Papua New Guinea is expanding state participation in major mining and industrial ventures as it looks to accelerate its post-Covid economic recovery, Stockhead reports. Westpac forecasts the country’s GDP to grow by 4.7% in 2025, placing it close to China’s growth pace, though from a much smaller economic base.
Earlier in December, the government committed significant capital to multiple resource developments, benefiting several ASX-listed firms active in the country.
The largest initiative is a $470mn package to advance St Barbara’s Simberi gold project, enabling construction of a long-planned sulphide plant that is expected to produce roughly 200,000 ounces of gold annually for 13 years. As part of the deal, Chinese miner Lingbao (HKG: 3330) will contribute $370mn for a major stake, while PNG’s state entity Kumul will invest $100mn for a 20% holding, pending final clearance.
The investment adds to PNG’s growing portfolio of state-owned resource interests. Kumul already holds 67% of Ok Tedi, 35% of the Porgera (ASX:PGD1) joint venture with Barrick (NYSE: B), 15% of Solwara 1, and a strategic stake in Tolu Minerals (ASX: TOK). It is also in discussions to exercise a 30% equity option in the Wafi-Golpu copper-gold project operated by Newmont (NYSE: NEM).
Lime and cement
Alongside the Simberi announcement, the government signed a Project Development Agreement (PDA) with Pacific Lime and Cement(ASX: PLA) for a major quicklime and cement initiative. Under the agreement, the state nominee will take a 13% stake in each of the project’s two special-purpose vehicles, Quicklime and Cement, with the option to raise these to 18% once the facilities begin operating.
For the Quicklime plant, currently under construction, the state will invest around $16.3mn for the initial 13% and $6.8mn for the additional 5%, reflecting a 22% discount to the project’s $161mn net present value. The valuation for the Cement SPV will be determined at the final investment decision, expected next year, with the most recent project NPV reported at $284mn. A 15% discount will apply based on an agreed valuation method overseen by an independent expert.
The PDA also sets out frameworks for involving local landowners and the Central Provincial Government. 8% of the state's equity will be transferred to these groups, and PLC will provide an additional 2% free-carried stake in each SPV to landowners. In exchange, the project will receive Special Economic Zone incentives, including corporate tax relief, import duty exemptions and regulatory stability guarantees. The state will also promote the use of domestic quicklime, clinker and cement where competitive on price and quality, with tariff measures available to counter unfair foreign competition.
The PDA, announced by Minister for International Trade and Investment Richard Maru, marks a significant de-risking step for the company after more than ten years of negotiations. It will next be reviewed by the National Executive Council before final approval by Governor-General Sir Bob Dadae. The agreement is legally binding for international arbitration purposes and complements a Community Development Agreement signed in February.
PLC managing director Paul Mulder noted that the PDA aligns government, provincial authorities and landowners, combining sovereign equity, SEZ benefits and free-carried local ownership to underpin long-term value.
The $61mn Central Lime Project reached final investment decision in August. As a result, initial production will rely on two 600-tonne-per-day quicklime kilns, with additional 800-tonne-per-day units planned for later expansion. The company was recently added to the ASX All Ordinaries index and also owns the Orokolo Bay magnetite sands project, where PowerChina (SHA: 601669) has joined as a partner. Construction and production at Orokolo Bay are scheduled to begin in 2026, starting at 300,000 tonnes per year.
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