Papua New Guinea's Western Province by Business Advantage International

Pa p u a N e w G u i n e aâ&#x20AC;&#x2122; s

WESTERN PROVINCE

Business and investment guide

2012

Proudly published by

C ont e nt s

INTRODUCTION 4

NG’s final frontier takes off: the sky is the limit as PNG’s remotest province sets off on a remarkable course of P sustainable development.

P R O F I L ES 11

How Papua New Guinea Sustainable Development Program Ltd is driving development in Western Province

The Ok Tedi mine: Western Province’s economic powerhouse

T R A N S F O R M AT I O N A L P R OJ E C T S 20

Communications towers connect Western Province to the world

A port of the future: transforming Daru

Improving air services

Energy: the electrification of Western Province

A College town in the clouds: the mining town of Tabubil faces the closure of the Ok Tedi mine with a brave new vision

E C O N O M I C SE C T O R S 30

Western Province’s abundance of natural resources

Mining and gas: preparing for the next wave

Tapping into rubber: North Fly Rubber is the Western Province’s leading exporting agribusiness

Fisheries: a natural advantage

Forests with a future

Western Province’s unique eco-tourism offering

R ES O U R C ES 22

Map of Western Province

Business travel guide to Western Province

Papua New Guinea’s Western Province 2012 is published by Papua New Guinea Sustainable Development Program Ltd, Level 7, Cnr Musgrave St and Champion Parade, Port Moresby, NCD 121, Papua New Guinea. Tel +61 3 320 3844, fax +61 3 320 3855 www.pngsdp.com This publication is also available free online at www.westernprovincepng. com. © Copyright 2012 Papua New Guinea Sustainable Development Program Ltd and contributors Produced for PNGSDP by Business Advantage International Pty Ltd www. businessadvantageinternational.com

Cover/page 3 images: PNG Sustainable Development Program Ltd, Ok Tedi Mining Limited, Business Advantage International, Beyond Art

Special thanks to: The Hon. Dr Bob T. Denaya, Governor, Western Province; Ross Garnaut; David Sode, Tamzin Wardley, Susil Nelson, Lydia Gah-Bell, Patricia Kila, Kaia Songoa, Camillus Midire, Lalatute Avosa, Stanis Tao, Joseph Aitsi, Michael Kiap and David Freeman (PNGSDP); Keryn and Jayne Lapthorne (Media Partners), Warren Dutton (North Fly Rubber); Joy Dutton (Kiunga Guesthouse); the staff at Kuki Guesthouse, Daru; Nigel Parker, Peter Allen and Peter Nupiri (Ok Tedi Mining Ltd); Manoj Kumar Singh (FRG Clothing); Jack Kerklaan; Meremi Maina (Maru Marine); Mark Vassarotti (Strategic Economics Consulting Group); Ian Middleton (Ok Tedi Fly River Development Program); Tony Waningu (BSP Tabubil); Trevor Davison (Star Mountains Institute of Technology); Paul Povey (Mineral Resources Star Mountains); Bill Patchett (Tabubil Engineering); Graeme Hill (Tabubil Hospital); Joycelin Leahy (Beyond Pacific Art); Don Manoa (Western Power); Tony Carbry (PNG Energy Developments); Duncan Smart (Talisman Energy); Michael McGowan (Eaglewood Energy), Stephen Charteris, Joel Dangkaim (Star Mountain Investment Holdings); and John Wylie (Tabubil Futures) Printed in Australia. Both printer and paper manufacturer for this publication are accredited to ISO14001, the internationally recognised standard for environmental management. This publication is printed using vegetable inks and the stock is elemental chlorine free and manufactured using sustainable forestry practices.

Introd u ct i on

PNG’s final frontier takes off Birds take flight on Papua New Guinea’s largest lake, Lake Murray in Western Province.

The sky is the limit as PNG’s remotest province sets off on a remarkable course of sustainable development.

f you ask someone in Papua New Guinea’s capital Port Moresby what they know about the country’s distant Western Province, the only response you are likely to get will be a reference to the giant Ok Tedi mine that single-handedly still accounts for a significant portion of the nation’s GDP. Also unofficially referred to as Fly River Province, PNG’s largest province by area is also one of its least developed. Vast, remote and with a population density of less than two people per square kilometre (only slightly higher than the Western Sahara), it has been variously referred to as the country’s ‘wild west’ and its ‘final frontier’.

Dramatic change If, on the other hand, you actually took the trouble to travel to Western Province in 2011, you would quickly realise the province is far from a backwater. Dramatic change is in the air. The commercial hub of Kiunga positively bustles while

the sleepy provincial capital of Daru has awoken. Flights and hotels are likely to be fully booked as a result of a raft of large-scale infrastructure projects and a sudden influx of companies involved in extensive hydrocarbon and mineral exploration.

New infrastructure brings down barriers It has long been known that the province’s 98,048 square kilometres land mass and coastal waters were endowed with a wide variety of valuable natural resources, not only minerals and hydrocarbons but also spectacular biodiversity (celebrated naturalist David Attenborough filmed his 1996 Attenborough in Paradise documentary in the province). Its outstanding flora and fauna make it a natural fit for tourism development. However, the barrier to private sector development in the province has always been the immense logistical challenges that operating in the province posed.

Introd u ct i on

‘A range of transformational infrastructure and transport initiatives is underway that will finally enable the region’s potential to be tapped.’ Now, however, a range of transformational infrastructure and transport initiatives are under way that will finally enable the region’s potential to be tapped in a sustainable manner and deliver benefits to the region’s dispersed communities.

Ok Tedi’s legacy To put these developments in context however, it’s necessary to understand the history of the Ok Tedi mine, as much of the new development would not be happening but for the revenue the mine has indirectly delivered. The mine commenced operations in 1984 under the control of Australian miner BHP (later to become BHP Billiton). However, by 1999 the company had conceded that its operations were having an unacceptable impact on both local environment and communities and in 2002, BHP Billiton divested its shareholding altogether, passing it on to a newly created entity, Papua New Guinea Sustainable Development Program Limited (PNGSDP). PNGSDP’s mandate was to support and promote sustainable development through projects and initiatives to benefit the people of Papua New Guinea, especially the people of Western Province. Around the same time, as part of an agreement to enable the mine to continue with community consent, the Ok

Key statistics on Western Province & Papua New Guinea Western Province population PNG’s population Land area: Provincial capital Average rainfall per year % of population with annual income of K20 (US$9) or less Annual population growth rate % of population under 15 years of age Major Industries:

185,000 (est.) 6.7 million (2009) 98,048 km2 Daru (pop. 13,496) 1.5 metres (coastal) to 10-12 metres (central ranges) 36% 3.5% 45% Mining and petroleum, rubber, aquaculture, fisheries, forestry

Sources: OTML/Business Advantage Papua New Guinea

Papua New Guinea and its Western Province

Introd u ct i on

The Ok Tedi mine.

The river port of Kiunga sits on one of the region’s great rivers, the Fly.

Tedi Development Foundation (OTDF) was established as a dedicated development agency for the villages most directly affected by the mine.

Driving development A decade on, and after extensive research and planning, PNGSDP and OTDF (which trades as the Ok Tedi Fly River Development Program) are now hitting top gear, delivering some landmark projects such as the Western Province Communications Project (see page 20), the Daru airport upgrade (see page 26) and the introduction of a first passenger ferry on the province’s main artery, the mighty Fly River. It may be early days, but initial progress has already improved the lives of the province’s 185,000 inhabitants, about 70% of whom live in rural areas.

Sharing in PNG’s boomtime In parallel, the economic fortunes of PNG as a whole have transformed the country over the past decade and Western Province is sharing in this new era. The Bank of Papua New Guinea is anticipating national GDP growth of a heady 9.6% in 2011, as a mining and petroleum-led boom shows no sign of abating. With substantial proven reserves of oil, gas and minerals, Western Province itself is now experiencing a flurry of exploration activity, involving major international companies such as Talisman Energy and Highlands Pacific (see page 32). The challenge is now to broaden its economy by developing further such economic activities as rubber production, aquaculture, forestry and tourism. As more pieces of the jigsaw fall into place, PNG’s final frontier should find itself increasingly on the map, not just in Port Moresby, but around the world.

Introd u ct i on

Western Province, the ideal location Dr Bob Danaya, Governor of PNG’s Western Province, provides his views on the Province’s economic potential and how government is encouraging development. Credit: Business Advantage International

‘Australia is only 15 minutes across the water in a dinghy. Indonesia is also close and has a huge population. That’s why we want to encourage the border area for trade.’ We are also subsidising education at the moment, and this is unique to the Western Province. The Government pays 50% of tuition fees from Grade 9 to 12 and also at tertiary level. For earlier years, we pay 100% of fees. In disadvantaged areas we pay 100% for all levels. Western Province Governor, Dr Bob Danaya

As a government, we are happy to work with business. We have a very good dialogue with investors. We have an office in the Province and that is the stepping stone for companies doing business here. We have 14 local level Governments (LLGs) and are encouraging them to be self-reliant but with a business arm supported by the Provincial Government. Australia is only 15 minutes across the water in a dinghy. Indonesia is also close and has a huge population. That’s why we want to encourage the border area for trade. There are two routes that we are looking at to open up air access: a flight from North Queensland in Australia to Daru (and from there to Kiunga); and also a flight from Merauke in Indonesia’s Papua Province. This Province is an ideal location. We have game fishing, surfing, safaris and bird watching. Almost all of the Western Province can be regarded as a potential tourist destination, whether it is in the bush or along the coast. You can have ferries going up and down the river. There are interesting things that we want to market to the world: Balimo’s annual canoe racing, with 60 warriors in 60-foot long canoes; the three districts each have their own annual district show; there can be kayaking in Lake Murray: fishing along the coast—especially for barramundi—is big. There is a lot that can be offered. Opening up tourism means lowering airfares, improving infrastructure and maintaining law and order. It is very costly to travel in the Province at the moment—the Province is big. What we have tried to do is to subsidise all airfares to reduce the burden of the travelling public on all routes serviced by Airlines PNG. We want to make it affordable to all.

