(Reuters) - Global miner Xstrata Plc (XTA.L) has lifted its initial capital spending estimate for the undeveloped Frieda River copper mine in Papua New Guinea by $300 million to $5.6 billion, a minority partner in the project said on Monday.
A number of new mining projects in Papua New Guinea and neighboring Australia have needed to rethink costs during or before construction begins, given unfavorable currency movements and higher energy and labor costs. Australia-listed Highlands Pacific (HIG.AX) said it had received a feasibility study from Xstrata that indicated the new estimate and also cited a proposed switch from hydro-electric power to gas if the project proceeds. New Guinea Energy (ASX: NGE) has banked in US$15 million (A$14.2 million) from the sale of PPL 277 in Papua New Guinea to ExxonMobil (NYSE: XOM) and Oil Search (ASX: OSH) to finance its exploration activity.
Importantly, it ties part of the company’s growth to the expansion of the ExxonMobil-led PNG LNG liquefied natural gas project by providing a source of ongoing revenue in the event of commercial development. Chief executive officer Grant Worner said the sale strengthened New Guinea’s balance sheet while retaining exposure to the upside potential. SYDNEY, Dec 12 (Reuters) - A dispute between Papua New Guinea and Canada's Nautilus Minerals threatens to sink plans to mine gold and other metals for the first time from the ocean floor.
It could also work against efforts by the South Pacific country to restore faith in its vast resources potential and entice more foreign companies to follow the likes of Exxon Mobil , Newcrest Mining and Barrick Gold and invest billions of dollars in resource projects. Growing diversity in Papua New Guinea's mining sector will bring more skills and expertise to the country, PNG's peak mining body says.
PNG Chamber of Mines and Petroleum director Greg Anderson says the growing interest in new kinds of mineral exploration - away from a reliance on copper, gold and silver - will also protect the sector from market fluctuations. "We've now got mineral sand ... there's a new generation of exploration going on," he told Radio Australia's Pacific Beat program. "Even rare earths, coal and coal seam gas for the first time. And coal, we've known about coal deposits for quite a long time, but no one's really taken a serious look at them." Mr Anderson's comments come as the Chinese-owned Ramu nickel project prepares to go into full production next month. He said it was a "big step forward" that will widen the country's production base. ABC Oil Rig in the Southern Highlands OIL Search managing director Peter Botten has pointed to Papua New Guinea's stable fiscal regime as fostering investment in the country, highlighting that it provided more certainty than Australia for resources companies looking to spend capital on new projects. Mr Botten, speaking at the PNG biannual mining and investment conference in Sydney yesterday, told the 1350 delegates at the event that although PNG was a challenging place with risks, there were huge opportunities if a company "got it right". He said the country was in "unprecedented" boom times, with a stable fiscal regime compared with the likes of Australia and Britain , a situation which had aided investment decisions in the region. The experienced PNG operator said although the country was enjoying a resources boom, he also had experienced the difficult years in the region. "It is nice to live in the sun for a little while but it is important we don't forget the bad times," he said. Oil Search is PNG's largest oil and gas producer and operates all of the country's producing oil and gas fields. Exxon Mobil Corp. (XOM), operator of a $19 billion liquefied natural gas project in Papua New Guinea, expects the Pacific nation will supply more than 10 million metric tons of LNG annually by 2025.
Natural gas demand is forecast to rise by more than 60 percent by 2040, Jeff Appleton, Exxon senior vice president of LNG marketing, said today in a speech in Sydney. The Asia- Pacific region will account for 29 percent of total worldwide gas demand in 2040, with consumption in the U.S. and Europe unchanged or declining, he said. Exxon and its partners in the LNG venture, including Santos Ltd. (STO) and Oil Search Ltd. (OSH), will increase production capacity by 5 percent to 6.9 million tons annually, the Irving, Texas-based oil producer said last month. Exxon’s development is on schedule to start shipments in 2014, even after a 21 percent cost overrun, the company said. Bloomberg News |
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