A profile of the mining sector in Papua New Guinea, including mining companies, licences and leases and tax incentives.

Lihir Gold Mine is in Niolam Island, 900 kilometres north-east of Port Moresby. Credit: Newcrest Mining (now Newmont).

Industry snapshot

Papua New Guinea’s mining sector is one of the nation’s strongest industries. Mining accounted for more than 10 per cent of GDP in 2019 and the sector was responsible for 35 per cent of the country’s export revenues. Principal mineral exports were gold, copper, nickel and cobalt.

Copper is of strong interest to PNG in the long-term, given the plans to develop the Wafi-Golpu and Frieda River mines, which are forecast between them to produce 370,000 tonnes of copper per year by 2036.

Total mineral export, including LNG and condensate, receipts were K25,778.4 million in 2020, a decrease of 20 per cent on the previous year. The decrease was due in part to the COVID-19 pandemic, which affected export volumes of all the mineral commodities.

PNG has four large mines:

1. Ok Tedi (copper)
2. Porgera (gold)
3. Lihir (gold)
4. Ramu (nickel and cobalt)

Significant recent announcements and developments at each operation have been made recently, changing the landscape of the resources sector in PNG.

Current mines

Ok Tedi (Western Province)
Production: 1984 to 2050

The Ok Tedi mine at Mount Fubilan in Western Province is PNG’s longest-running mine, having produced more than 5.2 million tonnes of copper, 15.9 million ounces of gold and 36 Moz of silver since beginning commercial operations in 1984. In 2022, Ok Tedi produced 248,000 oz of gold and 73,000 tonnes of copper.

State-owned KMHL owns 67 per cent of operator Ok Tedi Mining Limited (OTML), with three separate Western Provinces entities owning the remainder.

The mine was nationalised by the PNG government in 2013, one decade after Australia’s BHP transferred its majority ownership to a specially created vehicle, PNG Sustainable Development Ltd, following major environmental damage to the Fly and Ok Tedi rivers caused by the mine.

OTML has embarked on a comprehensive operating improvement campaign to support its board’s decision to extend the mine’s life to 2050.

Porgera (Enga Province)
Production: 1984 to 2030

Porgera has been producing gold for more than 28 years. Its production in 2017 was about 500,000 ounces of gold and 204,000 in 2018 (due to the Highlands earthquake). The mine life is projected to be 10 years, with another 10 years after that considered likely.

Porgera is subject to heavy rain, tribal conflicts, illegal mining and transport issues because it is located at the end of the Highlands Highway.

China’s Zijin Mining Group Co Ltd became a 50 per cent stakeholder in the Porgera gold mine in 2015 after forming a strategic partnership with Barrick Gold: the Porgera Joint Venture (PJV).

In December 2023, the Porgera gold mine in Enga Province resumed production after four years of 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.

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.

Lihir (New Ireland Province)
Production: 1997 to 2030
Gold mining on Lihir Island operation commenced in 1997. Ranked as the third largest gold mine in the world, Lihir is considered to be PNG’s most productive mine. 14.3 million tonnes were mined in the 2018-2019 financial year, generating A$301 million of free cash flow. The mine has an estimated 45 million ounces of gold.

The mine was impacted by the COVID-19 pandemic in 2021 because of travel restrictions, contact tracing, isolation requirements and the ability to attract labour.

In May 2023 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 the Lihir mine. 2023 gold production for the mine was recorded at 625,649 oz.

Kainantu (Eastern Highlands Province)
Production: 2018 to 2038
The Kainantu mine, which ceased production in 2010, was acquired by Canada’s K92 Mining (formerly Otterburn Resources Corp) from Barrick Gold in 2014. K92 Mining has spent or committed 57 per cent of the US$320 million earmarked for its stage 3 and 4 expansions, which are expected to quadruple current gold, copper and silver production to 470,000 ounces (oz) per year of gold-equivalent by 2027.

When K92 acquired Kainantu from Barrick Gold in 2015, the operation had been on care and maintenance for six years and had never achieved commercial production.

