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By Yehiura Hriehwazi

PORT MORESBY, Papua New Guinea (The National, Feb. 2) – A Chinese company has agreed to put up US$650million needed to develop the Ramu Nickel project in the Madang province, Mining Minister Sam Akoitai announced yesterday.

The company has requested the government to consider granting more tax concessions, but the entry of the Chinese company into Ramu is not conditional to receiving the tax incentives, Mr Akoita said. 

"The China Metallurgical Construction Corporation has agreed to develop the Ramu Nickel/Cobalt project and to meet the total construction cost of US$650 million," said Mr Akoitai, who returned from Beijing on Friday. The cost in kina terms is equivalent to about K2 billion.

Mr Akoitai travelled to Beijing on January 25 accompanied by Mining Secretary Kuma Aua, Highlands Pacific Limited managing director Ian Holdzberger and Mineral Resources Development Company managing director Francis Kaupa to negotiate the deal with CMCC.

Highlands Pacific Limited (HPL) owns 68.5 per cent of the project and it owns the mining lease while MRDC owns 31.5% of the project. Details of the deal will not be announced until the respective boards of directors have met and agreed to devolution of certain percentages of their shares to CMCC.

HPL is also listed on the Australian Stock Exchange and the Port Moresby Stock Exchange and certain stock market conditions must also be fulfilled before any public announcement is made.

Yesterday's good news announced by Mr Akoitai is expected to trigger an upward spiral of the HPL shares which are currently trading at AUS$0.45 cents on the ASX and K1.10 on the POMSoX.

Mr Akoitai said CMCC will finance the project 100%, construct the mine and buy all its products during the entire mine life which is about 40 years.

He said the negotiations on the Ramu project with CMCC has set a new record on reaching agreement in a very short time on mining project financing and development in PNG since its initial discussions started in August 2003. That was followed by three other meetings which included the signing of a Memorandum of Agreement with MCC in Beijing in October 2003 by Petroleum Minister Sir Moi Avei on behalf of the government of PNG.

Mr Akoitai said a Heads of Agreement to be known as "Framework Agreement" on all positions reached on the project would be endorsed by CMCC, HPL and MRDC in Beijing on February 10, 2004. It will be witnessed by the Prime Minister Sir Michael Somare and his Chinese counterpart.

CMCC is owned by the Chinese government. The Prime Minister had specifically urged the Chinese government leaders to help PNG develop the mining, petroleum and gas resources during their numerous visits to PNG and his meeting with the President in Thailand last year.

The company is expected to move into Ramu to begin construction before the end of the year and it will employ about 1000 people. A slurry pipeline will run to the Basumuk Bay on the Madang coastline inside Astrolabe Bay where a plant will be set up to process nickel for export.

The Petroleum Ministry led by Sir Moi Avei is also negotiating with the Chine National Petroleum Corporation (CNPC) to pipe gas from the Hides project to power the Ramu nickel project and Highlands Pacific Ltd's Frieda Copper Project.

Mr Akoitai said CMCC also expressed keen interest on financing and developing the Frieda copper project.

February 2, 2004

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