Self Bunded Tanks in Papua New Guinea. The new frontier for fuel storage.
The November 2018 opening of Mobil’s new 5.6 million litre diesel storage tank at Port Moresby was flagged as a step towards improving national fuel security and meeting growing demand from industry.
Dunlop PNG’s James Green says another growing trend for regional operators is on-site fuel storage that puts the power back in the hands of business operators to buy wisely, maximise reliability and reduce transport costs.
GRANDE30 – 24 hour un-manned refuelling station
Fuel transportation challenges
For James, infrastructure and transport challenges are among the biggest contributors to fuel costs for PNG business.
Old and poorly maintained infrastructure in regional areas means fuel needs to be transported long distances along difficult roads.
“The state of the national highways means moving fuel around is difficult and expensive,” he says.
“Add to that that outside of the main coastal towns, the only access to more remote townships is via ship.
“The main Puma depot is based on Port Moresby, which is road locked, so all fuel everywhere else in PNG is shipped from Port Moresby and road freighted or transhipped to other coastal towns, meaning freight costs are extremely high.
“Some operators also ship directly from overseas to Lae, Kimbe and other townships.”
Quality control – access to clean fuel
Ageing infrastructure and transport issues have a flow-on effect for fuel quality.
“A lot of the diesel or petroleum on the market is water and particle contaminated, either from the storage tanks on the end user site, from tankers or in some cases direct from the source,” James says.
“Fuel prices are also linked to the Singapore price rather than the cost of production in PNG, which means the cost of the final product can be out of step with the local cost of living and doing business.
Taking control with on-site fuel storage tanks
For many businesses, reducing fuel costs and downtime has meant finding new fuel storage options like on-site self-bunded fuel storage tanks.
“Taking control of costs and quality is one reason many companies outside of the main towns have started looking to hold additional fuel on site, so there has been a marked increase in sale of storage tanks,” James says.
“In the past a lot of the tanks were owned by the major fuel retailers in return for locked in contracts of supply, but there has been a shift away from that system as customers are looking for the flexibility to change suppliers based on changing pricing and rebates.”
Self-bunded storage tanks in PNG: a cost-effective solution
James says F.E.S. fuel storage tanks are an increasingly popular solution because they give regional operators options to safely store fuel on-site without the need for fixed earthworks and bunds, meaning operators can maximise the volume of fuel stored while complying with safety and environmental regulations.
“Self-bunded tanks or double-wall containment for fuel storage have revolutionised refuelling for business and solve many of the major challenges for PNG operators,” he says.
“Having an integral secondary tank wall does away with the need to build an expensive bund wall system and makes traditional underground storage a thing of the past.
“They are also ideal for situations where there are logistical challenges or isolated locations, because tanks can be easily installed on-site wherever is convenient, and moved safely when business needs change without compromising fuel quality.
“Storing your fuel on site in an F.E.S. tank gives you greater control over price and when you buy and over fuel quality, which means you can maximise fuel efficiency and minimise damage to equipment and downtime caused by dirty or contaminated fuel.
“Our self-bunded tanks come in sizes from 1000 to 110,000 litres, are compatible with a wide range of pumps and dispensers and can be transported by road, rail or sea.
“Best of all, installation costs are reduced to laying a suitable pad and connecting electrical supply and parts and service are available in-country, which is a major cost saving for local business.”
DUNLOP PNG has been servicing the business community in Papua New Guinea since 1969. With over 35 years in the industry, the Dunlop team has a sound knowledge and practical understanding of business conditions in Papua New Guinea.
The business has branches in Port Moresby, Lae, Madang, Mt Hagen, Alotau, Kimbe and Popondetta.
It’s been an interesting year for the Papua New Guinea mining industry. A leadership shakeup, coupled with looming mining law changes, has given the country a lot to celebrate.
Mining and petroleum is an integral contributor to Papua New Guinea’s (PNG’s) economy.
The region is seriously jam-packed full of resources; copper, gold, nickel, cobalt, LNG and more. But, despite this resource potential, it’s faced many challenges over the years, including illegal mining and a civil war between 1988 and 1998 sparked by mining tensions.
PNG has also been victim to a number of environmental disasters, including a devastating earthquake in February 2018, which caused disruptions to the country’s biggest mines, Ok Tedi and Porgera.
However, this hasn’t dampened the spirits of producers in the region, with mines bouncing back from troubles, and a wave of new projects on the horizon signalling good times to come.
Papua New Guinea mining benefits
In February, the World Bank released a report forecasting new large-scale resources projects will boost Papua New Guinea’s Gross Domestic Product (GDP) to 5% this year.
The PNG Chamber of Mines and Petroleum said a rebound in the economy was great news, particularly at a time when the country faced challenges with its foreign reserve.
“The World Bank Report demonstrates that the mining and petroleum sector remain absolutely critical for PNG jobs, the economy, and all the social benefits that flow from this,” it stated.
In mid-June, the PNG Chamber of Mines and Petroleum held its 35th Australia Papua New Guinea Business Forum in Port Moresby, which also put a spotlight on the strength of PNG’s mining and petroleum industry.
However, Mr Marabe said major reform to the laws would not take effect for years, and urged resources companies not to worry.
“While I’m speaking on natural resources, many of our corporate citizens amidst us will feel a little bit doubtful or will feel a little bit intimidated,” he said. “I’m looking at 2025 in which we will migrate to a new legislative framework.”
PNG Chamber of Mines and Petroleum president Mr Aobi applauded the new Government’s desire to amend resource laws.