K92 achieved commercial production in January 2018, with the processing plant initially capable of handling 200,000 tonnes per annum (tpa) of ore throughput – enabling production equivalent to 50,000 oz of gold per annum.

The company quickly embarked on its stage 2 and stage 2A expansions, which took the mine to 600,000 tpa by May 2023.

Commissioning of the stage 3 plant will begin in the second quarter of 2025 and will double the plant’s capacity. Work will then begin on stage 4, with the aim of increasing capacity to 1.8 million tpa by the first half of 2027.

Kainantu currently has a 7.6 million oz gold-equivalent resource, thanks largely to the 2017 discovery of the Kora North deposit.

Simberi (East New Britain Province)
Production: 2018 to 2026

Simberi is an open pit mine on the northernmost island in the Tabar group of islands in New Ireland Province. It has been producing gold from oxide ores since 2008.

Operator St Barbara’s recent strategic review of its Simberi gold mine provided confidence that oxide life can be extended through to 2026. It also confirmed the potential to extend the mine life by at least 10 years by processing ore from sulphide mineralisation contained below the oxide pits.

The St Barbara-owned operation produced 64,791 oz gold in the 2023 financial year.

According to St Barbara, key near-term steps to progress expansion include an update to the mine’s mineral resource and ore reserves estimate, an update to the feasibility study, completion of work specified by PNG’s Conservation & Environmental Protection Authority, and an exploration drilling program in 2024/25.

With a viable development pathway for the Simberi identified, St Barbara says it can now engage with the PNG government, the New Ireland Provincial government and local landowners on renewal of the mining lease, due in December 2028.

Hidden Valley (Morobe Province)
Production: 2019-2030
Harmony Gold bought Newcrest Mining’s half share in the mine in 2016 and now fully owns the operations at Hidden Valley.

The open-pit gold and silver mine in Morobe Province has been in production since 2010 and its mining lease is due to end in 2030. In 2023, additional work on mine life added a further 200,000 oz of gold to its reserves and studies are underway to convert another 2.4 million oz gold resources to reserves.

Meanwhile, Harmony has budgeted K20 million on exploration at Kerimenge, 7 km from Hidden Valley, and pre-feasibility drilling and metallurgical tests are underway.

In 2023, the mine produced 173,548 oz gold and 3,397,313 oz silver.

Ramu (Madang Province)
Production: 2011 to 2040+
The Ramu nickel-cobalt project, majority-owned by the Metallurgical Corporation of China Ltd, started exporting from the Kurumbukara mine at the end of 2012. It is one of the top 15 nickel producers in the world. The company in late 2018 said it would expand the mine, investing over US$1.5 billion (K4.8 billion) into the project.

In 2023, it produced 33,604 tonnes of nickel and 3,072 tonnes of cobalt contained in mixed hydroxide precipitate. To put this in perspective, Ramu produces just under 1 per cent of the world’s nickel and around 1.3 per cent of its cobalt.

Canada’s Nickel 28 holds an 8.56 per cent interest in Ramu NiCo Management, alongside majority owner and operator Metallurgical Corporation of China (85 per cent) and PNG’s Mineral Resources Development Corporation (MRDC, 6.44 per cent).

The operator of the mine is conducting a study with Kumul Minerals Holdings on collaboration in downstream processing which it expects to complete by the end of 2024.

Future projects

Frieda River (West Sepik Province)
Production: Feasibility study complete

PanAust’s projected Frieda River mine – located in Sandaun province, right on the border of East Sepik – is actually just one of four integrated projects proposed in its 2018 updated feasibility study.

These are:

• The copper-gold mine project itself – a conventional open-pit mine with a projected capital cost of US$2.8 billion;
• a 490MW hydroelectric project, which will double as a tailings storage facility, at a capital cost of US$3.2 billion;
• a power grid project, with around 400km of transmission lines running southeast to Hides (in Western province) via Telefomin and north-west to Vanimo and beyond, costing US$418 million; and
• enabling infrastructure, including airport and port upgrades, construction or upgrades of around 300 km of roads, and a 300 km pipeline to feed concentrate to Vanimo for shipment to export markets, all of which carries a price tag of around US$739 million.

