|Geography||Fiscal Provisions Applicable to the Mining Sector|
|Climate||The Mining Act and Mining Advisory Board|
|Population and Language||Licence types|
|Government and Judiciary||Geological Framework|
Full name: The Independent State of Papua New Guinea
Capital: Port Moresby
Population: 5.3 million, 85% of whom are rural based
Land Area: 462 243 sq.km
Mean Temperature: 26°C
People: 95% Melanesian, 5% Polynesian, Micronesian and Chinese
Languages: 805 indigenous languages plus Pidgin, Motu and English
Government: Independent State and member of the
Legal System: Based on English common law
GDP: K11.63 billion (approx US$3.6 billion)
GDP per head: US$675
Major industries: Gold, oil, copper, coffee, silver, copra, palm oil processing and logging
Trading partners: Australia, Japan, USA and China
Papua New Guinea lies in the southwest Pacific, just below the equator, between Asia and Australia. It comprises more than 600 islands and covers 474,000km2. Papua New Guinea is located between latitudes ~ 1° South and 12° S and longitudes 141° East and 158° East and comprises the eastern one-half of the island of New Guinea, which is one of the largest islands in the world; the archipelago includes an additional 3 large islands (Bougainville, New Britain, and New Ireland).
The major islands of New Ireland, Bougainville and New Britain are surrounded by striking coral formations.
PNG is geologically highly prospective for both on land and offshore minerals. The mining industry is a major contributor to the export income (44% in 2000) and the taxation revenue of the nation, and accounts for about 15% of the gross domestic product (GDP). Papua New Guinea produced 74.5 tonnes of gold in 2000 and 67.0 tonnes in 2001. Copper production, which is exported as a concentrate, averages around 200,000 tonnes per year.
PNG’s mining industry revolves around production from four large open-cut mines (Ok Tedi, Porgera, Misima and Lihir).
The country extends from the equator to latitude 10° south and the climate is typically monsoonal – often being hot, humid and wet all year-round.
Temperatures on the coast are reasonably stable all year (between 25° and 30°C; 77° to 86°F).
|Population and Language|
Papua New Guinea is essentially a southwest Pacific Melanesian culture with Polynesian and Micronesian influences.
The population of 5.3 million people can be loosely divided into four regional groupings:
• Highlanders – living in the mountainous part of Papua New Guinea
• Papuans – from the south coast
• New Guineans – from the north mainland coast
• Islanders – from the offshore islands
Over 800 discrete languages (tok ples) have arisen. In New Guinea, Melanesian Pidgin evolved in the post-German administration times by integrating words of many languages, including German, Malay and Kuanua (Tolai), with basic English. English has been adopted as the country’s official language and it is widely spoken amongst educated people. There are people who understand English in most areas of PNG.
|Government and Judiciary|
Papua New Guinea became an independent parliamentary democracy on 16th September 1975. There are three levels of government – national, provincial and local.
The National Parliament, sometimes referred to as the House of Assembly, has 109 seats; 89 members are elected from open electorates and 20 from provincial electorates.
Each of the provinces has a provincial assembly, governor and a bureaucracy to handle provincial matters.
The highest judicial body is the Supreme Court. The Chief Justice is appointed by the Governor General on the proposal of the National Executive Council after consultation with the minister responsible for justice.
Papua New Guinea recognizes the importance of basic education, with about 70% of children attending primary (community) school and about 30% passing onto secondary school.
Tertiary institutions that train professional geologists, engineers and metallurgists include the University of Papua New Guinea at Port Moresby and the University of Technology at Lae.
The isolated mountain and island communities of Papua New Guinea
and the mining industry have a long and enthusiastic relationship with
air travel. The national carrier Air Niugini provides national and
international services including Australia - to and from Cairns
(1.3 hours flying time), Brisbane (3 hours flying time), Sydney
(4 hours flying time, ex Brisbane).
|Hoskins Airport Entrance, New Britain Island|
|Fiscal Provisions Applicable to the Mining Sector|
A summary of the mining fiscal terms for new mining projects are presented in the Table below.
Income tax rate
Dividend withholding tax rate
Accelerated depreciation allowance
25% DB Pool
Deductions of exploration expenditures
Capital gains tax
The holder of a special mining lease or a mining lease must pay a royalty to the state equivalent of 2% of the net proceeds of sale of minerals (calculated as net smelter return or fob export value, whichever is appropriate).
At least 20% of the royalties from a project are distributed to the landowners of the project area; and the province in which the project is located.
|The Mining Act and Mining Advisory Board<|
The principal legislation in Papua New Guinea that regulate mining activities are the Mining Act 1992 and the Mining Safety Act (Ch. 195A).
Under the Mining Act, the State owns “all minerals existing on, in, or below the surface of any land in Papua New Guinea”. The State’s Minister for Mining can issue various types of leases or licenses (mining tenements) to interested companies on application, to enable them to engage in various exploration and/or mining activities in Papua New Guinea.
The Mining Advisory Board
The Mining Advisory Board’s functions are to advise the Minister on such matters as the Minister may refer to the Board, and such other matters as specified in the Act (e.g. make recommendations to Minister on various applications for grants / extensions of mining tenements).
The various types of licences issued under the Mining Act on recommendation from the Mining Advisory Board include:
Exploration Licence (EL) granted for a term not exceeding 2 years and may be extended for periods up to 2 years
Mining Lease (ML) granted for a term not exceeding 20 years, which may be extended for such period not
exceeding 10 years.
Exploration Licence (EL)
The area of land in respect of which an EL may be granted must not be more than 750 sub-blocks (one sub-block = about 3.41km2). When applying for an extension of the term of the EL, not less than half of the area held at commencement of that term must be relinquished. Where the area of an EL has been reduced to not more than 30 sub-blocks, the EL holder will not be required to make any further relinquishment on renewal.
Papua New Guinea’s unique geology and substantial mineral resources result from its position on the interactive tectonic boundary between the cratonic Indo-Australian Plate to the south and the oceanic Pacific Plate to the north. (Fig. 1)
Fig.1 Papua New Guinea in relation to major geological elements of South East Asia and Australia.
The geological framework of Papua New Guinea comprises a series of geological terranes (discrete geological regions) that are commonly separated by geological elements (structures, etc.) (Fig. 2).
Fig. 2 Geological framework of Papua New Guinea.
New Britain is typical of the other Melanesian Island arcs.
In central New Britain, several 30-22Ma age porphyry copper style mineralization occurrences were prospected during the 1970s and 80s. Some of the occurrences are partly obscured by Pliocene Ania Tuff. Many of the porphyries are the current focus of exploration activities.