“We share this desire and will support the development of legislation that encourage investments and provides a better outcome for PNG,” Mr Aobi said.
“We want to work together with Government and all stakeholders to make this happen. The vision shared by many, including our prime minister to grow PNG’s wealth is supported by us. We want to see a stronger Papua New Guinea, a stronger economy, and a bright future for our country.”
Operating Mines in Papua New Guinea
With a positive outlook ahead for the PNG mining industry, let’s take a look at the country’s key operating mines and latest developments.
State-owned mine Ok Tedi is an open-pit copper, gold and silver mine in the Western province in PNG, and the country’s oldest operating mine. In recent years, the team developed a revised mining strategy that has enabled it to access higher grade ore and extend mine life to 2025.
Porgera is an open pit and underground gold project, about 600km north-west of Port Moresby. The project is owned by Barrick Gold (47.5%), Zijin (47.5%) and the Enga provincial government (5%). In June, the joint venture met with new prime minister James Marape about extending the current special mining lease, set to expire in August, for another 20 years.
About 210km northwest of Port Moresby, Hidden Valley is an open pit gold and silver mine in the Morobe province in Papua New Guinea. In 2016, South African miner Harmony Gold became the sole owner of the project, after its JV partner Newcrest sold its 50% interest.
Newcrest’s Lihir mine is one of the largest gold mines in PNG, and is located on Aniolam Island, 900km north-west of Port Moresby. The project has an ore reserve of 24 million ounces and mineral resource of 50 million ounces. In June, the company deployed a private LTE network at the project to improve communications onsite.
K92 Mining’s Kainantu gold project is in the Eastern Highlands province of PNG. In Q2 2019 the mine produced 18,980oz of gold, 261,800 pounds copper and 6894oz silver, with production 25% above forecasts. Over the coming months, K92 is advancing a plant expansion to double capacity to 400,000 tonnes per annum and increase annual production to an average of 120,000 ounces of gold equivalent.
St Barbara’s Simberi gold project is in New Ireland – the easternmost province of PNG. The project comprises various open cut mines, and has a mine life out to 2021. However, there is the prospect of extending mine life should a 1.5 million tonnes per annum (mtpa) sulphide circuit be developed.
Ramu NiCo Management (MCC) operates the $US2.1 billion Ramu nickel-cobalt project in Madang. In 2018, the project faced pressures on the sales front, only selling about 75% of nickel production, which its executive team put down to a global economic downturn and price plummet. This year, the company plans to improve efficiencies, boost revenue and be adaptable to the changing market environment.
Niuminco operates the Edie Creek mine in PNG, and also owns exploration projects, May River and Bolobip. Over the last year, the company has struggled with its finances, but in May, entered into a $500,000 funding agreement to put towards general working purposes.
New Papua New Guinea Mining Projects
Wafi-Golpu is a world-class copper-gold project, which, if approved, could be the largest and most complex underground mine in PNG. The project is a 50:50 joint venture between Newcrest and Harmony Gold. If developed, it could provide 2500 direct jobs during construction and 850 ongoing operational jobs for an estimated 28-years. The project is advanced, however still needs to obtain a special mining licence before construction can begin.
PanAust’s undeveloped Frieda River project is also highly anticipated. In December 2018, the company announced the Sepik Development project, a new nation-building development pathway for Frieda River, which focuses on the development of shared-use infrastructure that will support a hydroelectric facility and mine operation.
Ekuti Range, Ipi River, Bismarck projects
Canterbury Resources has a suite of copper-gold exploration projects in PNG, including Ekuti Range, Ipi River and Bismarck. The projects are early-stage, however, with Rio Tinto managing and sole funding exploration at Canterbury’s Bismarck project on Manus Island, it’s all looking promising.
In November 2018, Geopacific released a Definitive Feasibility Study for its Woodlark gold project in PNG. The project, once developed, is expected to produce 100,000 ounces of gold annually for its first five years. Over the coming months, Geopacific will be advancing finance solutions.
Junior miner Kingston Resources is also pursuing shuttered gold mine Misima Island, which closed in 2004. Since acquiring a 70% interest in the project in 2018, Kingston has identified five key exploration targets for follow-up drilling.
Canadian company Nautilus Minerals is planning to develop PNG’s first deep sea mine, Solwara 1. The company is planning to extract high-grade Seafloor Massive Sulphide (SMS) deposits of copper, gold, zinc, and silver in 1600 metres of water. The project still needs to obtain approvals.
Central Cement and Lime, Orokolo Bay and Amazon Bay
Mayur Resources has industrial and mineral sands exploration projects in PNG. In July, the company announced it had lodged a submission for its Central Cement and Lime project, with only a few steps ahead before construction can begin.
Coppermoly is advancing the Simuku copper molybdenum project in the West New Britain province of PNG. In July, it completed a Ground IP Survey, which spanned 21km of ground. The company has also recently renewed an exploration license at its Nakru project in the region.
How F.E.S. TANKS can help Papua New Guinea miners
If you’ve got this far, we’re sure you can agree there’s a lot happening in the PNG mining space at the moment.
We’ve got an exciting announcement of our own too.
This year, we’ll be launching our self-bunded fuel tanks into PNG, servicing all industries in the country, through our division:
Self Bunded Tanks in Papua New Guinea
Power reliability is key, and at F.E.S. TANKS we can help with all your diesel fuel storage needs.
Our self-bunded tanks come in a variety of sizes ranging from 1,000l to 110,000l, meaning there’s a fuel storage option to suit all project sizes.
If you’re involved in the PNG mining industry, drop a comment below, we’d love to connect.