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Nautilus was a bad investment call by the O’Neill government

DSM campaign posterPAUL FLANAGAN

CANBERRA - Nautilus or Oil Search - which was the worst investment decision by the O'Neill government? 

Neither should have involved government funding – Papua New Guinea had much more pressing needs in areas such as health and infrastructure.

This type of project should have obtained private backers to bear the risks in an experimental technology.

The fact that the O'Neill government was dragged through the courts to make its extra contributions suggests the government is having serious second thoughts about the project.

In such circumstances, Nautilus should just move to private backers. Why are they having difficulty raising additional funding from private sources?

Thirty years ago, when I was an economist in the Pacific area of Australia’s aid agency, seabed mining was considered a long-term but uncertain possibility.

Over the following decades, technology has improved. However, there remain serious concerns. When talking about the potential of deep sea mining (DSM), the recent Pacific Possible report by the World Bank notes:

"There are, however, significant challenges to this emerging industry. These include weak regulatory and institutional capacities and patchy traditions of transparency and stakeholder consultation, substantial uncertainties about the economic potential of DSM, and limited understanding of the environmental and social risks associated with DSM mining (page 71).

"This is an unusual situation for governments and industry alike, where the underlying data used to model costs and benefits is limited to scarce observations for which connectivity to the surrounding environment is not well understood. DSM mining is proposed at great depths where regulatory monitoring is exceptionally difficult."

Like Oil Search, the Nautilus investment was a poor judgement call by the O'Neill government for the people of PNG.

There were better uses for the funds available, especially given the uncertainties highlighted by the World Bank. Nautilus should refund the moneys invested by the PNG government.

Certainly there should be no more government financing. Then there is a need for properly verified research to provide the necessary assurances to protect the people in surrounding areas.

There is a need to change PNG's system of taxation to ensure a fairer return from any resource project that proceeds.

It is likely that Nautilus will have generous accelerated depreciation arrangements and other incentives which would mean that even from just a revenue perspective there will be no quick fixes to the government's budget deficits.

I applaud Sir Arnold Amet's willingness to engage in this important issue facing PNG. I do hope lessons have been learnt - and these include the government being equally cautious about directly investing in agro-industries.

The government's role should focus on research, infrastructure, appropriate regulation and removing barriers such as an uncompetitive exchange rate and limited private banking credit. There are better ways for funding and decision-making around such uncertain projects.

We just don't know how bad the Nautilus project could be - let's be more careful until we know more. Those "chimneys" won't be going anywhere so there is time.


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August Fairsay

The Nautilus project maybe one the best visionary project ever and which the mining world may follow if successful. Prominent critics have labelled it a bad project. The project have not even begun actual mining so how can it be bad or good? Assumptions are just been made!

We have seen the destruction on biodiversity & the environment that above ground mining have done!
Mining is at depths. More than 2km so why not see what actual impact this type of mining actually does have.

If there is to be any environmental impact of any sort to the people living near the mining areas we will soon hear of it and investigations will be quickly undertaken to try to stop the project or for any possible compensation! The Directors of Nautilus and its backers would be very aware of this.

Nautilus Minerals Inc.is public listed on the Toronto Stock exchange, so has some form of accountant ability and before listing would have environmentental considerations,feasibilities and forecast earnings for its project.

If deep sea mining is successful then it will make some above ground project unfeasible so it would be good news for the environment. So much money has already been spent why not see what the actual outcome is?

The comparison between Oil Search & Nautilus is somewhat misleading. Nautilus is a new form of innovative mining, if successful would help boost PNG financially and change its image as embracing and supporting innovation and modernization.

When will someone do something about those “chimneys” if not now, never, and by who?

Oil Search was a pure stock market speculation which should not have been undertaken and failed because the oil price dropped spectacularly.

Bernard Corden

It has all the ingredients of a race to the bottom and you can rest assured that Nautilus Minerals will not be carrying any of the risk.

The directors will cheat, deceive and lie through their back teeth to ensure the project proceeds.

Just take a glance at the coal seam gas projects in Queensland and the approval process. It has left us with astronomical fuel bills.

They are merely are bunch of lying cnuts and snake oil salesmen who could never sleep straight in bed.

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