Papua New Guinea
But There's Good News. Orogen Mineral Doing Well
Record so far makes it a model for business
Orogen Minerals, of Papua New Guinea, is just over five years old. Despite its comparative corporate infancy, it isn't shy about making big claims about itself.
It was set up by the Papua New Guinea Government as a 51 percent government-owned vehicle through which its citizens could invest with confidence in all the country's future major petroleum and mining projects. Orogen's shares are listed on the Australian, Papua New Guinea and London stock exchanges. The balance of its shares are owned by a mix of institutions and private shareholders in Australia (23 percent), Papua New Guinea (seven percent), the United States (10 percent) and Europe (10 percent).
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Capitalised at about US$200 million and in 2000 generating an operating revenue of US$241 million and profit of US$68 million, Orogen is Papua New Guinea's most profitable company. Its record so far makes it a model "of what can be achieved when a government pursues a path of privatising state-owned enterprises," Orogen feels.
Another of its primary purpose is to raise capital for the financing of new resource projects.
Operating as a public company Orogen, run by a staff of 27 mostly Papua New Guinean professionals, has established itself quickly as a powerful influence in the country¹s mining and petroleum industries.
It inherited an impressive asset base from the government such as shares in the Kutubu oil field and in the vast Porgera gold mine. It has a 13 percent stake, with an option to lift this to 23 percent, in the PNG gas project, a US$3000-US$4000 million scheme for building a pipeline to transport gas to Queensland, initially from the Kutubu field and later from the Hides field.
Gas delivery is planned to begin by the first quarter of 2006 and should continue for at least 20 years. Another Orogen stake is an expected 25 percent participation in the US$833 million Ramu nickel project with Highlands Pacific Ltd as its main partner.
It is expected to be the world's lowest cost nickel producer, with ore reserves for at least 20 years and probably 35 to 40 years of mining. Nickel and cobalt mined from 2005 at Kurumbakari, inland from Madang, will be pumped through a 134-kilometre slurry pipeline to a processing plant and refinery on the Rai coast.
Orogen's other major involvement is with the Gobe oil field, which has recoverable reserves estimated at 80 million barrels. Production was targeted at 50,000 barrels a day, but so far it has not exceeded 35,000. Other interests are in the Misima and Lihir gold mines and the Central Moran unit scheme.
Since it went into business Orogen has paid about 368 million kina in income tax and royalties and 888 million kina in dividends. It has spent nearly 23 million kina on such infrastructure developments as roads, health and educational facilities.
Orogen says that it must adjust to the decline of earnings from gold mining and oil since the Kutubu and Gobe oil fields and Porgera mine are now "mature" assets in a "harvest" mode.
A low level of exploration in Papua New Guinea during the past five years is attributed to a combination of low commodity prices and worries about political stability. Profit risks have also exacerbated the diminishing prospect for oil and gold investments.
But the gas pipeline and Ramu nickel ventures are the plums for plucking for Papua New Guinea.
