IOC not only one having problems with PNG/Petromin; no money

[Palm]

Intetesting but just like having company makes you clean up the house; in PNG having an election exposes real issues in the country. Nautilus and others are having plenty of problems as well as IOC.
"By: Henry Lazenby
21st June 2012
TEXT SIZE
JOHANNESBURG (miningweekly.com) – Marine mining hopeful Nautilus Minerals said on Wednesday Papua New Guinea (PNG) had filed a notice of arbitration in the dispute between the two joint venture partners.

TSX-listed Nautilus earlier this month said it might have to slow or defer development of its Solwara 1 marine-mining project, because of a dispute with the State, which owns 30%.

Nautilus had initiated the dispute resolution process by filing a notice of arbitration against the PNG government on June 1, owing to a disagreement about the parties' obligations to complete the contract entered into on March 29, 2011, and alleged that the State had not paid its share of project development costs.

“The company understood the State wanted to resolve the dispute, particularly in light of a letter to the company from the PNG Prime Minister Peter O'Neill, dated June 6. In that letter, the Prime Minister outlined a number of key principles to be reflected in relation to the joint venture for the Solwara 1 project, which Nautilus considered to be a suitable basis for continuing discussions in an attempt to resolve the dispute,” the company said in a statement.

But the State had now asserted that Nautilus had not met certain obligations on which completion of the transaction was dependent, arguing that the company had breached the agreement and that the State was entitled to terminate the agreement.

Nautilus refutes these claims, maintaining that it was the State that breached the agreement.

Under the agreement, the State's Petromin subsidiary must pay, among other amounts, its share of costs incurred in the development of the project up to completion to acquire its project interest.
Nautilus aims to extract copper and gold from the seafloor off the coast of PNG."
http://www.miningweekly.com/article/png-...2012-06-21

Couple of other articles out there too with copper, etc companies

[ArtM72]

Is there a pattern? Let me guess. Something to do with Petromin.

ONeil has his hands full. The IOC deal gets done in August. My bet continues to be Exxon will be involved.

[Palm]

Just a small one. They need cash and seem to be throwing up roadblocks. This too shall pass:
"Papua New Guinea suffers new blow reviving copper mining
Thu Jun 21, 2012 4:26am EDT

By James Regan

SYDNEY, June 21 (Reuters) - Papua New Guinea on Thursday suffered the latest in a series of setbacks as the impoverished nation tries to re-establish itself as a world class supplier of copper after a major producer said it might sell out of a big mining project.

Swiss-based Xstrata said it was considering a whole or partial sale of its 81.8 percent interest in the Frieda River copper project in western Sandaun Province after investing $200 million in pre-development work.

Xstrata said it was considering exiting Papua New Guinea as part of a wider review of its worldwide Papua New Guinea on Thursday suffered the latest in a series of setbacks as the impoverished nation tries to re-establish itself as a world class supplier of copper after a major producer said it might sell out of a big mining project.copper assets.

The move comes just three weeks after Canada-based Nautilus Minerals warned that its plans to mine copper in territorial waters off Papua New Guinea might be scrapped unless an ownership dispute with the government can be resolved.

Once Papua New Guinea's top export revenue earner, copper mining has been reduced to a small number of lodes, the biggest of which is nearly depleted.

Political rivals seeking ways to sustain economic growth for the South Pacific nation and ease concerns of political instability are making foreign investment in new copper mining projects lynchpins of campaigns ahead of a national election that starts on Saturday to decide the next prime minister.

Still, targets to boost annual copper output by around a half-million tonnes within several years and by even more in later years now appear stretched.

"The issue of country risk for Papua New Guinea has become a significant talking point," Ken MacDonald Chairman of Highlands Pacific, which owns a minority stake in the Frieda River project, said recently.

"The lack of constitutional and political certainty, threats to judicial independence and conflicting policy statements, some of which would be seriously detrimental to investment in this country, are issues which need to be resolved," he said.

To date, other than the now-jeopardised deal with Nautilus, there has been little headway in starting new mines, with copper production set to decline for the tenth year running in 2012.

"There is a lot of copper in Papua New Guinea that is not getting mined," said Greg Anderson, head of the country's Chamber of Mines and Petroleum.

China's largest importer of copper concentrate, Tongling, agreed to buy over a million tonnes of copper ore a year from Nautilus before the dispute with the government erupted.

Copper mining in PNG under the control of sector behemoths BHP Billiton and Rio Tinto supplied millions of tonnes to smelters in Asia and Europe in the 1980s and 1990s. Neither company has mined in Papua New Guinea for years.

The first blow came in 1990 when Rio was run off the restive Bougainville Island by residents who wanted to reintroduce an agrarian society and secede to neighbouring Solomon Islands, forcing Rio to abandon its giant Panguna copper mine there.

A decade later BHP relinquished ownership in the Ok Tedi mine to a government trust following claims by landowners over toxic mine waste disposal into local tributaries.

The Panguna mine still holds the potential to annually produce 200,000 tonnes of copper, which would provide a higher yield than BHP Billiton's Olympic Dam mine in Australia, the world's fourth-largest known copper deposit.

But considerable deterioration has occurred in the intervening period, due to a lack of maintenance along with vandalism and militant action, making it near-impossible at this stage to venture a restart date."
http://mobile.reuters.com/article/idUSL3...1?irpc=932

[jft310]

Petromin should raise money by selling all its interest in E/A to IOC's new partner and have money to develop these other PNG assets. Rumors are their 20% interest would yield them $4.5 Billion for just an E/A sale.

[maui4marko]

palmtokloud, Petromin needs to be careful in the case of Nautilus as they differ in one key aspect from the other mining and O&G companies: they have license tenements all over the south Pacific.

If PNG screws around too much, Nautilus can just pick up and move to another more friendly country, with their unique approach (sort of like traveling modular lol).

Sure this little tiff has cut the pps in half, and sure it may result in a delay in first ore... but with diversified license holdings they have many options outside of PNG. Company management are seasoned O&G executives and keenly understand how to manage sovereign risk.

Look out Petromin, or you might just bend over and kiss your royalties goodbye!