PanAust, the Australian subsidiary of China’s state-owned Guangdong Rising Holding Group, is hoping to have its environmental impact statement approved by the end of this year, followed by a special mining lease (SML) in 2026.

If everything goes to schedule, it will complete detailed design and engineering by 2028, and start construction in 2029, with ore production commencing in 2035.

Wafi-Golpu (Morobe Province)

Production: pending approval of special mining licence

Wafi-Golpu is one of the world’s largest undeveloped copper-gold block-cave projects, boasting 5.1 million ounces of gold and 5.1 million pounds (lbs) of copper in probable reserves, according to a February 2024 update from Newmont Corporation.

The project, in Morobe province, is owned by a 50/50 unincorporated joint venture [JV] between US-headquartered Newmont and South Africa’s Harmony Gold Mining Company. Under PNG law, the state may acquire up to a 30 per cent participating interest in Wafi-Golpu, with 20 per cent expected to be held by state nominee Kumul Mineral Holdings (KMHL) and 10 per cent by the Morobe provincial government and local landowners.

In May 2019, the project was put on hold by the country’s National Court due to an application by the Morobe provincial government for leave for a judicial review. This application was rejected in February 2020.

A final investment decision (FID) can be reached 30 months from approval of the MDC and SML which are predicted to be confirmed end of 2024-2025, meaning development of Wafi-Golpu could begin by the first half of 2027.

Yandera (Madang Province)
Production: Feasibility study
Discovered in the 1950s, the Marengo Mining project is a Copper-Molybdenum-gold resource. It has estimated reserves of 580 million tonnes of ore grading 0.41 per cent copper, 0.01 per cent molybdenum and 1.1 million ounces of gold.

Woodlark (Milne Bay Province)
Production: Licence granted
The Kula Gold project, in which GeoPacific Resources has a 93 per cent interest, contains a 2.1Moz resource and 766,000 ounce reserve for a nine-year mine life. Gold production is forecast to be 100,000 ounces per annum and the mine life is expected to be 10 years.

Tolukuma (Central Province)

Production: Infrastructure creation

Located just 100 kilometres north of Port Moresby, Tolukuma produced around 1 million ounces (Moz) of gold and 2.4 Moz of silver between 1995 and 2015, when it was put on care and maintenance by state-owned mining entity Petromin Holdings (now Kumul Minerals Holdings).

Tolu Minerals acquired the mostly underground mine, and associated assets and infrastructure, in October 2022 and listed on the Australian Securities Exchange in January 2024, raising A$17.3 million (K45 million), followed by an additional raising of A$8.8 million in April 2024.

Tolu is aiming to restart production at 80,000 oz of gold per year, before expanding to 120,000 oz on the back of resource growth. Further long-term growth will be on the back of exploration activities across its mining lease area.

Exploration activity

Global spending on exploration for non-ferrous metals rose from US$7.3 billion (K24.7 billion) in 2016 to US$8.4 billion (K28.4 billion) in 2017, the highest level since 2013, according to Standard & Poor’s (S&P) Global Markets.

Mineral exploration spending in PNG averaged K380 million between 2010 and 2019, peaking at K606 million in 2013. But it has plummeted since, averaging just K138 million between 2020 and 2022, and with no signs of the recovery seen globally.

Despite challenging market conditions, exploration continues in PNG. Prospects in cobalt and lithium in particular are attracting interest.

There is also a significant informal alluvial mining sector that employs thousands of Papua New Guineans on a full-time or part-time basis. Alluvial mining is reserved for local businesses only.

An interactive map of mining tenements in PNG is available on the MRA website.

Training and human resources

PNG’s mining industry has faced a shortage of experienced national professionals for many years. This resulted from strong growth in the industry over the past decade and the exodus of mining engineers, geologists and other industry professional, which is testimony to the high standard of training and experience embodied in the domestic market. On the other hand, local training institutions tend to be viewed as under resourced and are in need of increased government funding for facilities upgrades and new equipment.

But several successful industry-operated training centres have been developed in PNG over the past decade, such as Ok Tedi Mining’s Star Mountains Training Institute in Tabubil, Western Province.

