PERTH (miningweekly.com) – The mining and petroleum industry body in Papua New Guinea (PNG) has called on the government to consider the ramifications of the amendments proposed to the Mining Act.
The PNG Chamber of Mines and Petroleum’s president, Gerea Aopi, said that stable government policies and a favourable investment climate were critical for future growth in the PNG resource sector, and that the proposed changes to the Mining Act would undermine PNG’s investment attractiveness.
“While we support the PNG government’s prerogative to update the legislation to meet the challenges of the 21st Century, some of the amendments would pose significant deterrents for investment in future mining projects and would be a serious impediment to the operation of current mines in PNG,” said Aopi.
“When investors assess the investment risk and return potential of a country, they look at the legislative and policy framework as well as the total cost of doing business, including the levels of existing infrastructure to support a project. This calculation includes mining legislation, as well as taxation, fiscal and other policies.
“Considering this whole package, PNG has a high total government ‘take’ when compared to other countries,” he said.
Aopi noted that independent modelling had shown that while PNG royalties in isolation might not be as high as other jurisdictions, the total take when including all taxes, such as royalties, corporate tax, state equity and dividend withholding tax, was at the higher end of most countries. This is combined with a very low score on the World Bank’s Ease of Doing Business scale.
The PNG government is reportedly considering higher royalties, tougher restrictions on fly-in, fly-out workers, and the potential nationalisation of assets.
The Chamber has encouraged the government to undertake an independent review of the amendments, as envisaged in the 100 Day Plan, to ensure full understanding of the economic implications of the revised Act on the economy of PNG.
The mining and petroleum industry contributed some 26% of the country's gross domestic product, and 80% of the export revenue as of September 2017. The industry also directly employs over 20 000 people, with yet more working in industries dependent on the resources sector.