The Mineral Resources Development Company (MRDC) is as old as the independent state of Papua New Guinea itself. Managing Director Augustine Mano tells Business Advantage PNG that the state-owned fund now has a wide mandate to involve itself in domestic investment.

The newly-refurbished MRDC Haus in Port Moresby

The MRDC was established in 1975 to manage landowner funds in the form of development grants, royalties, business developments and equity participation in mineral, petroleum and gas projects.

The mandated royalty for petroleum projects is 2 per cent. The state receives 22 per cent of the production and grants 2 per cent as royalty to the landowners. This 2 per cent is paid to the MRDC.

The MRDC’s Augustine Mano

Managing Director Augustine Mano says in both the petroleum sector, and, more recently, in mining, 40 per cent of the MRDC’s revenues are distributed to beneficiaries.

A further 30 per cent is invested and the remaining 30 per cent is allocated for community infrastructure projects (‘we build classrooms, health facilities, provide clean water supplies or banks—like in the Kikori area, for example, where we built a BSP rural bank and Post Office.’)

‘We have diversified and our investments are in real estate and in stocks.’

‘At this stage in its evolution, the MRDC is focused on managing landowner and the provincial government entities,’ says Mano.

He adds that, although the company is 100 per cent state-owned, it is funded by the landowners ‘through the management fees that we collect’.

‘Our mandate is very, very clear. In the petroleum sector, it is to manage and distribute the royalties and equities [derived from petroleum projects], and in mining it is [to manage] the equity.’

Investing

Mano says the MRDC has changed its investment strategy away from its previous passive approach.

‘In the last 10 years, we have changed the way we do business. We have been very aggressive in pursuing investments and taking risks outside the traditional role of just the mining and petroleum areas.

‘We have diversified and our investments are in real estate and in stocks, both listed and unlisted.

‘The MRDC’s aim is both to assist in nation building and to get a good return.’

‘We have also gone into aviation [as a shareholder in PNG Air], we have gone into hospitality, and very recently, we have gone into the power business.

‘We have signed an agreement with Kumul Petroleum to promote cheaper, cleaner energy in Port Moresby.’

The agreement will see the construction of a 45-50MW gas-fired power plant, adjacent to the 57.8 MW Port Moresby Power Project being developed by Niu Power Limited.

Legacy project

Mano says the MRDC’s aim is both to assist in nation building and to get a good return.

The latter, he says, is ‘governed by our own internal investment guidelines, in terms of rate-of-return on investments.’

‘I want landowners to see what they can achieve.’

Artist’s impression of Star Mountain Plaza. Credit: NDY

The MRDC is involved in funding the new Hilton Hotel in Port Moresby, part of the Star Mountain Plaza development in Waigani.

Mano says Star Mountain Plaza (SMP) is a collaboration between the Kutubu landowners and the Ok Tedi landowners. The project’s design incorporates features that reflect the culture and geography of PNG.

‘This is a legacy project that claims back the landowner’s heritage and dignity whilst contributing to nation building,’ says Mano.

‘I want landowners to see what they can achieve if they’re committed to their dreams.

‘They can be inspired and motivated … and that can be the benchmark to motivate them to be successful in life.

‘Rather than just depending on royalties and equity, and thinking that that’s it, they can do something for themselves.’

Infrastructure

Mano says the MRDC’s aim is to develop projects at a high standard and then challenge the country’s superannuation funds, and other real estate developers, to do the same.

‘The SMP development will not only transform the Port Moresby landscape but also set a new benchmark for high-rise buildings in PNG’.

‘[We want to say] “This is the standard, can you build something like this or better?”

‘For me, that is the challenge. If we really want to build quality infrastructure in this country, then this is the standard.’