We make the recommendations and directives for infrastructure development but often the private sector is involved in the implementation because they have got the capacity. A lot of the roads, jetties and upgrading airstrips— all this is done by the private sector. Papua New Guinea Sustainable Development Program Ltd has set a good example for all companies operating in Western Province. The big example is telecommunications. We have beaten all the other provinces to achieve provincewide coverage. We have covered the whole of the Western Province with communications towers, even the remote areas where the oil companies are exploring. Regarding mineral resources, there are 15 prospecting licences covering the whole Province—we are basically sitting on oil and gas. The mineralisation found along the coast near Daru has similarities to the bauxite deposits in North Queensland. Up in the Star Mountains [near the giant Ok Tedi Copper mine], there are still plenty of deposits of silver, copper and gold. Agriculture is another area to put money into. We have vast amounts of land: yam and sago are suitable, there are deer here naturally and we can look at bringing in livestock too. North Fly Rubber has done very well: the people have become shareholders, they will be encouraged to plant more rubber and the price of rubber is going up. Forestry has potential in the Province but it has to benefit the people, give them employment and improve their living sustainably. My message is: if it is sustainable, let them go with it. As a Government we will watch forestry development carefully, making sure that it is benefitting everyone and complying with the rules.

Introd u ct i on

A province with a rich future

Credit: Darren Boyd Coombs Photography

Australian economist Ross Garnaut, who is also Chairman of Papua New Guinea Sustainable Development Program, offers his perspective on how Western Province’s potential can be realised.

Ross Garnaut

Western Province contains natural resources of extraordinary scale and value, within stunningly varied and beautiful natural environments. It contains relatively few people, and the low population density has meant that there has been little provision of transport and communications infrastructure to allow investors to profitably make use of the potentially valuable resources.

The Ok Tedi mine is by far the main source of national income and Government revenue in Papua New Guinea. Since the 1980s, it has been the reason why commercial boats have been plying the Fly River and between Port Moresby and the Fly. It has supported the emergence of good urban services in the towns of Kiunga and especially Tabubil, and allowed these towns to be linked by a road that has attracted villagers from the surrounding areas.

infrastructure will be available. Much of the work of PNGSDP in Western Province over recent years has been directed at analysis of the use that would be made for transport, communication and social infrastructure if it were available. This work has confirmed that maintaining the town of Tabubil as an education and services centre after the eventual closure of the Ok Tedi mine is economically viable; that this will justify maintaining the road and other North Fly transport infrastructure; that there is a strong economic case for establishing an international port and major industrial area in Daru and on the adjacent mainland at Oriomo to utilise the hydroelectric resources of Papua and the gas resources of the Western Province.

'The provision of essential infrastructure is now set to grow alongside increasing private investment in unlocking the intrinsic value of Western Province’s natural endowments.'

PNGSDP has been seeking to build on these strengths, and greatly to augment them, so that the rich natural endowments of the province can be appreciated and utilised for the benefit of people from the Province and Papua New Guinea more generally. This involves juggling provision of infrastructure with the need for it. There is no case for investment in infrastructure unless there is a clear use for it; but investors will not invest in assessing projects that need the infrastructure unless they are confident that the

PNGSDP has already introduced modern telecommunications services throughout Western Province, and it is in the process of underwriting the provision of the infrastructure for water and land transport and the urban services that will facilitate investment in resource development, agriculture, sustainable forestry, sustainable fisheries, mineral processing and tourism. The provision of essential infrastructure is now set to grow alongside increasing private investment in unlocking the intrinsic value of Western Province’s natural endowments. Increased scale of modern economic activity will support improvement in infrastructure on a continuing basis. PNGSDP is working to ensure that all of this occurs within a framework that values conservation of the beautiful and valuable natural endowments of Western Province.

How Western Province is governed

Western Province sits within the larger Papua administrative region of Papua New Guinea, which consists of five provinces and the National Capital District.

There is another level of government below district level— local level governments (LLGs). North Fly and Middle Fly districts are subdivided into five LLGs; South Fly into four.

Western Province’s Governor represents the province directly in Papua New Guinea’s National Parliament, alongside three MPs, one from each of the province’s three districts: North Fly, Middle Fly and South Fly.

While the provincial capital remains Daru, the provincial administration, known unofficially as the Fly River Provincial Government, has recently moved to Kiunga. As with all PNG’s provinces, the provincial government is an arm of the national government and is run by an Administrator.

P rof i l e : P N G S D P

Driving sustainable development in Western Province A women’s small business group sponsored by PNGSDP.

Papua New Guinea Sustainable Development Program is a unique organisation that is directing the substantial profits from the Ok Tedi mine into a range of long-term development projects for Western Province.

apua New Guinea Sustainable Development Program Ltd (PNGSDP) promotes development that meets the needs of the present generation and establishes the foundations for continuing progress for future generations of Papua New Guineans. It derives its income from 63.4% of the annual dividend of Ok Tedi Mining Ltd (OTML), to which it is entitled as its major shareholder. One third of this income goes into its Development Fund to fund current development programs, while the remaining two thirds are placed into a Long Term Fund for use after the eventual closure of the Ok Tedi mine (see box on page 14). PNGSDP is a Papua New Guinean institution but incorporated in Singapore as a not-for-profit limited liability company. Thus, it is registered and operating in PNG as an overseas company.

Company functions The company has three main functions: • To support and promote sustainable development through projects and initiatives to benefit the people of Papua New Guinea, especially the people of Western Province (see page 14). • To prudently manage its Long Term Fund and Development Fund, in order to maximise the development expenditure referred to above. • To ensure the sound commercial operations of OTML, responsible management of related environmental and social issues, and to sustain the infrastructure established by OTML for broader social and economic development beyond the closure date of the OK Tedi mine. PNGSDP’s vision for Western Province is for the province to be recognised as a model for equitable socio-economic development in PNG by 2020, and for new industries that support such development to have replaced the Ok Tedi mine’s contribution by the time the mine closes.

‘PNGSDP’s vision for Western Province is for the province to be recognised as a model for equitable socio-economic development in PNG by 2020.’

prof i l e : P N G S D P

Western Province: a sustainable future Business Advantage interviewed David Sode, Chief Executive Officer of PNG Sustainable Development Program Ltd, to discover more about its Western Province strategies. a chance to participate in a modern telecommunications system, to connect to the world no matter how remote their location. The next project will be power: how do you give everyone access to power? I want to put the right sort of power, affordable power, into every village.

What about the major Daru Port Project, what is the rationale behind that? (See page 24.) PNGSDP’s projects range from infrastructure to aquaculture and social programs

The prospect of extending the life of the Ok Tedi mine offers a whole host of opportunities.

Founded in 2002, PNG Sustainable Development Program Limited (‘PNGSDP’) was created to support sustainable development through initiatives that benefit the people of Papua New Guinea, and especially the people of the Western Province. Where are you placed in 2011?

If it were not for logistical obstacles, the pyrite that is currently being cast aside at the mine would constitute a lucrative commercial opportunity in its own right. But all that will change once you’ve got an international port at Daru. Given current OTML production levels, current global commodity prices, plus the prospect of processing the pyrite, the port is already commercially viable.

It’s taken us a good while to understand the province and devise models that can make things happen in a sustainable way. In the last couple of years, we’ve finally entered execution mode, taking some key decisions that are already paying dividends. We have always been aware of the province’s huge potential: it has a huge landmass, small population, but is unexplored. That is why there are so many opportunities now, that finally people are waking up to. Suddenly now everyone is heading there because it is the last of the last frontiers. Thus, our challenge has been to capture that potential using sustainable models, to pick the right projects that could give the province a long-term future. PNGSDP couldn’t see this a decade ago but now we can, hence these major projects are starting to emerge.

For instance, the mobile phone tower project? (See page 20.) Exactly. The question we asked is how do you achieve an ‘equitable spread’ throughout the province; that is to say, bring benefits to the whole population? In other words, we want to give everyone part of the pig and in this case the pig is the Ok Tedi mine. The Western Province Communications Project achieves this. We’ve invested revenues from Ok Tedi Mining Ltd (OTML) through this model to give everyone in the province

At the same time, once we complete the infrastructure road corridor [see page 25], then Daru port also becomes the port for the Highlands, with Kiunga acting as the river port. A port in Daru will change everything, the economics of every project, that’s why it is central to us.

What are your other priorities looking ahead? The Daru airstrip is being renovated and extended at present so it can receive jets. In fact, both Daru and Kiunga will become international airports, but Kiunga will be the hub with links to Asia. We will also continue to deliver a range of health and education projects. However, these cannot be considered in isolation. You also need these economic drivers, such as the port, and you need a healthy mindset, under a social distribution model which is an alternative to dividends. Finally, we need to do more to leverage the constructionphase strengths of the resource companies that operate in the province. These days, when we’re approached by them we say ‘Okay, we’re happy to work with you but don’t forget we’re a development company, so welcome to development.’ A strong social input gives their projects longevity, by giving the people around the project a good understanding of how the project affects their lives. People in the footprint must always participate.

prof i l e : P N G S D P

Traditional dancers from the Middle Fly region of Western Province.

prof i l e : P N G S D P

PNGSDP’s economic development strategy PNGSDP manages two funds that are vitally important for Western Province’s future development. • Transformational projects Daru port development, cross-border economic links with Indonesia and Australia, gas commercialisation, large scale power generation by multinational companies, new Oriomo Industrial Centre near Daru.

The Long Term Fund The main priority of the Long Term Fund, which now contains over one billion US dollars, is to maintain service levels in Western Province in perpetuity after mine closure.

The Development Fund

• Infrastructure Infrastructure corridor, rural electrification, Western Province Telecommunciations Project.

