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09 December 2013

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Why are you saying "foreign investment is welcome in PNG". You don't speak for everyone.

Of course the foreigners welcome foreign investment because at the end of the day, they'll make the lowest possible investment and take the highest possible profits back to their own land.

Learn from the example of India who painfully developed self reliance by prohibiting many forms of foreign investment. The internal wealth grew as a result, it wasn't shipped back to some other place, and as a result, today India has its own capital to invest in its own domestric industry.

Welcoming foreign investment is yet another short cut that brings with it a very very high cost.

Gabriel, firstly I don't like either the proposed Frieda or Nautilus mining developments as I don't believe they can be developed without significant environmental damage.

I also don't like the way these companies too often fail to adequately consult both the government (national, provincial and local level) and communities. In Frieda's case it will be near impossible to mitigate severe impacts on the Sepik river.

These companies are listed on their respective stock exchanges. You have come up with a conspiracy theory about an orchestrated media leak. Conspiracy theories are rarely correct but sometimes may be partially correct. If you had done more research you would have found that the information was released as public announcements to the stock markets. That is where the media such as Reuters got the news, not from some leak.

The announcements, as is normally the case, state that the deal is subject to regulatory approval. They did a deal and announced it as they are legally required to under continuous disclosure rules (which are designed to provide a level playing field for shareholders). They then go through a process before the deal can be completed whereby they explain their plans to the regulators (govermnent) and seek approval.

The regulators can either allow the deal, impose conditions or block the deal. The PNG government needs to be on the ball and ready to scrutinise and negotiate with new and existing investors at all times. That's part of being open for business.

PanAust Limited and Highlands Pacific both made announcements on 1 November explaining their deal. It helps no one if incorrect stories are spread.

You need to get your facts right in order to mount strong and credible arguments and avoid misinforming people. Follow this link for the company announcements: http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=PNA

Whether the deal is a good one is another question. The PanAust proposal is very different from the Glencore Xstrata proposal. The reality though is that the mining majors are pulling back from major new greenfield developments as the mining boom has run out of steam and mineral prices have been falling. The original Xstrata project was simply not going to happen.

Although PanAust is planning a smaller development, given the same sized resource, by exploiting it at a slower rate it should be able to operate and support the PNG economy for a longer time than a larger development would. I hope that they are not allowed to use riverine tailings disposal as Ok Tedi, Porgera and Bougainville Copper have.

A smaller operation should make developing a tailings dam easier. In a worst case scenario if there is riverine tailings disposal, a smaller project should have a smaller impact as the tailings load would be lower. Having said that I strongly oppose rivering tailings disposal.

Ultimately the PNG government is the decision maker and a good decision making process depends on the government having strong environmental regulations, regulators who are empowered, willing and capable of enforcing those regulations, and negotiatiors capable of reaching robust and equitable economic, environmental and social terms with the developers.

The government needs to be smart and nimble so as not to lose or unnecessarily delay projects while achieving the best realistic terms - imagine if the Interoil LNG project had been ready to start construction just as the first LNG project construction was winding down instead of the years of indecision and bickering by both the company and government - that would have fired a second big rocket further boosting economic growth for PNG.

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