Economy
Agriculture has been of immense importance and will always remain the backbone of Papua New Guinea sustenance with 80 percent of the population involved in subsistence farming. The moderate tropical climate with high levels of seasonal rainfall is highly favourable for agricultural activities.
The driving force behind commercial agriculture in Papua New Guinea has always been the export crops namely coffee, cocoa, coconut (copra), oil palm and kernels. Other export commodities include tea, cardamom, rubber, chillies and pyrethrum as well as the great number of varieties of tropical fruits and vegetables. There is considerable potential for expansion and development of many more crops for export, including the export of fresh fruit and vegetables and processed or downstream products.
Specific investment opportunities dwell in Coffee, Oil Palm, Cocoa, Coconut/Copra and all Spice crops.
Fisheries
The waters around Papua New Guinea contain large stocks of marine resources. Within the 200 mile economic zone are large varieties of fish, including migrating schools of tuna. Besides abundant tuna and other pelagic species, several other commercially important fish, shellfish, and sedentary species are found in Papua New Guinea's waters. More than 10,000 species of fish, molluscs and crustaceans have so far been identified.
Coastal commercial fishing is based primarily on prawns, lobster and baramundi and a collection of sedentary fisheries resources, including beche-de-mer, trochus shells, pearl shell and green snail. The operations are carried out by small-scale commercial fishermen, who sell their product to a range of small to medium sized fish processing and marketing entrepreneurs. Sea cucumber is collected and processed for export. The trade in shells with lustrous interiors is small, but growing.
Domestic private investment in commercial fisheries in Papua New Guinea is small. Inland fish production is still very much underdeveloped, but commercial farming of trout and carp has been undertaken by a few farmers in the Highlands region of the country. The Papua New Guinea government is exploring avenues for the privatisation of various aspects of its coastal fisheries programme. Private sector participation is to be promoted in the areas of handling, processing and marketing of marine products, craft construction, repairs and maintenance, engine sales and ice and fishing equipment sales. The Government is also playing a key role in the management of the fishing industry. The long-term sustainability of the resources and the environmental impact are the key factors for the long-term sustainability, growth and development of the fisheries sector.
The major emphasis of the Government is the development of industrial and commercial fisheries which will help to provide the infrastructure necessary from small and medium scale fisheries development.
The PNG National Fisheries Authority is the primary regulatory and management body for the sector and it provides support and coordinate fishery development in the country. It also facilitates export certification and regulation and manages fisheries resources for sustainable growth.
Forestry
The Papua New Guinea Forest Authority (PNGFA) is the government body responsible for monitoring and controlling the wood and forest-based industries and the management of PNG's forest resources.
There are three key arms of the forestry administration of PNG include the National Forest Board, respective Provincial Forest Management Committees and the National Forest Service. The respective Provincial Forest Management Committees contribute to the decisions relating to the management of the forest resource within the provinces. The Papua New Guinea Forest Industry Association Inc. (PNGFIA) promotes and protects the interest of the forest industry.
There are 35 million hectares of enclosed forest of which about 15 million hectares of high quality tropical hardwoods are considered to be suitable for development. The Government is mindful of its obligations to environmental heritage when promoting the forest resource. Each major investment project is carefully evaluated in terms of its environmental impact and every effort is made to develop appropriate guidelines to meet the needs of both the local people and the investors.
The Government's recognition of the value of rare and magnificent natural forest has resulted in major policy changes aimed at creating an environment for sustainable downstream processing activities.
There are some prime opportunities for development of downstream activities. The potential for converting some of Papua New Guinea's premium species, such as rosewood, kwila, blackbean and taun, into high- quality furniture and other wood products, is an investment opportunity with a growing market. Stocks of premium wood species will be maintained for wood products manufacturers, so the markets they establish in the near future can be guaranteed of a continued supply.
International markets are establishing requirements for all tropical wood products to come from forest plantations and afforested sourced areas. With Papua New Guinea reforming its forestry policy to meet the international requirements particularly in already clear felled areas and savanna grasslands, it will be well-equipped to provide sound and rewarding investment opportunities.
In the forestry sub-sector, products made of tropical hardwood attract top prices. Although markets do exist, few are efficiently supplied at present, so the ability to establish a constant customer supply will guarantee a permanent and high demand.
The present timber industry in Papua New Guinea consists of more than 40 sawmills, a plywood factory, a woodchip mill and more than 25 furniture-making factories and joinery shops. Many of the existing mills are small and outdated. Downstream processing activities include furniture making, plywood, flooring and other building products.
Mining & Petroleum
Papua New Guinea has been a gold exporter since the 1930s and has ranked as the 11th largest gold producer in the world over the last few years. Papua New Guinea also ranks 10th in the world in terms of copper production, and has a very real potential to exceed the present production level. Also, silver is a commercial by-product from most of the mines. Papua New Guinea has extensive reserves of natural gas and oil.
The main mineral deposits are copper, gold and sliver but there are also recoverable deposits of other minerals such as nickel and cobalt. Papua New Guinea currently operates three world-class, open pit mines since the Misima gold mine in the Milne Bay Province of Papua New Guinea has now ceased operations. Ok Tedi, Porgera, and Lihir mines and one medium scale underground operation at Tolukuma. The Ok Tedi mine, in the Western Province of Papua New Guinea, is a major producer of copper and gold. The Porgera gold mine in the Enga Province of Papua New Guinea is one of the largest in the world and produced 20 tonnes of gold in 2002. The Lihir mine in New Ireland Province of Papua New Guinea is a long life gold project which commenced production in 1997, and in 2002 produced 18.8 tonnes of gold. A first-ever nickel project for PNG, in the Ramu valley of Madang province of Papua New Guinea, is anticipated to enter the construction phase in 2006. The project has been fully licensed.
Three gold projects - Kainantu, Simberi and Hidden Valley - are expected to commence development soon. In addition to several mechanised alluvial mining projects, there are about 60,000 small-scale gold miners, who work as individuals, family or clan groups in Papua New Guinea. Small-scale mining is estimated to produce about four tonnes of gold annually.
The first oil production began at the Kutubu field in the Southern Highlands Province of Papua New Guinea in mid-1992. A conservative estimate of recoverable reserves at this field has been put at around 301 million barrels. The Hides Gas fields is the country's first attempt at producing gas which, under the PNG-Queensland (Australia) Gas Pipeline, is proposed to pump gas from its origin to Queensland in Australia. The Gobe Oil Project in the Gulf and Southern Highlands Provinces of Papua New Guinea, commenced commercial production in 1998 and has an estimated recoverable reserves of 67 million barrels. Papua New Guinea's third oil field, Moran, commenced production in 1998 and full field development was completed in 2002. The Napanapa Oil Refinery started exporting of refined oil in 2004.
The Government through the Department of Petroleum and Energy is also looking at various options for developing our vast gas resource including the PNG-Queensland (Australia) Gas Pipeline Project to rescue the fast declining oil export revenue. In June 2005, project developers signed an agreement with Alcan's aluminum refinery in the Northern Territory of Australia. More importantly, early in July 2005 Australia Gas Light (AGL) announced that it had agreed to a A$4.5 billion Gas Supply Agreement to buy 1,500 petajoules of gas over 20 years starting in 2009. AGL also signed a conditional agreement of US$300 million to acquire a 10% equity stake in the upstream PNG gas project. The agreements are subject to the project reaching financial close in 2006, but the confidence of project developers of reaching this deadline is rising given these important contracts. If financial close is reached in 2006, construction on the project would begin in 2007 - which would already provide a boom to PNG's economy in terms of increasing foreign direct investment and employment.