• Industry Support agricultural, aquaculture, forestry, trade and tourism industries, micro-finance, education and training (Star Mountains Institute of Technology)

• Social investment Water and sanitation, HIV/ AIDS prevention, health and education services.

• Preparation for Ok Tedi mine closure Minimise impact of mine closure, Tabubil Futures, transfer of OTML services and assets to third parties.

Two thirds of expenditure from this fund is allocated to activities and investments that provide significant national benefit, i.e. to the people of Papua New Guinea, and the remaining third is allocated to activities and investments that specifically benefit the people of Western Province. The central plank of the ‘National Strategy’ is the Partnership Development Model that entails achieving development goals by working with specialist partner organisations from across the spectrum of government, community, NGO and private sector as follows: • Government: working alongside all levels of government to delivery on shared priorities. • Community/NGO: working through organisations such as NGOs and Churches to empower local communities to determine their own way forward. • Private Sector: business has the expertise and experience that will enable the delivery of appropriate projects more effectively and efficiently. The centrepiece of the ‘Western Province Strategy’ is the development of Multi-Sector Economic Development Hubs, based on the creation of alternative industries in hub locations such as Balimo, Daru, Kiunga, Lake Murray, Morehead, Nomad and Tabubil.

P rof i l e : O k T e d i M i n i ng

‘A large portion of OTML’s dividend goes directly to its major shareholder, PNGSDP, and is therefore channelled into a wide range of community development projects.’

Western Province’s economic powerhouse The Ok Tedi copper/gold mine is PNG’s largest mine.

While the future of the massive Ok Tedi mine hangs in the balance, Ok Tedi Mining Limited looks set to continue its major contribution to Western Province.

he massive Ok Tedi copper mine, which opened in 1984, is not only the largest contributor to the economy of Western Province but also to the entire economy of Papua New Guinea. It is one of the world’s largest copper mines. To give some idea of the mine’s importance to the country, in 2010 it accounted for 18% of Papua New Guinea’s gross domestic product, while a temporary closure of its slurry pipeline in 2011 deprived PNG’s various levels of government of almost 130 million kina (US$59 million) in tax revenue. Situated in the Star Mountains region in the north of Western Province, the mine is run by what is now a 100% Papua New Guinea-owned company, Ok Tedi Mining Limited (OTML). OTML itself has two owners: Papua New Guinea Sustainable Development Program Limited (PNGSDP, which owns 63.4%) and the State of Papua New Guinea (36.6%). One of OTML’s major preoccupations is the environmental impact of the mine, the waste and tailings deposition to the

riverine system having had a major impact on the Ok Tedi and Fly Rivers and their associated eco-systems. Under an environmental regime put in place in 2001, as part of the mine continuation agreement, the company now employs teams of scientists to monitor and manage the impact of mining activity past and present.

Strong community role Operating the Ok Tedi mine makes OTML the most important company in Western Province. It employs a lot of people— some 2000 directly, and another 1500 indirectly through its partners. It also pays a lot of tax (K1.22 billion—US$553 million—in 2010), plus royalties and other payments to provincial government, landowners and other stakeholders inside the Western Province totalling K398 million—US$180 million—in 2010. Given the mine’s remote location, OTML’s activities inevitably extend beyond just the mining activity. The entire

prof i l e : O k T e d i M i n i ng

District by the Ok Tedi Development Foundation to maintain Government infrastructure. Finally, OTML currently owns 75% of Ok Tedi Development Foundation Limited, established in 2001 to manage the trust funds set up for the 152 mine-affected villages along the Ok Tedi and Fly rivers under the Community Mine Continuation Agreements. The Foundation, which delivers the K680 million (US$308 million) Ok Tedi Fly River Development Program, was launched in 2008. The Foundation’s enabling legislation requires OTML to relinquish its Foundation shares before or at mine closure to four reputable development organisations.

The future of OTML The Ok Tedi mine, like all mines, will eventually run out of ore. In Ok Tedi’s case, that will happen sooner rather than later: it is scheduled to close at the end of 2015 unless significant mine extension works are given the go-ahead soon. This has been known for some time, and much of OTML’s focus now is on identifying additional ore deposits both within the Ok Tedi region and in other parts of Papua New Guinea. (See page 32 for more on OTML’s mine extension and exploration activity). Development of new deposits should ensure that OTML continues to have an important economic role in Western Province and Papua New Guinea beyond the Ok Tedi mine closure, whenever that occurs.

Ok Tedi in numbers

Environmental monitoring is one of OTML’s key preoccupations

support infrastructure for the mine had to be created and is now maintained by the company. This includes the company town of Tabubil adjacent to the mine (which has its own airport and hospital); the 157 km road and parallel slurry pipelines which connect Tabubil to Kiunga on the Fly River, from where the copper concentrate is barged down to the sea some 800 river kilometres away; power plants; and the river port at Kiunga. It also funds a K20 million per annum training and development scheme for apprentices and university graduates.

Pit size Open date Due closure date Annual production Export revenues Profit before tax (2011 forecast) Taxes paid Employees

2.6 sq km 1984 2015 or 2024 159,821 tonnes of contained copper 486,000 oz of contained gold 1.47 million oz of contained silver 4.74 billion kina (US$2.15 billion) 1.01 billion kina (US$457 million) 1.22 billion kina (US$553 million) 2000 directly (plus 1500 indirectly)

NB 2010 figures quoted unless otherwise stated.

Community benefits A large portion of OTML’s dividend goes directly to its major shareholder, PNGSDP, for community development projects in Western Province and PNG more generally (see the profile of PNGSDP on page 11). In addition, OTML’s Tax Credit Scheme, worth K91 million (US$41 million) in 2010, funds the building and maintenance of vital community infrastructure across Western Province and the Telefomin District in the Sandaun Province, such as schools, government housing, sewerage systems, hospitals, airstrips and police stations. Health and education are a particular focus of the scheme. Under the Restated Eighth Supplemental Agreement, 20% of the Special Support Grant is also required to be spent in the Tabubil

P rof i l e : O k T e d i M i n i ng

‘This is probably the wealthiest province in PNG in terms of revenue per capita, but if you look at the physical side of the province it is probably the poorest in infrastructure development and services.’

Beyond mining All supplies to the Ok Tedi mine, including fuel, have to come 800 kilometres up the Fly River to the river port of Kiunga, then along the 150km road between Kiunga and the mining town of Tabubil.

On a visit to the Ok Tedi mine, we met with Nigel Parker, the man tasked with managing Ok Tedi Mining Limited through the final years of the mine’s life.

OTML is currently undergoing a corporate restructure. What does that entail and where has it reached? The corporate restructure is looking at our core activities. When this company started 30 years ago, there was nothing here in Tabubil. Legally, for instance, we had to have a hospital. Now, we are Nigel Parker, Ok Tedi looking at entering into an arrangement Mining Ltd’s Managing with Divine Word University so that we can Director & Chief have it positioned as a teaching hospital. Executive Officer We are looking at the hospital to continue operating beyond OTML as a sustainable medical facility in this part of the world. In fact, there are a lot of activities in our business that now have natural owners other than ourselves. We are here to position these non-core activities as sustainable businesses for the future. We and PNGSDP have a company called the Ok Tedi Development Foundation Limited, which we have now made independent. It is a benevolent institution: OTML, or anyone else, can make a contribution or donations that are both tax exempt to OTDF and tax deductible for the donor. OTDF has purchased vessels on behalf of the communities, using community funds, to service the communities of the Fly River and these are under construction now.

What about the future of OTML as a mining company? OTML is an extraordinary asset to this country. It would be a great shame to see this asset wither by simply mining out this ore body and doing nothing else. We have the view that we should be leveraging this company into other mining and exploration activities to support PNG. We have some of our own mining leases to the north of here that we are actively exploring. We have some leases under application in New Ireland, and some joint venture agreements with Frontier Resources, an Australian listed mining company. This strategy is directed at transitioning the company from a single project company into a mining and exploration company.

How do you go about managing the change in the culture of OTML? It must be a challenge? We are changing the culture from that of a project that was very much finishing to that of a culture in which we are repositioning the business so that it will benefit the sons of the sons of the sons. My approach to management is very clear: I expect my people to make decisions within their authority levels and to be accountable and responsible. That is quite new for Papua New Guineans as they are accustomed to having expats sitting at the top. I am seeing some real changes where people are just getting on and doing it. Changing this culture from a manager’s perspective is an interesting one.

prof i l e : O k T e d i M i n i ng

What are your own aspirations for the future of Western Province?

Stanley near Kiunga. Here at Ok Tedi, we have hydropower with diesel back up. Power is very expensive because of the diesel: if our hydro is down, we can consume half a million litres of diesel a day. We have to bring it from Port Moresby, 800 km up river to Kiunga and 150 km up the road. We have to have enabling transmission line infrastructure between Kiunga and Tabubil so that, when gas comes on in 2013, a combination of parties can turn the gas into electricity. Once you have that, you have 29 villages with power at a reasonable price then it can spread out. Up until now, we have been producing the electricity in Kiunga and giving it away for free. We are starting to change that. The infrastructure that enables commerce is the next step forward.

