PAPUA NEW GUINEA GOVERNMENT APPROVES US$ 850 MILLION NICKEL PROJECT

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By Harlyne Joku

PORT MORESBY, Papua New Guinea (July 3, 2000 - The National/PINA Nius Online)---The Papua New Guinea government has given the long-awaited green light to the US$ 850 million (K 2 billion) Ramu Nickel Project in Madang province.

Prime Minister Sir Mekere Morauta announced that the National Executive Council had approved the proposed Mining Development Contract for the project in principle.

The Cabinet has also advised the head of state to execute the contract and grant a Special Mining Lease, Sir Mekere said.

The memorandum of agreement between the State, the developers, provincial and local-level governments and the landowners was also approved by NEC and is to be executed by the State.

Sir Mekere said these were the final steps in the government approval process.

Now the Papua New Guinea companies developing the mine, Highlands Pacific and Orogen Minerals, must finalize their financial arrangements and bring in a substantial international mining house as a partner.

"This is a notable day for Papua New Guinea. It shows that once again the country is regarded by international investors as a safe haven for very large amounts of capital," Sir Mekere said.

He added that there has not been a resource project of this size and significance for the nation since the Lihir gold project was approved in 1995.

"The message for the nation and especially the people of Madang province, is that stable, efficient and accountable government brings with it very substantial rewards," he said.

The Prime Minister said it is no coincidence that Ramu is going ahead now. He said the previous incompetent, unstable and corrupt regime had turned international investors away from the country in droves.

He said PNG needs this investment to promote national growth and development to fulfill its needs to provide jobs and create investment opportunities for the national entrepreneurial class.

Sir Mekere said the Government had worked extremely hard to ensure that the right environment was created for investment to benefit the nation.

"We have succeeded where others have failed miserably," he said.

Sir Mekere said the Ramu project is the most significant resource project in the country's history because in reality it is a very long life mineral processing operation rather than a stand-alone mine.

"Where an average mine might have a life of 10 years, this processing operation will have a life of 30 to 40 years, possibly more," Sir Mekere said.

Capital expenditure on Ramu is expected to be nearly US$ 850 million. Average tax revenue over the life of the mine is calculated at K 280 million (US$ 115,360,000) a year. Ramu will generate foreign revenue of K 1 billion (US$ 412,000,000) a year.

According to Sir Mekere, Ramu will contribute about five percent of the gross domestic product over the life of the operation. During the construction phase, about 2,500 jobs will be created and the long-term employment is expected to be about 1,000.

Four landowner groups who have strongly supported the project will benefit directly and the economic boost for the Madang region will be significant, the Prime Minister said.

He added that Ramu would be the first resource project to receive a guarantee of stability of fiscal terms under the Government's new fiscal stability policy announced in Parliament recently.

"Previous fiscal stability arrangements have been legislated as part of the project agreements. This will not be necessary in Ramu's case because of the great strides the Government has made in the past 11 months to restore stability, transparency and accountability to national politics and economies," Sir Mekere said.

For additional reports from The National, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The National (Papua New Guinea).

Pacific Islands News Association (PINA) Website: http://www.pinanius.org 

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