Business and Development

If Bougainville Copper Goes Ahead,

A Big New Town Will Rise

By a staff writer

What national Treasurer would not await with anxious in terest a decision which would give him an additional SA6O to SAIOO million in export funds per year? Papua-New Guinea’s Treasurer is in this position and he may possibly know the answer by the time he produces his next budget in August, 1969.

But the chances are that he will ve to wait a few months longer m that for the momentous decision whether Conzinc Riotinto of stralia will go ahead with its 250 million development plan for ugainville copper and gold extrac ts The final decision may be de ed until the end of 1969. rhere is no argument that the jper is there in large quantities i that it can be got out and that d is there, too —more gold than st people realise.

What will occupy Conzinc icutives in the coming months is matter of obtaining the money re red for such a large-scale develop nt. While the fund-raising in tigations continue, engineers will ahead with detailed plans for the r elopment, so that when and if the ney is available, copper exploita i can begin immediately.

Admin, can share

only as recently as 1965 de ed that Bougainville copper was rth serious consideration. It is at sent operating on what is called prospecting authority and it has agreement with the New Guinea ministration (finally okayed on vember 30, 1967) which gives it il December 31, 1971 before it ;ds to decide finally if it is to go :ad. It can until that date apply a special mining lease to mine deposits, build town sites, wharves, ns and power stations.

Jnder the terms of the agreement Administration has an option to •chase, at par value, 20 per cent, the share capital of CRA’s sub iary operating company, Bougain

ville Copper Pty. Ltd. The admin istration has said the option will be exercised either on behalf of or by the people of the territory, provided the Administration is satisfied the venture offers reasonable prospects for profitable operation. The agree ment also provides for employment and training of New Guineans and if possible the purchase of locally produced supplies and equipment.

The project would give employment to about 1,500 New Guineans.

The Administration would also get royalties of li per cent. —five per cent, of which would be paid to the Bougainville landowners direct and the remainder into territory revenue.

The company would get an income

tax holiday of three years from the commencement of production; later it would be taxed on up to 50 per cent, of its taxable annual income.

The copper on Bougainville is 2,000 feet up in the mountains, at Panguna, roughly in the centre of Bougainville and about 12 miles as the helicopter flies from the east coast.

Vast copper reserves

Estimates of how much copper there is have increased each time CRA has made a report and its latest estimate is that there are 500 million tons of ore containing 0.51 per cent, of copper and 0.4 pennyweights of gold. In addition to this fairly low grade material there are 400 million tons of lower grade material. These estimates may again be increased with further in vestigations.

The 500 million tons of 0.51 per cent, of copper ore are sufficient to keep large-scale mining operations going on Bougainville for 20 years,

before there would be need to exploit the lower grade.

The deposits would be worked by open cut, and trucked to the coast, to a port the company would build, probably at Anewa Bay, north of Kieta. Water here is deep enough to take the 20,000 to 30,000 ton ore loading ships which would be re quired. A 16-mile winding road to the coast has already been built by CRA during the proving investigations, but there may be a more direct route.

If the scheme goes ahead, CRA plans to build a town of 5,000 people somewhere near the scene of operations. It hasn’t yet found a

suitable location available to it, but the town won’t be alongside Kieta —where there is not enough land, and in any case it is too far away from the operation, This town would hold about 2,000 employees of all races, plus their families,

It'll COSt $250 million

T CRA estimates it would take about three years for the town, port and mining facilities to be completed. once the go-ahead is given, Total expenditure to get the whole operation working would be about $250,000,000, which includes the $l6

million which will have been ex pended on the Bougainville operation! up to the end of 1968. A little; arithmetic shows that 500 millioni tons of copper ore mined over 20( years gives an annual average out put of something like 25 millioni tons. Current world price for copper is £Stg.4so a ton. This would give; an average of about 120,000 tons, a year of contained copper in con centrate.

Recovery of gold would be some thing like 500,000 oz per year— which even at the present controlled! price of SUS3S an oz, would be: worth SUSI7.S million a year. Goldl exports for the whole of Papua-New* Guinea for 1968 are expected to be worth only 5A500,000.

It could be expected that copper output, and financial returns, would be higher in the first years, because the richer material would obviously be mined first so that loans could be paid back.

If the bankers come up with the money for CRA to go ahead with this big development, there will be no shortage of buyers of the copper, CRA officials have been negotiating in recent months with English, Spanish, French and German com panies.