This is probably the wealthiest province in PNG in terms of revenue per capita, but if you look at the physical side of the province it is probably the poorest in infrastructure development and services. We need to leave a positive sustainable legacy. We are fortunate now we have a very good Provincial Administrator who is working very closely with us and we are also engaging far more positively with PNGSDP, partnering with them and using our management and engineering capacity in the Province to get projects implemented. Going forward, we are interested in influencing infrastructure development, and roads in particular because roads enable The Ok Tedi mine: where the dividends go commerce. Down at Aiambak, OTDF has a Long Term Fund (offshore) 66% PNG Sustainable rubber nursery and there are thousands Development projects Development of significant National Program 63.4% Impact 66% Development Fund 33% of seedlings. We set up the plantations Ok Tedi Mining 0.75% of tax liability to OTML Tax Development projects that benefit solely and the villagers tap them, but for them Limited dividend Credit Scheme for infrastructure/ Western Province 33%. 2.5% or 21 health projects million kina, whichever is higher, to Ok Tedi Development Foundation to get the rubber from Lake Murray to National Government Independent State of PNG 36.6% general revenue 50% Kiunga takes 18 hours via river. We need Western Province 16% to provide the roads; the villagers wonâ&#x20AC;&#x2122;t Western Province/Fly River Provincial Government 50% tap the rubber now because all their Mineral Resources Star Mountain Ltd (investment vehicle for the six villages nearest Ok Tedi mine), managed by Mineral Resources Development Corporation (MRDC) 50% income goes towards freight. Once you Western Province start to enable commerce, the people are Development projects for Ok Tedi Development Foundation Peopleâ&#x20AC;&#x2122;s Dividend communities covered by Community (owned PNGSDP 25%, OTML 75%). Trust 33% Mine Continuation Agreement Executes the Ok Tedi Fly River pretty industrious. (80,000 people in 153 villages) 50% Development Program Development funds for rest Another enabling project is power. We of Western Province 50% are fortunate that there is gas down at

9 community trusts (mine village and 8 others)

Development projects

T r a n s form at i on a l proj e ct s : C O M M U N I C AT I O N S To w e r s

Connecting Western Province to the world One of the 58 communications towers is officially opened

An ambitious and transformative project has commenced to bring 21st century communications to the rural areas of Western Province for the first time.

estern Province is remote, even for Papua New Guinea, and its sparsely distributed population and business community has, until recently, faced particular challenges in communicating not only acrossprovince but with other parts of the country and the world. If you lived or worked outside the Province’s major population centres, satellite phones were the only option and the internet was something only for the largest enterprises. The Western Province Communications Project is already changing that situation.

Once complete in 2012, the project will have built 58 strategically located towers across the Province. The towers will be able to host a range of communications services. Already Digicel PNG, which won the tender to install the towers, has used them to expand its existing national mobile network. To encourage competition, the towers will also be open to other service providers.

‘Once complete in 2012, the project will have built 58 strategically located towers across the Province.’

A network of towers The ambitious US$26 million project commenced in 2011 with the aim of bringing 95% of the Province’s population within reach of a mobile phone network, the internet, and radio and television broadcasts from a new network of communications towers.

Logistical challenge

With so few roads in the Province, the installation of the towers has represented a major logistical challenge. Equipment has been brought from the capital Port Moresby by barge to Daru or further up the Fly River, and then has been flown into position by helicopter. Rural communities have already felt a positive impact from the rollout, with landowners able to charge rent for the sites, and local businesses being invited to bid for security and maintenance contracts.

T r a n s form at i on a l proj e ct s : C O M M U N I C AT I O N S To w e r s

Immediate benefits Other investments are already reaping social dividends. School students are connecting to the internet for the first time with laptops supplied to them under a ‘One laptop per child’ pilot scheme (pictured), rural businesses are able to communicate with distant customers and suppliers quickly and effectively, and there will be positive repercussions too for information and data-hungry sectors such as mining/gas, health and tourism. ‘This is a large impact project for communication which will reduce the isolation of the Western people and open economic market opportunities,’ said PNGSDP’s Chief Executive Officer David Sode in July 2011.

Sharing in the growth Papua New Guineans have shown themselves to be enthusiastic adopters of mobile technology, with some suggesting the introduction of competition in the mobile phone sector in 2007 contributed directly to a 0.7% rise in the country’s GDP. It will be fascinating to watch the impact of its widespread introduction into Western Province. With more and more services, from banking to insurance to power bill payments, being delivered via mobile phones in PNG, this important enabling infrastructure will ensure that the Western Province’s population—and the businesses based there—are able to more fully participate in PNG’s rapid economic growth.

Credit: Business Advantage International

The towers have plenty of space for additional services such as radio, television and competing mobile services

A ‘one laptop per child’ pilot scheme is delivering internet-capable netbook computers to schools in selected rural areas

Papua New Guinea’s WESTERN PROVINCE

T r a n s form at i on a l proj e ct s : D a r u P ort

‘A new Daru port could provide enabling infrastructure for at least four major projects.’

A port of the future Daru’s single jetty may soon be supplanted by significantly larger and more modern infrastructure. Credit: Business Advantage International

At present, Western Province’s main sea port of Daru is one of PNG’s less-utilised ports. That may be about to change.

he port town of Daru (population: 13,500) at the mouth of the Fly River is the second largest settlement on PNG’s south coast after the capital, Port Moresby. Looking out over the Torres Strait—an important international sea lane—Daru is the closest port in PNG to Australia and it is this strategic position, plus its proximity to some potentially major projects, that could see this quiet port transformed into a major industrial and logistical hub. While the port itself is currently little more than a 30-metre berth on a single jetty, Papua New Guinea Sustainable Development Program’s (PNGSDP) Transformation Projects Unit has for some time been considering how the port could be expanded and developed to better serve Western Province’s mining and gas sectors in particular.

Major projects in need of a port A new Daru port could provide enabling infrastructure for at least four major projects currently being considered for PNG’s Southern Region (of which Western Province is part).

1. Western Province’s booming gas sector Currently, there are 15 companies involved in gas exploration within Western Province (turn to page 32 for more on the development of mining and gas in the Province). Gas has been discovered across the Province but generally in small

quantities, particularly when compared to the massive reserves in PNG’s Southern Highlands that supply the ExxonMobil PNG LNG project. It is generally accepted that only aggregation of these various gas fields will create sufficient scale for liquefied natural gas (LNG) to be developed economically in Western Province. Should this occur, Daru would be the natural port from which to export the LNG.

2. The Ok Tedi mine Currently, Western Province’s largest business bypasses Daru. The copper concentrate from the Ok Tedi mine is barged down the Fly River and stored in a silo vessel either in the Gulf of Papua or Port Moresby’s harbour before being transferred to ocean-going ships for export (gold and silver is currently flown out). However, there is potential in developing a new line of business based on a plentiful by-product of the Ok Tedi mine, iron-rich pyrite (known colloquially as Fool’s Gold). A suitably-equipped port could be the catalyst for rendering the processing and export of this hitherto unused mine waste cost-effective.

3. The Purari River Hydropower Scheme This ambitious power project, which would harness the immense power of the Purari River in neighbouring Gulf Province, is currently the subject of a feasibility study by PNG

T r a n s form at i on a l proj e ct s : D a r u P ort

Energy Development Ltd, a joint venture between PNGSDP and Australia’s Origin Energy. The scheme would see PNG become a power exporter to neighbouring Australia via an undersea power cable. Daru is considered the natural location for that cable to enter the Torres Strait.

4. Bauxite smelting and other industry Should the Purari River scheme go ahead, the presence of a large and renewable baseload source of energy in PNG’s Southern Region could turn Daru into an attractive location for power-hungry industries such as aluminium smelting. Already, a major international miner is conducting a feasibility study into building such a facility in Daru.

Oriomo industrial centre

The construction of appropriate port and road infrastructure is critical for Western Province’s economic growth and will stimulate the development of mineral, timber, agriculture, marine, oil and gas industries in the region. One further development could also help Daru and Oriomo become more important centres for PNG generally. A planned Infrastructure Corridor road, the physical survey and design for which is expected to go to tender starting in 2011, will run like a spine through the Province, and also connect Daru and Kiunga to the oil- and gas-rich Southern Highlands Province for the very first time (see map on pages 22 and 23). The connection of Daru and Oriomo to the Highlands would in turn give the Highlands’ extractive industries (and potentially agricultural exporters too) an attractive alternative to PNG’s heavily congested major port, Lae. Once physical connection to the Highlands has been achieved, there exists the potential to plug Western Province into the fibreoptic National Broadband Network currently being constructed around the PNG LNG Project. While the development of the above major projects continues, Daru and its surrounds are the subject of hydrographic and land surveys, dredging and feasibility studies, as the business cases are developed for the various developments the port will need in order to service its potential new clients.

Credit: Akuna Dredging Solutions

To complement the new port at Daru, a new 70-hectare industrial park is also being planned on the Oriomo River, roughly 15km from Daru. Much of the industrial activity associated with the availability of baseload power would be based here. It is anticipated that basic infrastructure will be provided as an incentive to those companies establishing operations in the park. While all the above projects have some way to go before they become reality, it is currently believed that copper condensate and sweet crude represent the most likely and most immediate opportunity.

Infrastructure corridor

The site for Daru’s proposed new port has been the subject of extensive surveying and testing

T r a n s form at i on a l proj e ct s : A i rport s

‘Investments are being made to upgrade and rehabilitate existing airstrips, as well as create new ones to open up more rural areas to services and trade.’

Improving air services The upgrading of Daru’s airport is now under way Credit: Business Advantage International

Western Province is highly reliant on air services. Much-needed investments are now being made to bolster this vital form of transportation.

it is planned to be an alternative aviation gateway to Asia (at present, Asian visitors to the province must travel via Port Moresby’s Jacksons International Airport). Both Daru and Kiunga will eventually also benefit from the installation of a new Instrument Landing System (ILS), which will improve landing efficiency for pilots and reduce landing times. The ILS is part of systematic upgrade of aeronautical communications, navigations, surveillance and air traffic management systems across the nation’s 22 airports under the NAC’s US$640 million Asian Development Bank-funded Civil Aviation Development Investment Program. The year 2010 also saw the 5.5 million kina (US$2.5 million) major overhaul of five rural airstrips at Bak, Oksapmin, Golgobip, Elipamin and Telifomin. These improved airstrips will be particularly welcomed by those remote villagers who, until recently, had to travel up to two weeks on foot to reach a rural airstrip. Credit: Business Advantage International

ue to its remoteness and a lack of alternative transport infrastructure, Western Province’s three main airports and rural airstrips play a critical role in enabling its economy. Investments are being made to upgrade and rehabilitate existing airstrips, as well as create new ones to open up more rural areas to services and trade. The province’s two main publicly-owned airports are at Daru and Kiunga and fall under the auspices of the National Airports Corporation (NAC). The third major airstrip, at Tabubil, is currently owned and operated by Ok Tedi Mining Limited, although there are plans under way to transfer ownership of this asset and commercialise it in anticipation of the Ok Tedi mine’s closure. There are investments under way at both Kiunga and Daru with the eventual aim of having both gazetted as international airports. The upgrade of Daru airport, which commenced in 2010, will see the airport rehabilitated and its 1400 metre runway extended so that it can take jet aircraft. The project, financed by PNG Sustainable Development Program in partnership with the National Airports Corporation and the Fly River (Western Province) Provincial Government, is being managed by NME International (PNG) Ltd. Completion is expected in the first half of 2012. The administrative centre of Kiunga, which is expected to see similar upgrades to its 1200 metre runway, will become the designated aviation hub for Western Province. Eventually,

An Air Niugini Dash 8 lands at Kiunga Airport

T r a n s form at i on a l proj e ct s : P o w e r

The power of change Western Province’s power industry is being reformed and appears to be moving to an entirely new level, making electricity widely available for the first time.

