PNG recently announced its first review of its resources tax regime since the 2003 tax cuts that contributed to the the industry's resurgence.

The International Monetary Fund and the Asian Development Bank say there is room for PNG to increase its tax revenue.

This morning Mr O'Neill will address more than 1000 industry delegates attending the PNG Mining and Petroleum Investment Conference, in Sydney.

He told Jemima Garrett there are arguments both for and against raising mining taxes.

Presenter:Jemima Garrett

Speaker:Peter O'Neill, Prime Mininster, Papua New Guinea

O'NEILL: We are now putting an independent panel together, which will look at the regimes of managing this industry within their region and beyond so that we are guided by the experiences of other countries. Our task is to make sure we have a regime that is fair to the investor, also very fair to our own people and our own government.

GARRETT: Why is a review of the resources tax necessary?

O'NEILL: Well, There are many people within the communities, particularly the landowners that feel that they are not being rewarded well for the resources that they own and they believe that more could be done. It is only fair that we have an independent review and industry will be a participant in that review. They have to argue why, they have to tell us why it is necessary to maintain current structures, whether they need more further incentives. It can go either way. If they feel that the cost structure of the resource sector is high, we can sit down and work through it as partners in developing these projects.

GARRETT:Mining projects in Papua New Guinea, negotiate their tax often on a one-off basis. And some projects such as Lihir, run by Newcrest, which is a one million ounce a year mine, have paid little or no tax until very recently, even though they have been going since the 1990s. Is that the sort of problem that you want to tackle?

O'NEILL: I don't necessarily want to go back in time. What has happened, has happened. I know that we learn from those mistakes that we have made. I am aware that Lihir has paid very little or no tax whatsoever to the Papua New Guinea government and our people but I can assure you that the standards that we have set, particularly in the standards of tax regimes that we have set for the LNG project, everybody, even the second LNG project knows that they are the terms that they will receive. So we are not going to change structures for each individual project, we will standardise it so we maintain uniformity across all the projects.

GARRETT: Australia's experience with mining tax reform hasn't been crowned with success. The government started with a super-profits tax, then reduced the tax after pressure from the industry. Then after being told that could damage the industry they have pretty much netted nothing in their first round of tax collection. No doubt you have been watching this with interest. What have you drawn from the Australian experience?

O'NEILL: I think the main thing is to engage with the industry, to have a transparent negotiation process, independent review of the terms and conditions that we are proposing. So the industry will paly an important role and when I open the Mining conference I will advise the industry that it is going to be done in a fair and equitable manner. It is not going to be out there to deprive the investors who are investing in these projects. We understand very well that they are there for a return to their shareholders but equally I am there for the return to my own people and my own country so we will do the right thing but in a fair and equitable manner.

GARRETT: Do you expect the industry to pay more overall?

O'NEILL: Let us wait and see the outcome of the review and then and the discussions that the independent task force team will return to us.

GARRETT: Let's turn now to Nautilus Minerals. It is hoping to be the first company in the world to mine the seep sea floor in Papua New Guinea but it has had to put the project on hold because of a dispute with the PNG government. You haven't put in more than 70 million dollars in capital for the stake, the PNG government stake in the project. Is the PNG government still committed to going ahead with that investment?

O'NEILL: We are committed to participating. Under the law, PNG mining law, we have the opportunity to participate in the project up to 30% of the sunk costs that they have spent and take up equity through that. The dispute is very much on the manner in which this particular project can be advanced. Firstly, on equity and also on the issue of intellectual property rights on some of the technology that will be used for some of these particular mining projects. We feel that as partners Papua New guinea is entitled to some rights to those intellectual property rights and those are the disputes that are before the arbitration. I have the greatest sympathy for Nautilus. I think we want to see them succeed. I think it is unfair on them that we have given them a licence to explore, licence to develop and then the project is now stalled in the meantime. But there is serious issues about environmental issues. They must clear those issues. We are now working together with our environment agencies, ensuring that the concerns of the landowners, the concerns of the local provincial governments must be put to rest before the project can get off the ground.

GARRETT: Indeed there has been a huge grassroots campaign against deep sea mining on environmental grounds. To what extent has that influenced your government's position?

O'NEILL: We appreciate and we acknowledge the concerns that the grassroots have expressed though the social media network and other avenues but we must debate these issues on facts not on emotions. And, for me, I would like to see the experts in the Industry. From what I understand the technology being used is similar technology to being used to explore for oil and gas and the other areas. So that must be put to rest and I am certain the experts that we are engaging will give us some certainty on how envirvonmentally damage, or if not, can be addressed in a comfortable manner.

GARRETT: Nautilus already has all the government environmental approvals it needs. Is it going to undermine investor confidence if the PNG government appears to be raising new environmental questions once that approval process is complete?

O'NEILL: I am not aware that the environmental permit has been issued by our environment department to Nautilus. I am aware that the mining development licence has been issued to Nautuilus by the Department of Mining. The next stage is for them to work through our Environment department to get the environmental permit to progress it. So I am not aware of that. That is new information. If they do there is nothing stopping them. If they raise the capital, with their shareholder support to go and develop it, let's see it through that.