The US$7 billion Frieda River copper-gold project is one of the largest in Papua New Guinea’s development pipeline but may take another decade to come into production. Business Advantage PNG looks into why its developer, PanAust, considers it worth the wait.

Project overview for Frieda River. Credit: PanAust

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 300km of roads, and a 300km pipeline to feed concentrate to Vanimo for shipment to Asian export markets, all of which carries a price tag of around US$739 million.

“The idea that we have is we’re working behind Wafi. Their SML is likely to be approved this year. Then there’s a three- to four-year construction cycle, and that fits well with our timing”

Long timeline

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, according to PanAust’s Project Director Frieda River, Phil McCormack, it will complete detailed design and engineering by 2028, and start construction in 2029, with ore production commencing in 2035.

McCormack is excited about the benefits the Frieda River copper-gold project will bring to PNG’s Sepik region. However, he tells Business Advantage PNG that the country can only absorb a certain number of resources projects at any one time.

“We’re cognisant of the fact that you cannot have all these major projects – Papua LNG, P’nyang, Pasca A and Wafi [Golpu] – kick off at the same time. Otherwise, you’d have hyperinflation in PNG. People wouldn’t be able to afford housing. You’d have to import workers into PNG,” McCormack says.

“The idea that we have is we’re working behind Wafi. Their SML is likely to be approved this year. Then there’s a three- to four-year construction cycle, and that fits well with our timing,” McCormack continues.

“That way you will see a skilled workforce being developed in PNG. They’ll come off the gas projects and go onto the Wafi project, then they’ll come onto the Frieda project. That way, you’ll see sustained growth.”

Gamechanger for Sepik

At full production, Frieda River is expected to produce 175,000 tonnes of copper per year – which would make it PNG’s largest copper mine – and 230,000 ounces of gold.

A project of that size requires massive supporting infrastructure to bring in all the equipment it needs and ship out the metal it produces, McCormack notes.

“PNG doesn’t [currently] have the capacity for that. That’s why we’re marketing this as an infrastructure project supported by a mine.”

The Frieda River Project airstrip along the Frieda River on the border of Sanduan and East Sepik Provinces. Credit: PanAust

Once the project is developed, PanAust’s project director sees it unlocking the economic potential of the Sepik region.

“The northern part of PNG has been infrastructure-challenged for years,” McCormack says, noting that most capital spending has taken place in the Highlands and Southern Regions.

“Along with Wafi, we’ll take that capital from the south and move it further north and we’ll start seeing the Momase [Morobe, Madang, Sepik] Region also develop.”

PanAust acquired an 80 per cent interest in Frieda River from Glencore (which had acquired it in its merger with Xstrata) for US$75 million in 2014, and the remaining 20 per cent from Cobalt 27 (now Nickel 28), after Cobalt 27’s 2019 takeover of Highlands Pacific in 2019. The company has operated the Phu Kham copper-gold operation in Laos since 2005.

Looking back on his six years in the role, McCormack admits that it has been as challenging as it has been rewarding. But, he adds, “We’re in it for the long haul with PNG and hence why we’ve been there for 10 years and why we continue to invest every year.”

This article was first published in the Business Advantage PNG Mining & Energy Special Edition 2024/25, which was published in October 2024.