Erecting new power poles.

he electricity market in Western Province has until quite recently been very modest in size. State-owned utility PNG Power has a small operation supplying power to Daru on the coast while the major customer for power, the Ok Tedi mine, provides its own electricity from the nearby 75MW Ok Menga hydroelectric run-of-river scheme and from two 45MW and 16MW diesel stations. In the past three years, two new players have come into the Western Province energy sector with long term mandates to electrify the Province, and to develop baseload power for industry there respectively. The primary focus of Western Power, a wholly owned subsidiary of Papua New Guinea Sustainable Development Program Limited (PNGSDP), has so far been rural electrification. As Ross Garnaut, Chairman of PNGSDP, has remarked, ‘Our aim is for all but a few percent of Western Province households to have access to electricity by 2014.’ Western Power is responsible for power plants of up to 10 MW in the Province and is the only company other than PNG Power to have energy generation, transmission, distribution and retail licences in Papua New Guinea. As part of its mission, it recently completed a two-stage project to build small power plants in second tier population centres such as Balimo and Lake Murray and also 31 village communities along the Tutuwe Corridor that connects Ok Menga to Kiunga. A transmission line is being considered to connect Ok Tedi’s power plants with Kiunga, at which points some of the community-based diesel plants in the Tutuwe Corrider may be decommissioned. The goal is to turn Western Power into a genuine commercial utility and a rollout of prepayment electricity metres in Kiunga is part of this plan. Western Power is also expected to be a minor beneficiary of any revenue that arises from the other new player in energy, PNG Energy Developments Limited (EDL). A joint venture between PNGSDP and Australia’s Origin Energy, EDL is focused on large energy generation projects, the most

high profile of which is the massive 1800 MW Purari River hydropower scheme, currently the subject of a feasibility study. While the Purari River itself flows through neighbouring Gulf Province, the massive power it could generate would be available not only for export to Australia and PNG’s own grid, but also to attract energyhungry industries to the nearby port of Daru, itself the subject of development plans (see page 24). PNG Energy Developments Limited is also expected to take over the Ok Tedi mine’s considerable power generating assets once the mine starts to wind down, and is also working on a number of gas and hydro power generation projects elsewhere in PNG. These ventures, plus potential gas-fired power generation from Horizon Oil’s Stanley gas field near Tabubil, could well make PNG Energy Developments Limited a major producer of electricity and one well-placed to supply power to major mining and gas projects in PNG’s Highlands and further afield.

‘New players have come into the Western Province energy sector with long term mandates to electrify the Province, and to develop baseload power for industry there’

T r a n s form at i on a l proj e ct s : Ta b u b i l

‘Out of this study has arisen a range of strategic initiatives that will see Tabubil transformed from a mining town into a “sustainable mixed-economy college town”.’

A college town in the clouds Tabubil, beside the Ok Tedi river. Credit: OTML

The mining town of Tabubil is facing the closure of the nearby Ok Tedi mine with a brave new vision.

uilt to support the Ok Tedi mine, the town of Tabubil is in many ways a model town for Papua New Guinea. In spite of its remote location in the misty Star Mountains, its roads and houses are well-maintained; it has reputable and well-resourced hospital, international school and small international airport; its utilities are reliable, and security is rarely an issue. There’s even a golf course (although landslides adjust its fairways from time to time). But how is Tabubil and its 10,000-strong community to be sustained and even flourish once its reason for being—the giant Ok Tedi mine—closes, either in 2015 or 2024? And what of the surrounding communities; about 80% of the workers in the villages surrounding Tabubil also derive their livelihood from the mine. This pressing question has been the subject of Tabubil Futures, a study commissioned by Papua New Guinea Sustainable Development Program Ltd (PNGSDP) and Ok Tedi Mining Limited (OTML) to determine how the town will survive after mine closure.

Out of this study has arisen a range of strategic initiatives that will see Tabubil transformed from a mining town into a ‘sustainable mixed-economy college town,’ with a broader economic base and, eventually, its own municipal government. Arguably the most high profile project under this transformation plan is the creation of the Star Mountains Institute of Technology (SMIT). Due to its proximity to the Ok Tedi mine, Tabubil has been a training centre for a range of mine-related skills for some years. SMIT will bring Tabubil’s existing training activities under one banner, and also develop a broader range of courses in such critical areas as business, health, hospitality, agriculture, technology, environmental science and teacher training. Land for SMIT’s campus in Tabubil has been secured and the building of its environmentally-friendly campus of classrooms, laboratories, student accommodation, theatre, library and conference centre has been put out to tender. Dr Trevor Davison, SMIT’s Chief Executive Officer, expects the build to take about two years. A proposal for a SMIT campus in nearby Kiunga has also been drafted.

Credit: SMIT

T r a n s form at i on a l proj e ct s : Ta b u b i l

An artist’s impression of the planned Star Mountains Institute of Technology campus.

programs from national and international partner universities, and producing skilled workers not only for the mining and gas projects in the neighbouring Highlands and Papua Basin but also for private and public sector employers across the country. Professor Ross Garnaut likens the planned transformation of Tabubil to that of Pittsburgh in the United States—a former steel town that overcame the departure of its traditional manufacturing industries in the 1980s and is now one of the United States’ most liveable cities with a strong technology and services sector. If it can achieve a comparable transformation, Tabubil Futures could well prove a blueprint for post-resources communities across PNG.

Credit: Evan Hill

Other parts of the Tabubil Futures plan will see Tabubil’s hospital turned into a teaching hospital under an arrangement with Divine Word University in Madang Province, and the commercialisation of electricity infrastructure currently owned and operated by OTML. The latter move will involve the transfer of OTML’s three local power generation assets to PNG Energy Developments Ltd and Western Power (see page 27 for more on the Province’s electricity sector), which will for the first time be able to charge commercial rates to users. Also on the agenda is more housing, a town planning framework, and plans to commercialise Tabubil’s small but busy international airport. With all these initiatives at various stages of execution, it is likely Tabubil will be a very different town a decade from now. It will be hosting academic conferences, managing

Tabubil’s hospital, the main referral hospital for Western Province, will become a teaching hospital under a partnership arrangement with Madang’s Divine Word University.

Econom i c s e ctor s

‘It is not well known that, besides copper and gold, Western Province also exports notable quantities of rubber and fish to first-world markets.’

An abundance of natural resources Rubber is one of Western Province’s major cash crops.

The time is ripe to convert Western Province’s abundance of natural resources into a sustainable, broad-based economy.

he irony of the economy of the Western Province having for so long relied so heavily on what is colloquially referred to as ‘the hole in the ground’ in its remote northwest corner is that so many other opportunities remain untapped. Now, with substantive measures being taken to provide a conducive business climate, other industries are finally getting the chance to come into their own. Some of these are featured in more depth later in this section.

Expanding minerals sector Unsurprisingly, the Mt Fubilan area above Tabubil is not the only part of the vast province to contain mineral wealth beneath the ground and companies such as Highlands Pacific and even OTML itself are now busily prospecting. Meanwhile, ExxonMobil’s PNG LNG project has sparked a race to see who can execute PNG’s second major gas project. Nowhere is interest greater than in Western Province (see page 32 for more information on the mining and petroleum sectors).

‘Secret’ exports It is not well known that, besides copper and gold, Western Province also exports notable quantities of rubber and fish to first-world markets. Both these industries are likely to expand in future years as the result of major development programs (see pages 34 and 36 respectively). Although Western Province has little arable land (sago—a starch extracted from palm stems—is the staple food crop), the outlook for agribusiness is also positive. While the recent progress of rubber has been outstanding, oil palm plantations are now being developed in the southern part of the Province, in order to provide income from bio-fuel production, and discussions have taken place with some of the largest cattle herders in Queensland, Australia, about the potential for keeping overseas livestock in the province.

Sustainable forest products There is certainly no shortage of trees in Western Province. Although the spectre of illegal logging remains, sustainable forestry is an obvious area of opportunity. Areas of immediate

Econom i c s e ctor s

Landowner company diversifies

interest include plantation timber, value-adding ‘in province’ and the cultivation of high-value species (see page 38).

Beyond produce Mineral Resources Star Mountains (MRSM) is Western Province’s own example of the new breed of landowner company playing an increasingly entrepreneurial role in the nation’s economy. MRSM represents the economic and social interests of the Ok Tedi Mine Landowner Groups, on whose land Ok Tedi’s operations are located.

The province’s stunning biodiversity is its most tangible asset. It should provide the platform on which the tourism sector can grow from its very low current base into another important economic contributor (see page 39). Meanwhile, back in Tabubil, the post-mine future of the town will revolve around the service sector, with the Star Mountains Institute of Technology (SMIT) providing the cornerstone of the Tabubil Futures masterplan (see page 28).

