The passionate wildlife vet whose career kicked off in PNG
Where are you Peter O’Neill? Mendi is burning

BCL says re-opening Panguna will be a long & costly project

Panguna (Loop PNG)
K19 billion & 10 years to get Panguna mine operating again

KEITH JACKSON

PORT MORESBY– Panguna’s copper and gold mine will take about 10 years to re-establish at a construction cost of up to K19 billion ($A7.7 billion), a Bougainville Copper Ltd chief has told a tax summit in Buka.

And no decision will be made to re-open the mine until BCL is convinced of the viability of the project and has conducted a ‘bankable feasibility’ study, said BCL company secretary Mark Hitchcock.

Mr Hitchcock said a realistic timeline for Panguna would see the mine operational around 2025-26 and potential tax revenue had to be viewed as a longer-term prospect with no short-term, direct tax generation

However the project’s development and construction period would present income generation opportunities for Bougainville.

The three-day tax and revenue summit was an initiative of the Autonomous Bougainville Government to assess the financial outlook of the province and the ABG’s ability to fund public services.

Mr Hitchcock told the summit that the project’s reconstruction phase would cost an estimated K13-19 billion.

Once developed, the mine would generate significant tax revenue for its operational life, expected to be more than 25 years.

Mr Hitchcock emphasised the need for certainty in the tax regime and warned that excessive tax imposts would undermine the project’s viability.

Mark Hitchcock
Mark Hitchcock

“One potential pathway is for the ABG and PNG national government to work towards a joint agreement to provide assurances regarding applicable taxes that would apply over the long-term,” Mr Hitchcock said.

In addition to tax revenue, the Panguna project would have a multiplier effect in terms of economic benefit.

“A project of this scale will help stimulate the economy in a multitude of ways in areas such as training and employment, new business opportunities in the supply of goods and services and the provision of new infrastructure to name a few,” he said.

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Peter Salmon

Bearing in mind recent Bougainville history, the capacity of some factions not hesitating to resort to arms and return the island back to a "ground zero" type state, I could not imagine the "Gnomes of Zürich" every risking a dollar on the re-opening of Panguna.

And this could not happen again? I think that there is still an underlying state of anarchy in Bougainville simmering away under the surface.

Apart from local politics there is the "sovereign risk" issue. Sovereign risk is all about forex not taxation and look at the current PNG forex situation, it's a disaster.

Next, as a matter of interest, who is the sovereign in this situation, the PNG national government or a yet to be established independent Bougainville?

Mark Hitchcock opinind that the "one potential pathway is for the ABG and PNG national government to work towards a joint agreement".

Again, bearing in mind past "agreements" how reliable (bankable) would an agreement between the ABG and PNG government be?

I can only imagine another nation (nod, nod, wink, wink) looking to enhance it's geopolitical presence in the area getting involved in the re-opening of Panguna through one of it's state controlled enterprises but even then I'd think that there would be much deep thought about security, risk. They would probably want to keep to the mainland.

I remember years ago when James Strong was asked whether he was worried about Qantas being taken over and his reply was, if you had billions of dollars (I forget the actual number he quoted) would you invest that in an airline?

Similarly, if one had $10 billion, would you invest it in Bougainville in preference to other international opportunities with more manageable governments?

For the record, as you and I know, Bougainville is a beautiful island and the people are good but the financial reality is.....

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Comments are moderated, and will not appear until the author has approved them.

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)