with a smile.