Other institutions providing training relevant to PNG’s mining and petroleum sectors include:

• Department of Mining Engineering, Papua New Guinea University of Technology (Unitech), Lae
• Division of Earth Sciences, School of Natural and Physical Sciences, University of Papua New Guinea (Port Moresby)
• Port Moresby Technical College (Pomtech)
• The Mineral Resources Authority’s Wau Small Scale Mining Training Center (SSMTC) in Morobe Province

Governance and legislation

The principal laws that regulate mining activities in PNG are:

• Mining Act 1992,
• Mineral Resources Authority Act 2018,
• Environment Act 2000
• and Mining Safety Act, which stipulates safety requirements on mine sites.

In June 2020, the Parliament of PNG passed the Mining (Amendment) Bill 2020 amending the Mining Act 1992. The amendments introduce a ‘live data’ reporting obligation, give the state entity, Kumul Minerals Holdings (KMH), priority in tenement applications over reserved land and afford KMH the option to take up to 100 per cent equity in projects. The Marape government has also announced its intention to move to Production Sharing agreements rather than Royalty Tax agreements.

Copies of these Acts are available on the Mineral Resources Authority (MRA) website. The MRA is responsible for administering both Acts. The development of policy for the mining sector is the responsibility of the Department of Mineral Policy and Geohazards Management.

The MRA became operational in June 2007. It has several roles, including:

• To promote PNG as a destination for exploration and mine development
• To facilitate and encourage exploration through the provision of relevant exploration and geological data
• To increase all mining and exploration activity in the sector
• To closely monitor mining projects and provide support to operating companies, landowners and communities
• To encourage sustainable development.

The Department of Environment and Conservation administers a Code of Practice for Mining, which stipulates the environmental responsibilities of mining projects in PNG. Use of water resources within mining and exploration tenements is governed by the Water Resources Act.

Mining licences and leases

All land in PNG, including the seabed beneath the country’s territorial waters, is potentially open to mining activity. Under the Mining Act, the State owns all minerals existing on, in or below the surface of any land or in any water lying within the territory of PNG.

The various types of mining tenements (licences and leases) issued under the Mining Act on recommendation from the Mining Advisory Council include:

• Exploration Licence (EL)
  A two-year licence that allows the licensee to occupy and explore a specified area.
• Mining Lease (ML)
  A 20-year lease that allows the licensee to mine within a specified area that can be extended for 10 years.
• Special Mining Lease (SML)
  A longer lease (not exceeding 40 years) issued for larger, more complex projects. It may be extended for 20 years.
• Alluvial Mining Lease
  A five-year lease reserved for Papua New Guineans conducting non-mechanised mining operations on their own land. This can include joint ventures with overseas partners, provided the project is at least 5 per cent owned by Papua New Guineans.
• Mining Easement and Lease for Mining Purposes
  Issued explicitly for the development of roads, powerlines, port sites and other associated infrastructure related to a mining project.

Process for approving an Exploration Licence

Licences are issued by the Tenement Management Branch of the MRA. Application forms and a Schedule of Fees, Rents, Security and Exploration Expenditure Requirements is available from the MRA website or direct from the MRA head office at Mining Haus in Port Moresby (see address below).

Once an application for an Exploration Licence (EL) has been received, the MRA checks the Registry of Tenements to ensure the land is available, and reviews additional information provided by the applicant, such as the program of work set out in the application (which should include plans for post-exploration rehabilitation) and project finances. It also seeks advice from the Department of Environment and Conservation on environmental impact, as stipulated under the Code of Practice for Mining.

The MRA will then host a Mining Warden’s Consultation Forum between landowners and other affected people local to the tenement and the exploration company. With approximately 97 per cent of land in PNG held under customary laws, this process is critical.

Once the Warden’s forum has been held and all issues are resolved, the application is received by the Mining Advisory Council, which makes a recommendation to the Minister for Mining, who is ultimately responsible for approving all mining and exploration leases, with the exception of Special Mining Leases. The Governor-General of PNG, on advice from the National Executive Council, approves special Mining Leases.Exploration Licence reporting requirements and extensions

Once an Exploration Licence (EL) is granted, the licensee must submit biannual and annual reports to the MRA on its progress. A statement outlining reporting requirements for exploration licences and mining leases is available from the MRA.

