On the back of rising demand for metals due to the development of electric vehicles and storage batteries, the search for new sources of supply has grown in recent years. Home to significant reserves of the copper, nickel and cobalt required, Papua New Guinea is looking to expand production with the world’s first deep-sea mining project and the potential reopening of the Panguna copper mine for the first time since 1989. Both projects have the potential to boost resources and revenue, though they also present complications. While the wealth of metal deposits beneath the sea is considerable, the task of mining at extreme water depths, or black smoker zones, is highly complex, as well as costly. In a similar way, opening Panguna may support the economy and the island of Bougainville on which it is based, but it could generate other problems.
The Solwara 1 project, operated as a joint venture between Nautilus Minerals and state-owned Kumul Holdings with a 15% stake, is targeting mineral extraction at a water depth of 1600 metres in the Bismarck Sea, 30 km off the west coast of New Ireland. While the project has made significant progress in developing a seafloor production system, there has been some scepticism of the project’s prospects.
In December 2017 local media reported that Nautilus Minerals was still seeking significant additional funding to finish the project. However, in February 2018 the company completed an economic assessment, which placed commencement of production as early as September 2019, although this date is expected to slide due to Nautilus’ funding difficulties. While Nautilus announced release of $34m in June 2018, some $350m is required to complete project construction.
In January 2018 the three production tools for the system and the slurry lift pump had been completed and were undergoing testing, while the 220-metre production support vessel, which will serve as an operational base, was expected to be finalised by the third quarter of 2018 though no update on progress had been announced as of August 2018. Regulatory concerns exist on account of funding pressures and the continued changes in the production date, which currently sits at October 2019.
Closed for almost 30 years, the potential reopening of one of the world’s biggest copper mines could provide a much needed economic boost to the island of Bougainville. While revenue from the reopening of the Panguna Mine could hold the key in the future economic progression of the island, arguments over who would run the facility, if it were to be restarted show no signs of being resolved.
For a period of 17 years, Panguna was responsible for 50% of the country’s total GDP. In 1989 a conflict erupted, regarding revenue from the mine. As it stands, Bougainville Copper and a consortium of Australian investors are involved in a disagreement over the rights to the facility. As the previous operator, Bougainville Copper is supported by the autonomous local government and the state, while the consortium, set up by Sydney businessman Ian de Renzie Duncan, is backed by some landowners who own the mineral rights.
Mount Tore Project
With Bougainville tentatively scheduled to hold a referendum on independence in 2019, the future of the mine will be central to the island’s economic evolution. However, resolution will need to be found with rights issues before moving forward. In the interim, the new Bougainville Mining Act may act as a catalyst for much needed investment and exploration in the area. In early 2018 Perth-based firm Kalia had begun geological surveys in its two licensed areas, known as the Mount Tore Project, located about 60 km from Panguna. According to local media, Kalia teamed up with local partner Toremana Resources which holds a 25% shareholding in the licences with free carry through to production. While the future of the mine remains uncertain, the Mount Tore Project may potentially trigger activity on Bougainville, which could provide much needed income for local communities.
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