GLOBAL MINING GIANT Xstrata wants to sell all or part of its 81.8% share in the Frieda River copper project. The stake is valued at over $2 billion.
Analysts say Xstrata’s decision is the result of a review of its development projects worldwide reflecting pressure to conserve capital amid uncertainty over global growth, rising costs and falling commodity prices.
But it could also be an indicator of the risks of doing business in the increasingly politically unstable landscape of Papua New Guinea.
One commentator told PNG Attitude that “poor project development decisions” regarding landowner rights had “poisoned the chalice of resource investment” in PNG.
“Resource companies and landowners can strike deals, but political interference and corruption have got in the way of good decision-making,” according to the source.
Meanwhile an Xstrata spokeswoman said the company has not yet decided whether to sell all or part of Frieda River.
"As part of this process we are assessing the interest of other investors," she told Reuters.
A critical concern for buyers would be the $5.3 billion cost of developing the Frieda River project.
Analysts say Chinese companies, possibly including Metallurgical Corp of China (MCC), could be interested in Xstrata's stake.
Frieda River has an estimated resource of 12 million tonnes of copper and 18.5 million ounces of gold, and could produce 246,000 tonnes of copper a year, according to a pre-feasibility study.