After a decade focused on existing minerals and hydrocarbons production, Papua New Guinea is gearing up for an anticipated wave of large new investments in its resources sector. We hear from some of the key players.

Drilling at the Arakompa project near the Kainantu mine in the Eastern Highlands. Credit: K92 Mining

An estimated US$50 billion pipeline of projects is lining up for development in Papua New Guinea, led by TotalEnergies’ Papua LNG, ExxonMobil’s P’nyang and the country’s first undersea gas project Pasca A in the liquefied natural gas (LNG) space, and the Wafi-Golpu and Frieda River gold-copper projects in mining.

These would provide a boon for a country that has not had major greenfield resources projects commence production since the ExxonMobil-led PNG LNG project in 2014 and the Ramu nickel mine in 2012.­­

Green shoots in mining

A powerful signal came in May 2023 when Newmont Corporation, the world’s largest gold miner, purchased Australia’s Newcrest Mining, giving it a 50 per cent share in Wafi-Golpu and full ownership of Lihir, PNG’s largest operating gold mine.

The opportunity to operate in PNG is “something that certainly fits well within our strategy,” Newmont Corporation Chief Executive Tom Palmer tells Business Advantage PNG.

While a special mining lease for Wafi-Golpu is still ahead, Palmer says the US$5.4 billion block cave project in PNG’s Morobe Province “will be developed”.

Sarimu Kanu, Managing Director of Kumul Minerals Holdings (KMHL), agrees. He says the PNG state will exercise its 30 per cent right to the project in full through KMHL, and he believes the parties – South Africa’s Harmony Gold is also a participant – are quickly “moving towards an agreement that will be acceptable to everyone.”

Another important milestone for the industry came in December 2023, when the Porgera gold mine in Enga Province resumed production after four years’ closure. The hard-won deal to reopen the mine leaves Barrick Niugini (BNL, a joint venture of Barrick Gold Corporation and China’s Zijin Mining) as operator but provides for a new owner, New Porgera Limited, jointly owned by BNL and PNG stakeholders.

“There is still a project. TotalEnergies is still the operator, and they’re working hard with all the EPC proponents to bring that cost down.”

While full production won’t be reached for some time, the reopened mine is already having an economic impact through the employment of 2,500 people, with plans to recruit “between 500 and 700 more”, according to Barrick Gold’s CEO, Mark Bristow.

Notably, under its new ownership and fiscal structure, over 50 per cent of the benefits from the mine will flow to local interests – a benchmark the PNG government has set resources projects under its “Take back PNG” agenda, introduced when Prime Minister James Marape came to power in 2019.

LNG plans

In petroleum and gas, ExxonMobil is working to complete the Angore Pipeline Tie-in Project in Hela Province, connecting it to PNG’s only existing gas project, PNG LNG. Natural gas from the US$1.3 billion development is expected to flow to PNG LNG’s Hides Gas Conditioning Plant by the end of 2024.

Meanwhile, privately-owned Twinza’s US$1.5 billion Pasca A undersea gas project has made progress in 2024, thanks to an agreement with state-owned Mineral Resources Development Company (MRDC), which will see MRDC acquire up to a 50 per cent participating interest in the project.

Development could begin by early 2026 if all regulatory approvals go to schedule, according to Twinza Chairman Stephen Quantrill. Undersea gas is new to PNG but several other companies have Petroleum Prospecting Licences in the Gulf of Papua and are watching Twinza’s progress with interest.

Drilling at the Antelope gas field. Credit: TotalEnergies

Newmont and Barrick Gold are the world’s two biggest gold producers, and PNG is the only country outside of the Americas where both companies have operating mines.

These positive signals have been tempered somewhat by the news that a final investment decision (FID) on Papua LNG, the highly anticipated US$10 billion project being led by TotalEnergies, has been pushed back from mid-2024 to now late 2025 or early 2026.

Wapu Sonk, Managing Director of state-owned Kumul Petroleum, which is preparing to take up the state’s full 22.5 per cent equity entitlement in the project, says the delay was caused mainly by high costs for engineering, procurement and construction (EPC) – after contractors quoted 40 to 50 per cent more than expected.

“All the different scopes have had to be re-tendered and we’ve invited other participants to come into the mix,” he says.

“There is still a project. TotalEnergies is still the operator, and they’re working hard with all the EPC proponents to bring that cost down.”

‘Mountain of gold on a lake of oil’

Resources have been the backbone of the PNG economy since the Panguna copper-gold mine in Bougainville underpinned the country’s move to independence from Australia in 1975.

PNG currently has seven mines in operation, and it is ranked 10th in the world for mining’s contribution to its economy in 2022, according to the International Council on Mining & Metals.

Moreover, thanks to PNG LNG, the International Group of LNG Importers (GIIGNL) reported PNG was the 10th largest exporter of LNG in 2023.

PNG boasts an impressive concentration of major resources companies. ExxonMobil and TotalEnergies, two of the top three oil and gas supermajors by revenue, are both heavily invested in the country. Newmont and Barrick Gold are the world’s two biggest gold producers, and PNG is the only country outside of the Americas where both companies have operating mines.

If a substantial presence of majors isn’t enough on its own to attract entry investors to PNG’s resources sector, then the country’s geological prospectivity should be. Colloquially, PNG has earned a reputation for being a “mountain of gold floating on a lake of oil.”

The country sits on the Pacific’s “Ring of Fire”, an arc stretching from PNG to southern Chile which hosts most of the world’s large copper-gold porphyry deposits.

A 2013 United States Geological Survey report estimated that PNG had undiscovered porphyry resources containing 61.7 million metric tonnes of copper (compared to the 33.9 million tonnes in known resources at the time) and 4,062 tonnes of gold (known resources: 2,412 tonnes).

In petroleum and gas, PNG is equally prospective, with an estimated 25 trillion cubic feet of gas reserves already identified.

Challenges abound…

PNG is not without its challenges, however, with Barrick CEO Bristow urging the government to focus on improving law and order.

“There’s no doubt that Papua New Guinea has a lot of mineral endowments. But money needs a friendly environment, and sometimes that’s not the case in PNG,” he says.

Another challenge is cost, according to Grant Craighead, Managing Director of Canterbury Resources, which has exploration projects in PNG and Australia.

“In Queensland, there’s road, rail, power, water, people, equipment – all within an hour’s drive from our deposit,” Craighead says.

“In PNG, you’ve got zero of those opportunities, which is why everything is three times as costly and three times as slow to achieve. And [therefore], the scale of the deposit you’ve got to find is three times as big.”

But optimism remains

And yet, despite the challenges, investors remain excited about the opportunities in PNG’s resources sector.

Indeed, for some, the biggest consideration is how to position themselves in the queue for development in a developing country with capacity constraints. For instance, the queue for large LNG project development is already notionally lined up until the mid-2030s.

As Phil McCormack, Project Director for Frieda River, notes: “There are some large-scale projects in PNG. The government is not geared up to deliver four or five multi-billion dollar projects at the same time. [But] I don’t think Australia could do the same either.”

This is a version of an article first published in the Business Advantage PNG Mining & Energy Special Edition 2024/25, which was published earlier this month.