Bougainville
pp. 78-79 · Read in the full issue
Brightness And
Ok Tedi Tarnish
Bougainville Copper Ltd was a bonanza for the Papua New Guinea Government in 1974 to the extent of about $94 million. There was a jarring note however, for on the same day the profit was announced the managing director of Kennecott PNG Ltd, Mr K. R. Hulley, warned that his company was willing to aban don the Ok Tedi copper project be cause of a deadlock in negotiations with the PNG Government aimed at setting up a fiscal policy. Differences were settled a few days later and ne gotiations were resumed.
Kennecott has invested about $l6 million in proving 150 million tonnes of 0.9 per cent porphry copper at Ok Tedi in the remote mountainous region of north-west Papua. Ok Tedi, before it can become an operating mine, needs a tremendous infrastruc ture, not the least of which is easy access to the coast.
The PNG Chief Minister, Mr Michael Somare, said exploratory work would continue if Kennecott pulled out. The facilities set up by Kennecott at Ok Tedi would be maintained, whatever happened. He was disappointed that Kennecott might abandon the project. The government, in its last message to Kennecott, indicated it considered a number of key questions still open.
The Bougainville balance sheet was an interesting exercise for ac countants. There were several “might have beens”, which did not happen because the company was forced to renegotiate the Bougainville copper agreement with the PNG Govern ment, following its huge profit of $l5B million in its first full year of operation.
The net earnings for 1974 were $114,575,000, compared with $158.4 million in 1973. Two factors contri buted to the drop—tax, and lower world copper prices. Under the re negotiated agreement the company had to pay tax in 1974, from Janu ary 1. This reduced the profit for the first half of 1974 from $llB million to $62 million. But for the agreement the 1974 profit would have been $lBl million.
The renegotiated agreement was signed after June 30, and provided for the company to pay current tax at 33 1/3 per cent, plus an excess profit tax on earnings above $B7 million. It also provided that in the first half of the year, the company
should only pay half the excess pro fit levy. Had that provision not ap plied, the tax would have been $11.2 million higher for the full year.
The latest net result included ex change gains on loan repayments of $8.2 million. In 1973, exchange gains were worth $13.3 million. Un realised exchange gains relating to long-term loan repayments were re duced by $12,188,731 in 1974. Out standing loans at the end of 1974 were $139,438,696, which the direc tors expect to repay by 1983.
The dividend for 1974 is 27.5 c a share, compared with 30c in 1973.
The dividend is subject to PNG withholding tax of 15 per cent on dividends paid to non-residents of PNG. The total payout to the PNG Government of $93.5 million is about $2O million more than the share holders will get. PNG Corporation, with a 20 per cent interest, is a big shareholder.
Japanese project
for Caledonian timber
The French Government has ac cepted a Japanese proposition to research the possible exploitation of New Caledonia timber.
As a first step, Mitsubishi Paper Mills of Japan is planning to work with the Caledonian Forestry De partment in re-afforestation trials, mainly in the north of the island, where the Japanese could eventually exploit the Caledonian niaouli tree, the paper bark melaleuca leucaden dron. Apart from its timber, the tree is the source of “gomenol” medicinal oil (eucalyptus oil).
Mitsubishi’s initial research parti cipation would be 15 million francs CFP (about $A 130,000), with the Caledonians demanding satisfactory re-afforestation plans before any exploitation could be permitted.
Another merger
of Fiji companies
The giant Hong Kong firm, Jardine Matheson and Co, which has inter ests in a wide variety of commerce and industry, in a number of coun tries, is a big investor in Fiji.
It recently broadened its Fiji interests through the merger of the Stinson group of companies, with another well-known local firm, Pearce and Co Holdings Ltd. There are now eight wholly-owned sub sidiaries in Fiji, including Stinsons, Thaws, and Pearces, and substantial interests in associated companies, in cluding A. E. Farebrother, Associated Pacific Bakeries, Capricorn Hotel, Photographic Distributors and Fiji Insurance Co.