The MRA may ask for additional reporting at its discretion. Penalties exist for late lodgement of reports, false reporting and environmental breaches.

A licensee may apply for extensions to an EL using the application process detailed above. Holders of an EL are obliged to relinquish not less than half the original tenement when renewing the licence.

Mining and Special Mining Lease requirements and extensions

Under the conditions in Mining Leases and Special Mining Leases, licensees must provide the following studies prior to operations being given final approval:

• Bankable Feasibility Study
• Scoping study
• Environmental Inception Report
• Environmental Impact Statement
• Compensation Agreement

Guidelines and standard templates for these reports are available from the MRA.

A development forum hosted by the MRA will then be held between the licensee, the relevant provincial and local governments, and the local landowner association with the purpose of negotiating a Memorandum of Agreement, which includes important clauses on benefit sharing. The State is a co-signatory to this memorandum.

In the case of a Special Mining Lease a Mining Development Contract is also signed between the State and the licensee, which prescribes a number of obligations of both parties.

Once the Mining Lease or Special Mining Lease is granted, the licensee must submit monthly, quarterly, biannual and annual reports to the MRA on its progress. A statement outlining reporting requirements for exploration licences and mining leases is available from the MRA.

The MRA may ask for additional reporting at its discretion. Penalties exist for late lodgement of reports, false reporting and environmental breaches.

Mining operations are subject to quarterly site inspections by the Mines Inspectorate Branch of the MRA’s Regulatory Division, which audits technical compliance with the Mining Permit, other relevant agreements and regulations, and internationally-accepted technical standards (eg. United States or Australian standards). The inspectorate operates to enforce the Mining (Safety) Act and Regulations, and any other Act as directed by law or statutory determination.

Application for extension of the term of mining tenements can be lodged as per the Mining Act 1992.

Tax incentives

There are a number of incentives for the mining sector, including an income tax rate of 30 per cent for mining projects, dividend withholding tax of 10 per cent, royalties of two per cent and interest paid by a resource project to a non-resident lender being exempt from income tax and interest withholding tax.

A double deduction is available for certain mineral exploration expenditure, and all development expenditure on a project may be deducted on a 25 per cent diminishing value basis.

Mining projects are also eligible to take advantage of PNG’s Infrastructure Tax Credit Scheme, which deems eligible expenditure on certain approved infrastructure to be tax paid. The amount that may be claimed as a credit is either the total eligible expenditure, or 0.75 per cent of the taxpayer’s total assessed income, whichever is the least.

The Bank of Papua New Guinea said in its March 2019 Monetary Policy Statement that ‘current policies in relation to the extractive industries give a lot of tax concessions to the project partners for the development of major projects in PNG’, resulting in ‘most of the export earnings in foreign currency (being) held in offshore foreign currency accounts.’

Information resources

Mineral Resources Authority
www.mra.gov.pg

Department of Mineral Policy and Geohazards Management
Tel +675 321 4011

Department of Environment and Conservation
www.dec.gov.pg

PNG Chamber of Mines and Petroleum
www.pngchamberminpet.com.pg

Extractive Industries Transparency Initiative
https://eiti.org/papua-new-guinea

Useful publications

Profile: Mining and Petroleum Investment – Papua New Guinea, published biennially by the Papua New Guinea Chamber of Mines and Petroleum

Industry events

PNG Mining and Petroleum Investment Conference. Alternately held in Sydney and Port Moresby, and run by the PNG Chamber of Mines and Petroleum, this annual event is the major gathering point for those doing business in the country’s resources sector.

The PNG Alluvial Mining Convention and Trade Show was last run in 2018 by the Mineral Resources Authority.

What else would you like to know?

This sector file is a living document created as a service to our subscribers. It is updated from time to time, as new information comes to hand.

Is there something else you’d like to know about this sector? Is there new information we haven’t included? Let us know in the Comment section below, or email editor@businessadvantageinternational.com and we’ll look into it.