As a royalty, they receive 2.5% of the annual OTML dividend. MRSM’s responsibility is to put these funds to good use. Established in 1997, it has made investments into a range of businesses mainly in Tabubil (but also Port Moresby) so that by 2011 it was the largest subcontractor to Ok Tedi and employs around 700 people. Key companies under its umbrella include Tabubil Engineering, Fubilan Catering Services and a couple of hotels.

Eaglewood, or agarwood, is one of a number of timbers found in Western Province with export potential.

As Tabubil commences its transition from mining to ‘mixed-use’ town CEO Paul Povey is excited by the scope of opportunities opening up to MRSM:

Credit: Business Advantage International

‘We’re looking at a wide range of options, including entering into a joint venture with one of the major tenderers for the Star Mountains Institute of Technology project.’

PNG Microfinance: lubricating the wheels of commerce PNG Microfinance Ltd plays a vital role in the economy of Western Province by mobilising savings and providing financial services to many small businesses that are not able to meet the lending criteria of the major banks. Although it operates nationwide, it has a particular focus on Western Province, where it has seven branches. Its suite of services includes deposit facilities, business loans for micro business operators, working capital and asset purchase loans for SMEs, as well as agribusiness loans, including to the rapidly increasing number of rubber-growing smallholders.

MRSM subsidiary Tabubil Engineering is a key provider of engineering services in Western Province.

Staff at PNG Microfinance’s branch in Tabubil

Econom i c s e ctor s : M i n i ng & G a s

‘While copper, gold and silver have dominated the history of Western Province’s minerals industry, another resource—gas—looks likely to feature strongly in the sector’s future.’

Mining and gas: preparing for the next wave Cutbacks to the existing mine wall may extend the life of the Ok Tedi mine until 2022. Credit: OTML

Western Province is highly prospective for minerals. With the massive Ok Tedi copper mine approaching the end of its long life, a boom in exploration is occurring for other mining and gas discoveries.

t the PNG Advantage Investment Conference in Brisbane in August 2011, Papua New Guinea Chamber of Mines and Petroleum Executive Director Greg Anderson gave delegates a thorough overview of the outlook for PNG’s major industry sector. What was striking from his map of major exploration sites was just how many were in Western Province. PNG has had a mining and gas industry for decades but over the past few years investment in exploration and development has surged. With a mature and well-established regulatory regime in place, a supportive and industry-focused government agency—the Mineral Resources Authority—to deal with, and demand for mineral commodities strong, particularly in Asia, the sector has moved up to an entirely new level. What is true of PNG generally is also true of Western Province, which falls within the highly prospective Papuan Basin. Buoyed by a series of promising petroleum and gas discoveries over the past 10–15 years, and encouraged by the presence of the massive ExxonMobil PNG LNG project in neighbouring

Southern Highlands Province, Western Province is now awash with exploration companies drilling for gas. At the same time, there are plans to extend the Ok Tedi mine beyond its close date of 2013, and also to develop other copper and gold deposits.

Ok Tedi expansion plans Expansion plans at the Ok Tedi mine in the northern Star Mountains are expected to extend the life of Papua New Guinea’s largest copper mine until at least 2024 (see page 16 for more on the mine’s current operations). Currently the subject of feasibility study, community consultation and Government approvals, the plans involve two major cutbacks of the mine’s massive west wall and a small underground mine, ‘Gold Coast’. While the Ok Tedi mine production will reduce to less than half current production under this extension, it is still expected to produce some 700,000 tonnes of copper and 2.3 million ounces of gold over a nine-year period.

At the time of writing, a decision on going ahead with the extension was imminent and copper production under these new conditions may commence as early as 2014. In addition to the mine extension, Ok Tedi Mining Limited is involved in exploration to uncover further deposits in and around the current mine and further afield. In 2010, it signed farm-in agreements with Australia’s Frontier Resources covering five exploration leases, three in Western Province and one each in Central and East New Britain. It has also applied for two exploration leases in New Ireland that it plans to explore under its own steam. OTML isn’t the only miner looking in the Star Mountains. ASX-listed Highlands Pacific, which is involved in the major Frieda River (copper-gold) and Ramu (nickel) projects elsewhere in PNG, currently has two exploration licenses—Nong River and Tifalimin—about 25 km north of Ok Tedi. These leases were the principal focus of the company’s 2011 exploration budget.

Credit: Business Advantage International

Econom i c s e ctor s : m i n i ng & g a s

Due to the remote location, mineral exploration in Western Province relies heavily on helicopters.

Petroleum and gas

Credit: Business Advantage International

While copper, gold and silver have dominated the history of Western Province’s minerals industry, another resource— gas—looks likely to feature strongly in the sector’s future. The most active gas exploration company in Western Province is Toronto and New York-listed Talisman Energy, which has pursued an energetic program of acquisition and exploration since its purchase of Rift Oil and Papua Petroleum’s interests in Western Province in 2009. Talisman now has the largest position of any company in Western Province, participating in 13 petroleum prospecting licences covering most of the province, and one offshore licence in the Gulf of Papua. Some of these are being explored in partnership with other companies, such as New Guinea Energy, Sasol and Horizon Oil. While Talisman is still conducting seismic surveys and drilling in order to prove up its discoveries, company estimates suggest that gas across all its leases have the potential to create a project about half the size of the massive ExxonMobil PNG LNG project. With individual discoveries being on a small scale, the key will be to aggregate them efficiently. If all goes according to plan, Talisman is hoping LNG exports from its Western Province fields could start as early as 2018–19.

Eaglewood Energy has already completed a front end engineering and design study for the development of its Ubuntu-1 discovery close to Kiunga; a discovery estimated at 113.9 billion cubic feet equivalent of gas. The small LNG project, should it go ahead, would involve the building of an 85 km pipeline to Kiunga, and the construction of a liquefied natural gas/petroleum processing facility there. Gas would be shipped down the Fly River to Daru for loading onto oceangoing vessels. Australian company Horizon Oil is working in partnership with Talisman, specifically in the Stanley field to the north of Kiunga and the Elevala and Ketu fields to the east, in which unlisted Kina Petroleum is also a minority partner. Veteran PNG exploration company Oil Search is also drilling in Western Province, in the P’nyang field with Esso Highlands, the PNG subsidiary of its PNG LNG project partner, ExxonMobil.

Existing infrastructure

Alluvial gold mining at Ningerum. Such mining activity is reserved solely for Papua New Guinean nationals.

Operational conditions for exploration in the Western Province are far from easy, with logistics the major challenge given the region’s remoteness. However, it is worth noting that a lot of the exploration activity, especially to the north of the Province, has been made significantly easier due to the pre-existence of infrastructure built to support the Ok Tedi mine. Whether the current boom in exploration activity could have happened so quickly without such infrastructure as the Tabubil–Kiunga Road, Kiunga’s river port and various power plants and airports is a moot point. Furthermore, recent improvements in telecommunications, rural electrification, port and airport infrastructure, will undoubtedly help facilitate any future mineral project.

Econom i c s e ctor s : R u bb e r

‘North Fly Rubber’s Chairman Warren Dutton notes with pride how clients in Germany specifically request the company’s signature PNGCR10 product over that of the competition.’

Tapping into rubber Mature rubber trees near Kiunga Credit: Business Advantage International

North Fly Rubber is the Western Province’s leading exporting agribusiness. With further investment occurring, the sector has potential to grow further.

he development of sectors such as commercial agriculture and eco-tourism can provide a sustainable income for even Western Province’s most remote communities. In this context, the progress being registered by the smallholder rubber sector is nothing short of remarkable.

Cooperative structure The industry is arranged on a cooperative model with North Fly Rubber owned by around 3,000 rubber growing families from the Lake Murray, Balimo, Suki and Fly River areas. Growers deliver their cup rubber to a designated collection point in their area where it is transported to the river port of Kiunga. There, it is processed in North Fly Rubber’s factory and converted into a form in which it can be exported to markets such as Europe, China and Australia. Between 1995 and 2010 North Fly Rubber exported 10,606 tonnes of processed rubber, earning 34 million kina (US$15.3 million) in foreign exchange and providing 15.8 million kina (US$7.15 million) in income to its smallholders.

Ensuring viability North Fly Rubber’s Chairman Warren Dutton, an experienced businessman and former PNG Government Cabinet Minister, notes with pride how clients in Germany specifically request the company’s signature PNGCR10 product over that of the competition. Yet he is quick to point out that, regardless of quality, the industry would not be viable if it had not been for a long-term partnership between the company and Ok Tedi Mining Limited (OTML). Since 1992, North Fly Rubber has benefited from a freight subsidy arrangement with OTML (through its Ok Tedi Development Foundation) that enables it to overcome the tyranny of distance posed by its remote location. Under this agreement, OTML both subsidises the fuel for the vessels that bring the cup rubber to Kiunga, as well as providing transport on its own vessels from there to a convenient trans-shipment port (Port Moresby or Queensland, Australia).

Econom i c s e ctor s : R u bb e r

Expanding the grower base

Rubber: the perfect fit for the Western Province’s remote communities Small-holder rubber is ideally suited to both the environment, the remoteness of the communities and the lifestyle of the people living in Western Province. Once mature, it provides a source of income all year round (provided the farmer is located near a buying depot). Cup lump rubber requires no special post-harvest treatment. It can be stored under rudimentary conditions and sold months and even years later to a buyer for processing. The industry is not reliant upon the establishment of high cost infrastructure as in the case of oil palm. Source: Stephen Chartaris, Consultant Credit: Business Advantage International

Credit: Business Advantage International

In 2003, PNG Sustainable Development Program (PNGSDP) formed a partnership with North Fly Rubber to help expand the scheme in the particularly remote Lake Murray area. Funding of around 15 million kina (US$7 million) was divided between a development grant and sustenance loans provided by PNG Microfinance. By the end of 2010, the Lake Murray Village Rubber project had seen 1,646 growers from 21 villages planting a total of 1,960 hectares of rubber trees. The challenge is to see this success replicated in other designated ‘least developed’ areas of Western Province. As a result, it is on the verge of signing an agreement with North Fly Rubber to implement a major expansion of the smallholder rubber industry in the areas including Suki and Bituri in South Fly District, Balimo/Kawito in Middle Fly District and Agrim in North Fly District. Under the Western Province Rubber Development Project, approximately 40 million kina (US$18.1 million) has been committed up to 2020 to facilitate the planting of 2,800 hectares of high-yielding rubber at the above sites, along with financing the associated rubber tree nurseries, processing infrastructure, extension effort and sustenance loan program to assist growers to establish one hectare blocks on their customary land. Although this project will take some years to come to fruition, it will signal a major expansion of the province’s rubber sector.