Japanese talks

Mr. Frank Espie, managing director of Bougainville Copper Pty Ltd., was recently in Japan to dis cuss a Japanese deal. The Japanese will certainly buy some of Bougain ville’s copper ore although no fim contracts have been signed. is determined to spread its contract; throughout many parts of the worldl for if you have only one outle; there is likely to be less room fo; bargaining on the price.

Financial problems on such a vas; deal are not the only ones for CRA CRA’s advent has resulted ii opposition from Bougainvillians ii the immediate area, who do not warn their land interfered with in an; circumstances. For a time then were also some bitter arguments ove: the right of local landowners t« royalties, rather than the govern ment.

An American missionary, not nov on Bougainville, helped stir ui opposition, and the trouble that fol lowed ended in the unprecedented decision to give the Bougainvillian a share of the royalties.

There are still some strong feel ings in the area, although both thi company and the Administration ar doing what they can to point out th; advantages of the operation. CRA i

till regarded as a kind of occupy ng power.

From the first, CRA on Bougain rille has followed a policy of in egration of its staff and the 600 4ew Guineans and 200 Europeans t present working at Panguna and upport establishments share the ame amenities. This has been suc essful, especially since a rule was dopted that official notice need not ecessarily be taken of trouble be veen two brown men or between vo white men, but if brown and diite fight each other then there is nmediate dismissal for both.

In fact, few of the New Guineans i the immediate area do work for RA. They make enough money for leir needs by cash cropping now lat CRA has built a road which )r the first time gives them access > markets.

Many would-be New Guinean nployees these days arrive from uka, in the north—having paid eir own air fares down, so con lent they are of getting work.

A new political problem has arisen the last month or two with the oves by some Bougainvillians for dependence. These moves are not :ely to get very far, but should RA decide next year to go ahead th its big Bougainville operation, id if in the following years there ould be serious moves for a break fay from the central New Guinea vernment, CRA should have no ecial need for concern.

Dependent peoples are inclined to mplain about “exploitation” only til they find themselves in the sition of running their own affairs. ;n they realise, suddenly, that in dment is something to be en gaged because it means work, and •rk means economic prosperity, e phrase “capitalist exploitation” not then heard so often.

Feamies' profit'

p by 21 per cent.

Steamships Trading Co. Ltd. made profit of $1,188,696 for the year led June 30, a jump of 21.1 per t. on the previous year’s profit. *ning rate on increased capital PPed from 18.5 per cent, to 16 cent., but the annual 10 per t. dividend is well covered, directors of the diversified NG up said retail and wholesale rations “showed much improve nt”, but an indenting subsidiary, O. Svensson (NG) Ltd. suffered ‘slight setback” because of staff iculties. he company’s two sawmills main-

tained sales and profits, and the Coca Coca bottling operation is operating satisfactorily although Steamies faced “increased com petition in this field”. Shipyard operations were satisfactory but quarrying activities had “a difficult year”.

Steamies’ “Melanesian Hotel” at Lae made a “small loss” until June 30 but “worthwhile profits” were expected in the current year. Work on its multi-storey hotel at Port Moresby would start early next year.

Results from coffee plantations were “most disappointing”, copra plantations showed “significant profit increases” and several rubber planta tion investments showed poor returns because of depressed world rubber prices (here $lOO,OOO has been trans ferred from general reserves to in vestment reserve because of Steamies reduced market value of its shares in rubber companies).

L. J. Hooker moves

into South Seas

Australia’s giant L. J. Hooker real estate and invfe/stment empire is spreading into the South Pacific—but just how far no one is saying, least of all Mr. L. J. Hooker himself.

Mr. Hooker told PIM in November that he prefers action to words.

We wait until we have done some thing and then we talk,” he said.

However, it is known that the company is going to set up business in Fiji (Mr. Hooker said so in his annual report), developing in the first place homesites and waterfront properties. Later the company ex pects its Fiji operations to include the building of apartments and shop ping centres.

In early December Mr. Hooker was to leave Sydney on a business trip to Fiji . . . and Nauru, the home of Pacific Sporting Pools. He said he was “interested” in the football

pools scheme (how interested he would not say), and that he was going to Nauru to sound out busi ness prospects.

Mr, Hooker is also interested in at least one other area of the South Seas—the Sepik region of P-NG, where there is a possibility that, with others, his company will mine gold and copper.

How possible is the possibility?

