Papua New Guinea is very rich in Natural Resource
Papua New Guinea is rich in natural resources, including minerals, timber, and fish, and produces a variety of commercial agricultural products. The economy generally can be separated into subsistence and market sectors, although the distinction is blurred by smallholder cash cropping of coffee, cocoa, and copra. About 75% of the country’s population relies primarily on the subsistence economy. The minerals, timber, and fish sectors are dominated by foreign investors. Manufacturing is limited, and the formal labor sector consequently also is limited. High commodity prices in 2004 lifted both sectors after several years of declines.
Papua New Guinea is richly endowed with gold, copper, oil, natural gas, and other minerals. In 2001 mineral production accounted for 25% of GDP. This will inevitably increase as new discoveries are commencing sea beds of aluminium,zinc,oil,copper,gold,diamond,silver and more. Years of sluggish exploration mean that more new deposits will be open in the coming years. However, recent regulatory and tax reform have led to a resumption of exploration which may boost the sector in the out years. Government revenues and foreign exchange earning have depended depend heavily on mineral exports. Indigenous landowners in areas affected by minerals projects also receive royalties from those operations. Copper and gold mines are currently in production at Progera, Ok Tedi, Misima, and Lihir. A consortium led by Mobil/Exxon hopes to begin the commercialization of the country’s estimated 22.5 trillion cubic feet of natural gas reserves through the construction of a gas pipeline from Papua New Guinea to Queensland, Australia, however, the project has been stalled until major customers make purchase commitments. Interoil, an American firm, opened PNGÕs first oil refinery in 2004. It will produce 30,000 barrels of product a day, covering all of PNGÕs domestic requirements and leaving 15,000 b/d for export.
Trade and Investment
Australia, Singapore, and Japan are the principal exporters to Papua New Guinea. Petroleum and mining machinery and aircraft have been the strongest U.S. exports to Papua New Guinea. These have slipped as mineral exploration and new minerals investments have declined.
Australia is Papua New Guinea’s most important export market, followed by Japan and the European Union. The U.S. imports from PNG modest amounts of gold, copper ore, cocoa, coffee, and other agricultural products.