Rubber planting across Western Province

Western Province rubber ready for export to China

Kiunga (North Fly District)

4,267 hectares

Lake Murray (Middle Fly District)

2,261 hectares

Balimo (Middle Fly District)

1,510 hectares

Suki (South Fly District)

501 hectares

Oriomo Bituri (South Fly District)

183 hectares

Total rubber planted 8,721 hectares NB• There are currently 9,482 growers in the province, with the average block size ranging from 0.2 to 4.0 hectare per grower. In future years, these growers will be assisted to develop a further two hectares each in order to achieve a viable family income from their rubber.

Econom i c s e ctor s : F i s h e r i e s

Fisheries: a natural advantage Barramundi hatchery in Daru Credit: Business Advantage International

Strategic investments are demonstrating Western Province’s rich potential in fisheries and aquaculture, especially for its famous barramundi.

iven the Western Province’s size and varied geography, it is no surprise that business opportunities vary from one district to another. If Kiunga’s central location on the Fly River makes it the natural hub for the Province’s rubber industry, then Daru’s seaport makes it the obvious focal point for the fisheries sector.

‘My vision is to turn PNG into the country of barramundi.’

Daru’s local processing revolves around the Maru Marine company, founded by local entrepreneur Meremi Maina. The longest-established fish processing facility in Papua New Guinea, Maru Marine employs a total of 150 staff, of whom a fifth work in the plant located within the port area. At present the company turns out about two tonnes of product per day, including the iconic local barramundi (that you can sample at one of Maina’s other businesses, the Kuki guesthouse a few minutes away) and jewelfish that are gobbled up by the increasingly hungry domestic market. Meanwhile, lobster tails are exported primarily to Australia, although in 2010 the company registered its first export to the USA. Maru Marine is currently engaged in a research and development project, partly funded by a grant from PNG’s National Fisheries Authority, to enable it to export live lobster. The commercial opportunities of prawn, mackerel and mud crab have not even been seriously explored as yet.

‘This is the home of barramundi,’ says Meremi Maina. ‘My vision is to turn PNG into the country of barramundi, but it would require the hatchery project [see box on opposite page] being able to supply anywhere in PNG.’ In this instance, he envisages other players entering the local processing market to help process the increased volumes.

Credit: Business Advantage International

Well-established facility

Barramundi a major opportunity

Lobster tails from Western Province are exported to Australia and the United States

Econom i c s e ctor s : F i s h e r i e s

Barramundi project spawns opportunity The 28 million kina (US$12.7 million) Western Province Sustainable Aquaculture Project is the first sustainable fisheries project to be delivered in Western Province and it incorporates public, private and community partnerships with a strong regional development focus. Located next to Daru Airport, its main site includes a barramundi hatchery, storage, administration building and staff accommodation. A world-class bio-filtration and aeration facility, with customised water supply equipment, is capable of producing up to 500,000 ‘fingerlings’ (young fish that have developed to about the size of a finger) per annum. Measuring barramundi broodstock

Western Province is synonymous with barramundi but growing local and international demand for barramundi has led to overfishing and the depletion of fish stocks in the Fly River system.

the rural communities in the Middle and South Fly to farm barramundi.

Thus the fingerlings reared in Daru will underpin a restocking project to rejuvenate the Fly River barramundi stocks, as well as a ‘cage culture’ project empowering

The project commenced in late 2007 and is currently operating on a trial basis, with the first batch successfully spawned in November 2010.

Forests with a future

Credit: R H Group

Econom i c s e ctor s : F or e s tr y

Western Province’s vast forests, already a major contributor to the PNG economy, have the potential to deliver sustainable business opportunities. R H Group’s plywood factory in Panawaka, Western Province

NG covers approximately 45 million hectares and it is estimated that approximately 30 million hectares are forested. Due to the rugged terrain and inaccessible nature of significant areas of the country, around half of this is suitable for commercial forestry. As PNG’s largest province, it is therefore little surprise that forestry is a key sector in Western Province. The forestry industry creates opportunities for those in rural communities to enter the formal workforce. Operators also pay royalties to landowners for access to the natural resources on their land, as well as contributing to basic infrastructure such as roads, bridges, housing and healthcare.

Downstream processing Most commercial activity in Western Province is carried out by R H Group, a wholly-owned subsidiary of Malaysian company Rimbunan Hijau, PNG’s largest exporter and manufacturer of timber products. It owns several concessions and conducts downstream processing at its sawmill at Kamusie and its timber processing facility in Panakawa, which produces high quality timber veneer and plywood. R H products are exported to China, Taiwan and South Korea, among other markets, and it is one of PNG’s largest exporters outside the minerals sector. ‘As the largest processor of forest products in Papua New Guinea, Rimbunan Hijau is well positioned in regard to value adding and we expect to maintain our leading position,’ Managing Director James Lau told Business Advantage International in early 2011. ‘We have introduced a timber legality and traceability verification system in Papua New Guinea and are currently expanding the system to our other forestry operations.’

Future directions Besides value-adding, the future growth of this sector in Western Province is expected to revolve around the creation of timber plantations and the commercialisation of more highvalue species (see box).

Another potential source of revenue is carbon trading, through which Western Province’s substantial forests could be worth as much standing as felled. In May 2011, Papua New Guinea signed up to the United Nations’ Program on Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (REDD+). REDD+ aims to provide financial incentives to participating countries for conserving their forestry resources and biodiversity. Already, plans are under way for a ‘measurement, reporting and verification’ system for PNG’s forests under REDD+. If the program proceeds as intended, landowners in Western Province could one day receive payments from a global fund some estimates suggest may be worth as much as US$30 billion for acting as good stewards of their native forests.

‘Besides value-adding, the future growth of this sector is expected to revolve around the creation of timber plantations and the commercialisation of more high-value species.’

High value timber opportunities • Papua New Guinea Sustainable Development Program is currently seeking a joint venture partner for its Sustainable Eaglewood project to be developed in partnership with local smallholders. Eaglewood is one of the world’s most valuable forest products (also known as agarwood), the essence of which is used in incense and perfumes. Tests performed so far indicate that PNG Eaglewood is of the highest quality. • Another pilot project involves oil from the indigenous Waria Waria tree. This closely resembles eucalyptus oil and has similar medicinal properties. The early results of tests of samples of Waria Waria oil from Morehead in Western Province in 2010 were positive and it is hoped that export markets can be developed.

Eaglewood seedlings

Econom i c s e ctor s : T o u r i s m

‘There is certainly huge scope for growth in the province’s existing markets of Australia (sports fishing) and USA/Europe (birdwatching).’

Western Province’s unique eco-tourism offering Bensbach on Lake Murray; a fishing and birdwatching paradise

Western Province boasts truly outstanding natural attractions, yet only the most intrepid tourists currently get the chance to experience them. A range of initiatives is now underway that will finally make the area easier to visit.

t is not hard to understand why tourism has been identified as a sector of great potential for Western Province. It is already globally renowned for its bird-watching; those in the know claim there is nowhere better on earth to catch barramundi (and they’ve got the world records to prove it); while the majestic Fly River is one of the planet’s great rivers. And yet the province’s tourism sector remains in its infancy, handling a mere thousand or so leisure visitors per annum.

Bensbach Wildlife Lodge This comfortable 12-room lodge, built of local materials, has established a reputation for spectacular barramundi fishing (other species include ox eye herring and saratoga). It is located on the Bensbach River (Papua New Guinea’s most westerly river), in a vast, open, seasonally-flooded plain which is crowded with bird and animal life, including deer, wallabies, crocodiles and wild pigs.

Current constraints

Infrastructure to enable growth All this is about to change though as the transformational projects outlined in pages 20–29 re-engineer the very dynamics of tourism in Western Province. For instance, the Western Province Communications Project is already making reservations simpler, whereas air travellers will benefit from the extensive upgrades of airports at Kiunga and Daru. Meanwhile, the Fly River’s first passenger ferry service will commence operations in 2012.

Three quarters of the lodge’s guests come from overseas, and are often sport fishing groups from Australia. The property is the most remote of a network of eco-lodges around PNG that are owned and operated by inbound tour operator Trans Niugini Tours, which operates its own fleet of charter aircraft, boats and vehicles. Credit: PNGSDP

According to the travel operators who cater to these visitors, this is essentially due to infrastructure and transport constraints, particularly air access. There are no direct international scheduled flights into the province, while connections from Papua New Guinea’s capital Port Moresby are relatively costly and infrequent, and are not always reliable. It is therefore no surprise that there are currently few accommodation options available and those that do exist cater primarily to business travellers (the province’s premier property, Bensbach Wilderness Lodge, is the key exception—see box).

Bensbach is Western Province’s premier tourism destination

Econom i c s e ctor s : To u r i s m

Sport fishing

Credit: PNGSDP

Ian Middleton, Ok Tedi Development Foundation’s CEO and a keen fisherman, describes the unique pleasure of sports fishing in PNG’s remote Western Province.

Catch of the day

The Western Province of Papua New Guinea is amongst the last few pristine wildernesses on this earth, a diverse habitat comprising unique flora and fauna species, many endemic to the nation.