Mr. Hooker repeated that he prefers action to words, but added: “Of course we’re interested in gold and copper in the Sepik—if it’s there”.

P-NG assembly

for vehicles

Two small vehicle assembly plants are to be set up in Port Moresby, and at Lae or Madang—the first time vehicles of any description will be assembled on a production basis in any Pacific Islands territory.

Sir Donald Cleland, former Ad ministrator of P-NG and now chair man of PNG Motors Ltd., an nounced in November that his company would set up the plants.

He did not indicate when they would begin operating but hopes are pro duction may start by 1970, He said the first plant would operate in Moresby and assemble Land-Rovers, British Motor Corpora tion commercial vehicles and Mini- Mokes.

Production for the first year is estimated at 380 units—2oo Land- Rovers, 80 Mokes and 100 three to five-ton commercial vehicles.

A director of PNG Motors, Mr.

A. A. Morris, later said the company was “considering” building a small passenger vehicle in NG. It was thinking of a “fibreglass Mini-Moke without the trimmings”.

The vehicle would sell for “about $900”, Mr. Morris said.

Just when the assembly plans get going will depend to some extent on

A rejection of

Steamies' application

for an additional 47 blocks for its married quarters scheme for NG employees out side Port Moresby has placed the whole plan in "jeopardy", Mr. H. D. Under wood, the company chairman, said in his annual report.

Steamies has already built 16 cottages for its married employees at Moresby (right).

if PNG Motors can buy five acres of land in the Racecourse Road industrial area, outside Moresby, for the first plant.

Its shares, incidentally, are expec ted to be quoted on the Sydney Stock Exchange from early December.

The company claims over 50 per cent, of its shares have been bought by NG residents ( PIM, Sept., p. 117).

New Caledonia,

land of light

New Caledonia looks like be coming one of the best-lit territories in the South Pacific before long.

With a loan of 52 million Pacific francs (SAS 20,000) from the Caisse Centrale de Cooperation Econo mique, plans are going ahead for the electrification of seven centres on the mainland —Houailou, Gomen, Ponerihouen, Pouembout, Hienghene, Paita and Poya—as well as Tadine on Mare Island in the Loyalties.

There are also plans to install more powerful equipment at the electric power station at Bourail, La Foa and Koumac.

In addition, studies have recently been completed for the electrifica tion of 19 other centres in the ter ritory. These are Voh, Poum, Oue goa, Pouebo, Dumbea, Boulouparis, Moindou, Sarramea, Farino, Canala, Chepenehe (Lifu Island), La Roche (Mare), Fayaoue and St. Joseph (Uvea), Isle of Pines, Queen Island, Tiga Island, Belep and Balade, The electrical authority carrying out the electrification schemes and studies is called Socometra.

Copra expected to

remain firm

Mr. lan McDonald, chairman of the P-NG Copra Marketing Board, gave the following report on world copra market trends on November 24: “There has been little movement in the market for Philippine copra over the past six weeks or so, prices ranging from SUSI9I in early October to SUSI 97 later in the month, and at present around SUSI 94. Generally, this steady ten dency has existed throughout the whole edible oil sector.

“Reviewing oil seed production, it has been noted that sunflower has declined somewhat, crop prospects for groundnuts in West Africa are not good, copra in the Philippines steady, (however, copra exports have declined, although this has been partly offset by increased shipment of coconut oil) and Nigerian palm

kernel well down. There is also a tightness in edible oils, mainly groundnut, in Argentina.

“Consequently, prices over the next few months are expected to remain firm, with a tendency to improve. Looking further ahead, as far as laurics are concerned (copra and palm kernel) there are indica tions of improving production and availability; providing no heavy typhoon damage occurs this recovery in supply could lead to a decline in prices.”

Carpenter now

processing tea

W. R. Carpenter’s tea growing enterprise in the Wahgi Valley of New Guinea has begun production in its first tea factory, on Kudjip Estate. The factory will be extended in 1969 to bring it to its planned capacity of two million lbs of made tea a year.

The Carpenter tea enterprise com prises three estates—Kudjip (1,036 acres planted), Kindeng (1,200 acres), and Aviamp (100 acres).

Further acreages are being planted on all estates. At Kudjip an area of 440 acres is currently being plucked, and plucking is to begin on Kindeng in the new year.

Mr. C. H. Carpenter, chairman of W. R. Carpenter Holdings Ltd., told a general meeting in Canberra in November that the tea project was expected to make a minor contribu tion to group profits this year, and rise progressively in subsequent years.

