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Services companies hopeful of improving mining conditions in PNG

Services companies and contractors are often a casualty of a mining industry downturn. Business Advantage PNG talks to companies servicing the sector in Papua New Guinea on how they have coped with the downturn, and the potential for a turnaround in the country.

Despite difficult conditions in Papua New Guinea’s mining industry, Lihirian landowner company, Anitua Mining Services, is hopeful of a rebound and is considering a number of new opportunities that would grow its project portfolio.

Mining focused companies in PNG continue to face challenges as the country’s minerals sector struggles to recover from a downturn that has been felt on a global scale.

While conditions have been forecast to improve, with Deloitte PNG saying in its November budget analysis that the mining sector will grow by 12 per cent in 2015 as new strategic mining plans take effect, Anitua Mining Services general manager Mark Edwards believes a rebound in PNG will take more time.
Edwards said over the past 18 months in particular Anitua Mining Services had felt the impact of the industry downturn in PNG.

‘Conditions will improve but it is going to take time-it is the same throughout PNG-it has been a bit of a roller coaster but I don’t think the industry here has been hit as hard as it has been elsewhere in Australia,’ Edwards told Business Advantage PNG.

Anitua Mining Services’ activities continue to be dominated by its long-standing contract at the Lihir gold mine, now owned by Newcrest Mining Ltd. The company is also active at two mining projects off Lihir Island, although Edwards described them as minor and in their formative stages.

Future opportunities

Despite an outlook that will require patience, Edwards said the Anitua mining services team was currently considering a number of new projects to bolster its portfolio.

‘PNG is actually presenting itself with quite a few opportunities (for us) at the moment. We have to make sure what we choose is sustainable and it is going to be the right thing by the landowners–at the end of the day we work for the Lihirians,’ Edwards explained.

‘We like to go into an area where there is a landowner group that wants to take on a similar model to what the landowners here also seek.

‘We go into a shareholder agreement with them and part of that is that we provide them with the management and training to assist in improving the current business they’ve got for a sustainable business for both of us.’
After originally being formed to focus on the mining industry, the Anitua Group now includes a presence in a variety of industry sectors, including hardware, farming and supermarkets.

No improvement

Engineering company Kramer Ausenco is another that has been impacted by the mining downturn, with Chief Executive Officer Frank Kramer saying the lower activity had probably been the ‘most notable aspect’ of the company’s performance in 2014.

Kramer added that there was no sign of a rapid change to these conditions, but PNG’s major mines did have the potential to deliver a lift in activity.
‘The really large mineral resources projects—Wafi Golpu and Frieda River—they’re still just ticking along, there’s no definitive sign that anything significant is going to happen,’ Kramer said.

‘Lihir, which is a brownfield site also, can actually kick back up more quickly if the Newcrest people decide to do something with it, and that’s got a much shorter response time than the green field sites.’

Of the Ok Tedi mine in Western Province, Kramer said operations would not improve until issues between the PNG Government and PNG Sustainable Development Program have been resolved.

‘Until that happens and it’s formalised, I think Ok Tedi will just continue in a relatively sluggish manner. Certainly, its contribution to the general coffers of government is nothing like it used to be,’ he said.

Technology pull

While investment into exploration and mine expansions has fallen, operational optimisation continues to be a key part of strategic plans for mining companies.

An element of this is implementation of the latest information and communication technology (ICT) which, according to AllcomMCR PNG managing director Luke Byer has remained in strong demand from established mining companies.

AllcomMCR PNG, which was recently formed following a merger between Allcom PNG and mcr PNG, has identified the mining industry as a sector with the potential to provide the company with continued growth in the coming years.

Byer said there had been quite a significant increase in mining companies seeking out the ICT services it provided.

‘Mining is something that has always been on our radar and we have seen that area grow. Communications are of key importance to them,’ Byer said.

‘We are finding work with the more established miners in the country. Some of the more junior miners and their exploration projects are only in their infancy and have been wound back or shelved until market conditions improve. But certainly the more established miners are already there, already active and they know what they want.’

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