This includes one of the toughest fighting fish known to swim, the Niugini Black Bass, recently recognised by the International Game Fish Association as the Papuan Black Snapper. Cohabitating with the world’s largest population of barramundi, as well as an abundance of saratoga and tarpon makes the Western Province a fishing paradise and a mustvisit location for adventurous sport and fly fishermen alike. Growing to over 20 kilos, with a healthy dose of attitude and aggressively feeding from within snaggy habitats, the Niugini

Black Bass commonly destroys rods, reels and endless tackle: it’s an iconic species on the ‘must catch’ list of many a discerning fisherman. While the bass is busy fighting deep and pulling your arms off, you are equally likely to have a large barramundi of up to 30 kilos come exploding through the water surface with mouth open, gills flared and head shaking in an attempt to throw your lure. These spectacular large-scaled silver fish provide the perfect contrast to the dark brown marauding bass. Additionally, the angler gets to fish from crystal clear teacoloured tributaries, off-river water bodies and spectacular lakes that feed into the mighty Fly River, all teeming with an unrivalled diversity of life that includes deer, tree kangaroos, the bird of paradise, magpie geese, eagles and every water bird imaginable, not to mention tall hardwood stands, spectacular ferns and an astounding variety of orchids.

Private sector growth

Eco and adventure tourism opportunities in Western Province Credit: PNGSDP

Growth is starting to come from the private sector. Proposals are being considered both to expand the Bensbach Wildlife Lodge and open a sister property on the shores of Lake Murray, while there are moves to attract new investors into the province. Meanwhile, in response to increased demand, the owners of established properties such as the Kiunga Guesthouse and Daru’s Kuki Guesthouse are also planning to add additional rooms. There is certainly huge scope for growth in the province’s existing markets of Australia (sports fishing) and USA/Europe (birdwatching). PNG’s emerging middle-class and increasing expat population will also bring domestic tourism into play. Either way, increased visitor numbers will not only generate sustainable income for local communities province-wide, but would also help make transport and other key services commercially viable. ‘When compared to its other Pacific neighbours, PNG’s pristine wilderness, preservation of culture and the range of outdoor activities to be enjoyed makes it a stand-out destination to visit for tourists with the urge to explore,’ Executive Consultant Carla Ewin of Roaming Adventures, an adventure travel consultancy specialising in the Pacific, tells Business Advantage. ‘Western Province abounds with all these key attractions, and the planned upgrades of infrastructure will assist in growing the adventure travel industry. Sports fishermen, birdwatchers and trekkers alike will reap the benefits of being able to access the Western Province with greater ease.’

As the province’s enabling infrastructure develops and its tourism sector grows, potential exists for the creation of high-end Flora on Lake Murray and medium-range ecolodges in locations such as Kiunga, Tabubil and Lake Murray to accommodate visitors participating in activities such as: • Trekking. PNG has already established a reputation in this area, especially on the famous Kokoda Track. • Kayaking on PNG’s largest lake, Lake Murray • Recreational hunting, primarily for deer • Flora/fauna, including orchids, insects, butterflies and bats. • Cultural shows/village stays Source: Eco-Tourism and Adventure Tourism Market Study for the Western Province of Papua New Guinea, prepared for PNGSDP by TRIP Consultants, July 2009

WES T E R N P R O VI N C E : T H E G UI D E

Western Province: the guide The breathtaking Hindenburg Wall in the Star Mountains has been proposed for UNESCO World Heritage listing Credit: Rocky Roe

Some practical tips and advice for the visitor. ACCOMMODATION Accommodation in Western Province is fairly basic by international standards. At the same time, the current surge in economic activity means that rooms are also scarce, so make sure you make your reservation early and reconfirm before you travel. The best options in the three largest urban centres are below. Note that internet access is not generally available but credit cards are accepted.

Tabubil Cloudlands (tel +675 548 9277, email cloudlands@online.net. pg): neat, clean rooms and cable TV, plus a decent restaurant. TE Palace (tel +675 548 9108): owned by Tabubil Engineering, the units at the back are spacious and self-contained.

Kiunga Kiunga Guesthouse (tel +675 649 1188, email bookings@ gh.ningerum.com.pg): the social hub of Kiunga, with plenty of rooms, a restaurant and adjacent store. Plans are afoot to add 28 new units plus a cafĂŠ.

Daru The New Century Hotel (tel +675 645 9169, email newcentury@ msn.com), Crows Nest (tel +675 645 9485) Kuki Guesthouse (tel +675 645 9476, email kuki@daltron.com. pg) all provide clean ensuite rooms and in-house dining.

Note: Ok Tedi Mining Limited also has guesthouses in Tabubil and Kiunga for its own visitors.

Balimo Balimo Guest House (tel +675 275 6707) is owned by Biyama Trading.

CLIMATE Much of the province, including Kiunga, experiences the warm, tropical climate typical of most of PNG. However, Western Provinceâ&#x20AC;&#x2122;s size and topographical diversity means that its climate can vary greatly depending on where you go. An extreme example is Tabubil which, at 520m above sea level, receives a massive eight metres of rain annually, an average of just 2.4 hours of sun per day, and can at times be cool.

COMMUNICATIONS The Western Province Communications Project (see page 20) has brought 3G mobile technology to just about every pocket of Western Province. At this stage, Digicel is the only carrier to have installed its kit in the network of towers, although this is expected to change in due course. Bemobile mobile phones work in the three main towns.

Internet Wireless internet, via a USB modem, is now available via Digicel.

w e s t e rn pro v i nc e : th e g u i d e

Credit: Business Advantage International

Western Province’s three main urban centres Kiunga The seat of the Fly River Provincial Government, as it is locally referred to, is located in Kiunga, a port town on the Fly River around 737 kilometres from the river mouth. Kiunga is the commercial centre of the province and in recent times it has also become the focal point for the province’s boom in petroleum exploration.

Credit: Business Advantage International

The local government administration building in Kiunga

Daru Daru has been the official capital of Western Province since colonial times. Located on a small island at the mouth of the Fly River, it is the centre of the province’s fisheries sector and will soon be the location of a large-scale deepwater port. Daru is the closest port in PNG to Australia.

Daru airport

Tabubil Western Province’s largest town sprang up to support the Ok Tedi mine and the result is a town that is unique in PNG, let alone Western Province. Its streets are neat, footpaths wellmaintained and amenities range from an international school to sporting facilities and the province’s main referral hospital. Located 520m above sea level in a remote corner of the province, it is accessible only by air or via a single road from Kiunga. One of the wettest places on earth, it is also frequently covered in cloud. With a future now mapped out for the town post-mine, Tabubil has just commenced its transition from mining to mixed-use town. The nine-hole Tabubil Golf Club is one of the most remote courses in the world

Some things you might consider bringing to Western Province Umbrella

Roaming is also now possible in Western Province. You can also access mobile data services if you have a smartphone but as usual it is costly. The alternative is to buy a pre-paid Digicel SIM card (you can easily top up your credit as required).

Light raincoat

ELECTRICITY

Sturdy walking boots

The current in PNG is 240V AC 50Hz using Australian-style plugs.

Sunscreen Wide-brimmed hat

HEALTH & SAFETY

Mosquito repellent

Visitors are advised to consult their GP at least one month before travel regarding anti-malarial medication and recommended vaccinations for other prevalent diseases. The main referral hospital for Western Province is at Tabubil. However, serious medical conditions typically require treatment outside of the country, however. Individuals travelling

Antiseptic hand gel A couple of long sleeve shirts Basic medications (eg painkillers)

Mobile

w e s t e rn pro v i nc e : th e g u i d e

to PNG should thus ensure they have adequate health cover (the cost of medical evacuation alone can reach US$30,000).

Useful resources for Papua New Guinea

MONEY PNG’s currency is the Kina. With the exception of Tabubil, ATMs are not abundant in Western Province, so bring plenty of cash.

www.westernprovincepng.com The companion website to this publication.

TIME ZONE

www.businessadvantagepng.com Online edition of PNG’s international business and investment guide. Follow links from this site to other essential PNG business resources.

PNG has a single time zone, 10 hours ahead of UTC/GMT.

TRANSPORT For the time being at least, roads are few and far between in Western Province, so the most common way of getting around the province is by flying. Most scheduled services are operated by Airlines PNG (www.apng.com). Air Niugini (www.airniugini.com.pg) flies from Port Moresby to Tabubil and is expected to add new routes once the airport upgrade at Daru is completed. A number of charter services also operate including those used by Ok Tedi Mining Limited, which runs several flights a week from Cairns to Tabubil. Note that prices for domestic flights to and within Western Province are generally high and flights are often fully-booked. Try to make your reservation early and check in early. Note also that scheduled flights to Tabubil are particularly susceptible to disruption and even cancellation due to poor visibility in the Star Mountains.

VISAS

Credit: Business Advantage International

Business travellers require a business visa to enter PNG. There are two types of business visa: single entry (for one visit of up to 30 days) or multiple entry (visits totalling up to 60 days over a 12-month period). Single entry business visas can be obtained on arrival and cost 250 kina. However, a multiple entry business visa must be applied for from a PNG diplomatic mission before you travel. It costs 500 kina. In both cases, a letter from a ‘business associate in PNG’ outlining the purpose, duration, location and frequency of your visit(s) is required, as is a return ticket.

www.pngcci.org.pg Papua New Guinea Chamber of Commerce, the umbrella organisation for all PNG’s chambers, including the Daru Chamber of Commerce and Industry. www.pomcci.org.pg The Port Moresby Chamber of Commerce and Industry. Information on networking, PNG business generally, and useful links, including to The PNG Investors’ Manual. www.ipa.gov.pg PNG’s Investment Promotion Authority. www.pngchamberminpet.com.pg The PNG Chamber of Mines and Petroleum produces a number of useful publications, including Profile magazine, which coincides with its major biennial conference. Quarterly economic bulletins Informative quarterly bulletins are produced by the Asian Development Bank (Pacific Monitor; www.adb.org), and the central bank of PNG (www.bankpng.gov.pg). www.thenational.com.pg www.postcourier.com.pg PNG’s two daily newspapers, The National and Post-Courier, are both online.

Mobile phone banking promises to encourage financial inclusion in Western Province