Ginger worth more to

Fiji than bananas

Ginger is now worth more to Fiji than bananas. For the first time this year, the combined value of pro cessed and fresh ginger exported from Fiji will considerably exceed the total export value of the banana crop.

So said a leading Suva produce exporter in November. He would not, however, estimate the value to Fiji of this year’s ginger exports, although he did say that one con signment of processed ginger alone had totalled over 600 tons. (Last year, 440 tons of ginger were exported from Fiji and earned £39,000. Banana crops, affected by disease and storm damage, were worth £67,000).

The present keen demand for Fiji ginger is the result of the finish of Hawaiian production. Future pros pects for Fiji ginger depend on the fluctuating demands of the Japanese and Taiwan markets. However, ac

cording to the Suva exporter, “there will always be steady overseas markets for fresh mature ginger of high quality”.

Most of the ginger exported by Fiji is grown by Chinese in the Saweni and Waibau areas. About 180 acres of land is under cultivation.

Black ban on

Fiji biscuit' firm

If housewives in places like Samoa, the Gilbert and Ellice Islands and Noumea find a shortage of biscuits in local shops, they might look to Fiji for the answer.

In November, more than 100 tons of biscuits for export to these countries were stranded in a Lautoka factory, owned by Lees Trading Com pany, which has been declared “black” by the Fiji Trade Union Congress.

According to the firm’s managing director, Mr. Lee, the shipment was not sent for fear that union members would not touch it at the wharf. The stranded shipments were accumulated orders for September, October and November.

The union boycott followed a strike in August by factory workers after the company refused to re cognise their union, the Fiji National Union of Factory and Commercial Workers.

The strikers were paid off by the management in mid-September, and. new workers were hired the follow ing week. The Fiji Trade Uniom Congress declared the firm “black” at a meeting with representatives; from 10 unions.

Burns Philp and

Mauri Bros.

An investment of $665 for 100 shares in Bums Philp and Co. Ltd., made in May, 1958, will be worth about $1,372, in January, 1969 and the number of shares will have grown to 225.

That is a handy sort of capital gain in anyone’s language, and it becomes even better when annual dividends are added of the order of 10 per cent., increased to 12i pen cent, for 1967-68.

There is more good news in the latest BP annual report in Nov ember.

There is to be a new bonus issue of one-for-five and profits rose by 38 per cent, to a new peak ot $5,418,330, which is $1,475,920 higher than that of the 1966-67 financial year.

The directors also announced a share exchange with Mauri Bros;

and Thomson Ltd., a company which has widely diversified in the food and drink field.

At first sight the link between the two companies seems to be a protec tion against takeover bids, but the directors of the two companies indicated they were looking ahead.

They saw the arrangement as giving considerable financial benefits to each.

The BP directors added that con solidation of reciprocal trading activities would ensure “a sound and integrated development” of MBT’s expert manufacturing and packing potential with BP’s widespread channels of distribution.

MBT produces a wide range of foods, essences and engineering equipment for the food and drink industry. BP’s have a number of retail stores in NSW, and numerous trading outlets in the Pacific Islands, to which they add an unrivalled ex perience in Islands trading.

MBT rival their new partner with bonus issues. Every four years since 1952 there has been such an issue, and each of the last three was on a one-for-four basis.

The chairman and managing director of MBT, Mr. Donald lunor, had close links with Fiji more than 30 years ago.

He founded the firm of accountants which later became known as Sands lunor and Co., Suva, of which Mr.

Syd Gould is now the principal.

Mr. Junor and Mr. P. T. W.

Black, now general manager of Burns Philp, met in 1934 in the old Mariposa on a trip to Suva, and ater they shared the same table at fie Grand Pacific Hotel.

They did not meet again till •ecently when the two companies darted to talk about the share ex change.

Other points in BP’s annual report: The directors had their annual ‘beef” about their unprofitable ship ping activities. However, they ex pect to benefit by altering some outes and modifying some of the fiips. They hope to achieve a reduc ion in shipping losses of about 50 )er cent, in the 1968-69 financial fear, they said.

Difficult trading in New Zealand vas another bleak part of the eport, and the drought in NSW iffected the overall result of BP’s rading stores in that State.

The plantation interests experienced l very good year with increased >roduction and prices of both copra ind cocoa.

The Pacific Islands subsidiaries eported buoyant conditions, and nade handsome contributions to ;roup profit.