A mixed bag for PNG

A mixed bag for PNG

by Jesse Riseborough, PNGIndustry News

28th March 2006

THE attraction of PNG as an investment and minerals-hosting destination has been reviewed as part of the annual Fraser Institute's Survey of Mining Companies, with PNG posting mixed results.

The annual survey, highly regarded within the economic community, interviewed companies that had spent a combined total of $US1.83 billion ($A2.57 billion) on international exploration in 2005 (about a third of the global expenditure) to gauge their impressions of 64 different jurisdictions.

The overall result for PNG reflected its significant potential for hosting world-class mineral deposits. However, the survey also revealed serious concerns from the world's
leading explorers over policy, land access, the lack of both quality infrastructure and a
geological database.

The survey's 'Current Mineral Potential Index' ranks the "best" places to explore in the world, taking into account both the mineral prospectivity of a region and the current policy environment.

PNG was ranked 50th out of the 64 countries – posting a score of 31% - down on last year's ranking of 33rd from 64 and a score of 60%. Neighbours Indonesia also slipped to 42nd with a score of 45%.

The top 10 jurisdictions were Chile, Nevada, Mongolia, Quebec, Mali, South Australia, Ghana, Mexico, Ontario and Western Australia. Zimbabwe, the Democratic Republic of Congo and Venezuela were all in the bottom 10.

However, the 'Best Practices Mineral Potential Index' was where PNG shone. The index calculates the most attractive country for exploration assuming best practice and no land use restrictions.

PNG posted a perfect 100% rating and ranked equal first along with Russia, Peru, Mali, Ghana and Indonesia.

Other results of note for PNG included 'Uncertainty Concerning Native Land Claims', with PNG ranked second from the bottom, above Zimbabwe, in terms of the level of deterrent to investment in the country due to uncertainties over landowner rights.

The lack of infrastructure was also identified as a major area of concern for explorers, rating just over 60% in terms of lack of infrastructure being a strong deterrent to investment. The lack of a quality geological database was also seen as a deterrent to investment in PNG.

Of the 164 companies to respond to the survey, 130 had increased their exploration expenditure from last year. Gold was assigned 50% of the overall budget of the companies, with copper receiving 15% and nickel 8%.