It has granted a 20-year mining lease to Canadian company, Nautilus Minerals, to mine gold and copper in a 59 square kilometre section of the Bismarck Sea.
The Solwarra one site, as it is known, is off the coast of New Ireland province and about 50 kilometres north of Rabaul.
Presenter: Jemima Garrett
Speaker: Stephen Rogers, CEO of Canadian company, Nautilus Minerals
GARRETT: The grant of the mining lease was the last regulatory hurdle Nautilus Minerals had to clear. Nautilus CEO Stephen Rogers says it is an historic decision.
ROGERS: As this industry emerges it is going to present a significant contribution to the PNG economy.
GARRETT: Earlier this month you had more drilling results from Solwarra One. Just how much gold and copper is there and how much do you plan to produce once mining gets underway?
ROGERS: At the moment we have an indicated and inferred resource. Combined it totals around 2 and a quarter million tonnes, approximately, of ore. When we go into production we would be producing at approximately 1.3 million tonnes per annum and that should generate something of the order of 80,000 tonnes of copper per year and approximately 150,000 to 200,000 ounces of gold, each year as we go forward.
GARRETT: That will make Nautilus a significant player - producing about half as much copper as the giant Ok Tedi mine and the same gold as an average small operator. The grant of the mining lease was delayed while the PNG government considered if it will exercise its option to take a stake in the project of anything up to 30 per cent. Now the lease has been granted it has just 30 days to make a decision and find the finance. I asked Stephen Rogers what it would cost PNG to take its full option.
ROGERS: Any capital that we have to put into the project, going forward .. the government would have to put up its 30% share. Initially, it has an outlay of approx US$20-25 million which represents the investment costs to date on the exploration, the environmental work and the development work, that has been carried out so far on the project.
GARRETT: What is your understanding of what sort of stake the PNG government is considering?
ROGERS: I wouldn't like to second guess the government but I am of the opinion that they will certainly participate. As the project is offshore you don't have to deal with landowners. Does that mean PNG and its citizens will not get as much income from deep sea mining as it does from mining on land?
Not at all. The same opportunities exist for people to participate in this project by providing services to the company, and in terms of the royalties going back into the country, they are exactly the same as any land-based mine. So while we are not impacting people and having to move them from their homes, the general benefit back into the country is very similar.
GARRETT: How soon do you hope to be able begin commercial mining?
ROGERS: Once we sanction the project - which means our board has to approve it - then we'll be about 30 months before we go into production. We have one more milestone to put in place after this particular one: we are intending to close out an arrangement with a strategic partner which will bring in the additional capital that we need to take the project through to commissioning and into production. We hope to do that in the near future and once that milestone is achieved then our board would approve the commencement of the building of the equipment. We are well advanced in the engineering aspects of all of this equipment and we are now very close to the stage where we will start to assemble all the different components necessary to start offshore production.
GARRETT: Stephen Rogers CEO of Nautilus Minerals. Mr Rogers is bullish about the future of seafloor mining and he believes the Pacific will lead world.
ROGERS: We've had considerable success in the Bismarck Sea, with 19 different systems discovered to date. Over and above that, we've carried out exploration in the territorial waters of Tonga, and we have large tracts of land right across the Western Pacific in countries like Fiji, New Zealand, Vanuatu and the Solomon Islands.
GARRETT:: So what potential do you see in the longer term for this industry in the Pacific?
ROGERS: We have a view in the company that the seafloor industry has the ability to provide the world's copper supply. We don't have hard evidence of that at this point in time. But based on what we do know about the location of these seafloor massive sulphides around the world and the intensity or diversity of systems that we have seen in this one area of the Western Pacific, we apply that across the world - the experts tell us that there could be many thousands of systems with the ability to provide the world's copper demand.