How to do business with Papua New Guinea's major mines - businessadvantagepng.com
What opportunities are there to supply Papua New Guinea's major mines and what do potential suppliers need to know before attempting to do business in the country's mining sector? We asked procurement professionals at two of the country's major mines, Ok Tedi and Porgera, during an online briefing this week.
In 2019, mining was responsible for about 10 per cent of Papua New Guinea's GDP, and some 35 per cent of the country's exports. Typically, the operators of two of the country's major mines – Ok Tedi and Porgera – spend millions each year procuring goods and services from external suppliers.
So, what are the two mines planning?
Porgera Joint Venture's Jonathan Parker
Cameron McGregor, Manager for Supply at Ok Tedi Mining Limited (OTML), says the company has five major projects to deliver at its copper, gold and silver mine in Tabubil.
'All of these five projects work together to help to deliver our strategic business plan, which will give us another 10 years of mine life.'
'Number one is a engineered waste rock dump to the north of the mine project. Two is to increase our de-watering in the pit so that we can have a steeper pit slope on the West Wall. Number three is to remediate and mine our centre pit. Number four is to improve the processing assets.' A fifth project will focus on storing more waste material.
'We've got a very good opportunity to engage with our existing incumbent suppliers as well as new opportunities with new suppliers.'
The Porgera gold mine in Enga Province, on the other hand, is currently under 'care and maintenance', as the preparations continue for its reopening under a new ownership structure.
While there are still around 1000 employees working for the Porgera Joint Venture, Manager – Supply and Business Services, Jonathan Parker, says the real opportunities for suppliers will come with the mine's reopening, expected some time this year.
'We'll re-open in stages. The first stage will be up to a quarter circuit – so, 25 per cent production,' he says. 'The key [requirement] areas will be mobile equipment and the process facility.' Upgrading an ageing fleet will also be a priority on restart.
'The majority of the contracts that we had in place previously have expired or will come to an end, so we've got a very good opportunity to engage with our existing incumbent suppliers as well as new opportunities with new suppliers,' he notes.
Location
Both Parker and McGregor agree that potential suppliers need to understand the location of the mines in order to be successful in proving goods and services.
'We're 650 kilometres from Lae, up a challenging road. Logistics is pretty critical for materials supply,' says Parker. This remoteness has major implications for suppliers reliability and lead times, he says.
'We are looking for people who understand where we're located,' agrees McGregor. 'It's challenging … We're really looking for suppliers who don't just feel that the end of their commitment is their delivery to the freight forwarding point.'
Local content
Ok Tedi Mining's Cameron McGregor
Moving forward, both mines prioritise local supply where possible.
'We're looking local, then we're looking domestically, and then we're looking overseas,' says McGregor. 'For Australian producers, you must have a point of difference, you must be able to provide something that we cannot get domestically.
'Obviously, we are going overseas for the majority of our material spend, but a really good supplier is one that is working with local workforce.'
Parker says buying local is also something Porgera plans to 'optimise and do better'.
'It's very important for us to see that our suppliers are, if they're not local, that they're adding some value locally, giving something back.' he adds.
Quality or price?
Quality is critical for projects in remote provinces such as Enga and Western.
'We look at things from a lifecycle cost perspective and there's a there's a sustainability aspect to it as well,' says Parker. 'When you're when you're in a location like us, we have to manage our waste carefully. So, if we can get more life out of a piece of kit, then that's what we look for.'
'If I were to pick one, I would say quality,' agrees McGregor. 'That's just a function of the location where we are. We can't rush to the shops and get something to replace.'
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