Mining sector sees a rebound in 2016 revenue

Over K9.7 billion in mining revenue has been recorded by the Mineral Resources Authority for the 2016.

This is a 38 per cent increase from the preceding year, which recorded K7.2 billion.

According to MRA production reports by mines, Lihir Mine generated the most revenue with K3.57 billion.

Ok Tedi fell in the second spot, generating K2.1 billion (K2, 064b)after an impressive 10 month production run following a hibernation of the mine caused by the El Nino Drought.

Porgera moved down to third spot after generating K2 billion (K1.995b).

Other contributors to the mineral revenue increase include: Ramu Nico (K705 million); Hidden Valley (K603 million); Simberi (K407 million); Alluvial Export (K354 million); Eddie Creek (K2 million); Crater (K1 million)

The three top performers accounted for 78. 64 per cent of the total mineral revenue, while the following six made up the rest.

Mineral commodity composition revealed gold accounted for 78.46 per cent, copper with 12.84 per cent, and nickel 5.52 per cent.

The MRA says gold price had remained steady up until the election of US President, Donald Trump,  which triggered a slump in prices. However, since then the price has steadily improved.

They highlighted several factors that contributed to this turnaround and they include:

  • Improved mineral commodity prices, with the exception of copper, which reacted to Trump to the opposite to gold, and is currently up more than a third in value since hitting six year lows in February 2016;
  • Rising production at key mines, notably Lihir (exceeding 903, 000 ounces [oz] of gold) and Ok Tedi (copper up 77 per cent, gold up 54b per cent & silver up 96 per cent on 2015); and
  • Benefits from plant upgrades, greater efficiencies and new management strategies, especially at Lihir, Ok Tedi, Porgera, and Simberi Mines.

The MRA expects many challenges in 2017 but anticipates mineral revenue to breakthrough K10.5 billion this year if a steady state of commodity prices and mine production is maintained.

Production is expected to cease temporarily at Hidden Valley however this will be offset by Kainantu Mine returning to production during Quarter One of 2017.  Also both Ok Tedi and Ramu mines expect a full year of production.

Meanwhile Alluvial exports was placed 7th on the rankings having lost its place to the consistent performance of the Simberi mine.

It is hoped that mechanized alluvial operations recently approved, will bring better results to the alluvial sector, which dropped slightly in 2016 with an export gold and silver revenue of K353,652,652 (down 1.4 per cent on 2015).

Picture: Lihir Gold Mine (Newcrest Mining Ltd)

Author: 
Cedric Patjole