The Managing Director of PanAust, Fred Hess, has announced a rethink on the company’s proposed Frieda River mine project. ‘It is no longer just a mining project’—it is a development project for the Sandaun and Sepik provinces, he told the Papua New Guinea Mining and Petroleum Conference in Port Moresby.

PanAust’s Fred Hess

Hess said the company has identified a number of opportunities to explore other value creation opportunities. He said the company is getting ‘very close’.

The Frieda River region is remote, Hess noted, and the previous plan to ship the ore involved ‘a combination of roads, pipelines, riverine barge transport and also marine barge transport to Wewak’.

He said the distance ‘was of the order of about 660 kilometres’ and involved potential risks to the 300,000 people living on the Sepik River.

‘As a result of producing the feasibility study and sitting back and thinking about the opportunities that present themselves—which were not investigated at the time—we looked at some of the alternatives.

‘The company is also rethinking its approach to power.’

‘Now, we are far more optimistic.’

Road and power

The Frieda River project in Sandaun Province. Credit: Xstrata Copper

Hess said the company is now looking ‘at an access route to the mine site’ by road. If implemented, this would halve the distance travelled and change the economics of the mine.

‘We are hoping to have the study completed in the first half of next year, but really we believe that we have now been able to effectively double the length of the mine life.’

Hess said the company is also rethinking its approach to power. He said the company now sees power as a ‘standalone business opportunity’.

‘What became apparent is that it was possible to set up commercial alternatives to developing the infrastructure.’

‘We think we can come up now with a solution that involves power not just for the mine site, but power that can be exported. This changes our approach to how we develop the project.

‘The hydropower station based on the embankment will store not only the tailings and waste droppings but also water that is available for hydro generation.

‘We have also changed from looking at building infrastructure solely for use in the mine to expanding the infrastructure to have shared use.’

Infrastructure

Hess said this would open up infrastructure for other industries.

‘What became apparent is that it was possible to set up commercial alternatives to developing the infrastructure—in which case we didn’t have to bear the full capital cost ourselves upfront.

‘If they are commercially viable, someone else could build them and we could pay for their use.’

‘There could be 50 years of hydroelectric power after the mine is finished.’

Hess said the mine life is now estimated to be 35 years. He said ‘if the road were in place, it has the potential to take 12 to 24 months off the entire development schedule.’

This would reduce the development time line for the mine from five years to three years.

Hess added that there could be 50 years of hydroelectric power after the mine is finished. ‘That is quite a legacy. Power is crucial to remote areas.

‘There is the opportunity to generate hydroelectric power: not only to satisfy the requirements of the mine but also to have it available for export.

‘It is a great opportunity for mining to act in the vanguard for other investments and industrial development. PNG Power is very interested in participating with us.’

Partners

Hess said a number of firms are capable of doing the mine development, construction of the hydro dam and power generation, and the infrastructure work for the power grid.

‘There is quite a bit of competition to get involved.’

Hess said potential partners are ‘are also looking to bring with that the financing that is required and showing a lot of interest in participating from an equity point of view.’

The development could also be of interest for China’s One Belt One Road initiative. Hess said the company is actively promoting the project with the governments of both Papua New Guinea and China.