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P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 1
C o n t e n t s
Letter from the Chairman ........................................................................................................2
Our Mission and Values ...........................................................................................................3
Highlights of 2003..................................................................................................................4
Chairman's Report ..................................................................................................................6
The Board of Directors ............................................................................................................8
Members of the Company ......................................................................................................12
Chief Executive Officer's Report ...............................................................................................13
The Management Team .........................................................................................................14
Administration and Corporate Services ....................................................................................16
The Advisory Council .............................................................................................................18
The Annual Report Meeting....................................................................................................22
Income, Funds Allocations and Expenditure ...............................................................................23
Investment Activities..............................................................................................................24
Sustainable Development Program Activities .............................................................................25
Ok Tedi Mining Ltd Operations.................................................................................................34
Directors’ Report on the Company Accounts.............................................................................38
Summarised Income Statement .........................................................................................38
Summarised Balance Sheet...............................................................................................39
2003 Financial Statements ....................................................................................................41
Annexes ..............................................................................................................................63
Agreements entered into by the Company in relation to BHP Billiton’s
exit from OTML and Transfer of Shares to the Company .......................................................63
Maps
Papua New Guinea .......................................................................................................64
Western Province ........................................................................................................66
Basic Statistics................................................................................................................67
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L e t t e r f r o m t h eC h a i r m a n
2 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
PNG Sustainable Development Program Limited
Port Moresby, April 21, 2004
The Independent State of Papua New Guinea
BHP Billiton Limited
Ok Tedi Mining Limited
In accordance with Clause 20 of the Company’s Program Rules under the Articles of Association of the PNG Sustainable
Development Program Limited, I submit to the Independent State of Papua New Guinea, BHP Billiton Limited, and Ok Tedi Mining
Limited the Annual Report 2003, covering the financial year ending 31 December 2003. The Annual Report also includes the
financial statements and the report of the Auditor. Furthermore, in accordance with Clause 19.3 of the Program Rules of the
Company, the key elements of the Annual Report will be presented for discussion at the Annual Report Meeting of the Company,
to commence at 8.30am on Thursday 27 May 2004 at the Conference Hall, Holiday Inn Hotel, Port Moresby.
Sincerely,
ROSS GARNAUT AO
Chairman
Board of Directors
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O u r M i s s i o n a n d V a l u e s
‘Promoting development that meets the needs
of the present generation and establishes
the foundation for continuing progress for
future generations of Papua New Guineans’
We recognise the significant onus of trust, responsibility and challenge that has been
placed upon the Company.
We will be honest, fair and accountable in all our dealings, while promoting equality and
efficiency in our conduct and activities.
We commit ourselves, through the activities of the Company, to promote and improve the
quality of life of current and future generations of the people of Papua New Guinea,
especially of Western Province.
We will achieve this by:
• Investing and managing wisely the income and resources of the Company.
• Undertaking investments and supporting development programs and projects that are
sustainable - providing significant benefits in the short and long term to the people, local
communities, provinces and the nation.
• Meeting the best international standards - financial, physical, cultural, social and
environmental - in our activities.
• Working together with the people of Papua New Guinea in partnership with the
government, churches and other non-government development and business partners.
P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 3
Page 4
H i g h l i g h t s o f 2 0 0 3
2003 2002
US$ K US$ K
Revenue 67.9m 242.1m 7.2m 28.1m
OTML Dividend 65.5m 233.4m 7.2m 28.1m
Income from Investments 2.4m 8.7m - -
Total Expenditure 9.5m 33.4m 1.2m 4.8m
Taxes (Payments to PNG Govt) 6.5m 23.3m 0.7m 2.8m
Contractual Obligations 0.8m 2.8m - -
Admin and Other
Overhead Expenses* 1.8m 6.3m 0.5m 1.9m
Dev & Invest Program 0.3m 1.0m - -
Status of Funds
Long Term Fund 42.1m 138.3m 3.6m 14.4m
Development Fund 20.9m 68.8m 1.8m 7.2m
General Fund 1.4m 4.7m 0.6m 2.7m
* Includes establishment costs for Papua New Guinea office.
Income and Expenditure
Investment Operations
The Company appointed Newton Investment Management
Ltd of London as its Investment Adviser/Funds Manager
following a review of proposals from seven international
investment houses.
Newton assumed responsibility for the Company’s funds from
11 September 2003, which totalled more than US$64
million at the end of the year. The Company is considering
appointing a second funds manager during 2004.
The Company also identified potential investment
opportunities in Papua New Guinea in agriculture and
undertook evaluation work and several rounds of discussion
with the potential parties.
4 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
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P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 5
Sustainable Development Program Initiatives
Significant work has been devoted to several strategic
initiatives that could be supported by the Company under its
Development Fund, and where they fulfill the “Low-Risk”
Investment Criteria by its Long Term Fund.
To promote community-level sustainable development, the
Company has approved a Community Sustainable
Development Program Fund under which it would provide a
minimum of K50,000 and maximum of K250,000 per
project in partnership with community organisations and
development partners to support community-level
development initiatives. It has committed K15 million over
five years, consisting of K1 million a year for the Western
Province and K2 million a year for the rest of Papua New
Guinea. The Company also undertook feasibility studies of the
expansion of the Western Province Micro-Finance Scheme
into other parts of the province and nationally.
For Western Province Programs, PNG Sustainable
Development Program Limited has committed K11 million,
consisting of K7 million in development grants and K4.8
million in concessional loans for village growers, towards a
village rubber project in the Lake Murray area of the
Province. This project is to be managed and implemented by
North Fly Rubber Ltd. As a complementary activity, the
Company has provided independent technical advice to North
Fly Rubber Ltd to help improve its operations. A feasibility
study of a possible estate and village rubber project was
planned and agreement has been reached with a potential
partner to undertake the study, which will cover the Lower-
Middle and South Fly areas of the province. A field
survey was conducted of the communications infrastructure
in Western Province to form the basis of a proposed rural
communications system for the province, preferably under a
partnership arrangement.
For National Programs, PNG Sustainable Development
Program Limited has investigated possible support for village
and smallholder oil palm expansions under partnership
arrangements. A study of the Highlands Highway
Rehabilitation Project was completed, which identified a
section for possible co-financing with other development
partners. Further discussions with the Government will take
place before progress can be made.
Ok Tedi Mining Limited
The Company has responsibility for and supports the good
governance of Ok Tedi Mining Limited through its nominee
Director on the Board of OTML, Dr Ross Garnaut. OTML
operations continued to improve, with significant dividend
income being declared to shareholders and royalty and
taxation benefits accruing to Papua New Guinea during the
year. PNG Sustainable Development Program Limited
participated as a member of the Government-appointed Ok
Tedi Mine Closure Planning Committee.
Governance
Directors were appointed to the Board during the year. They
were Mr Lim How Teck of Singapore and Sir Ebia Olewale of
Papua New Guinea. The Board held eight meetings during
the year, seven at its Company’s offices in Singapore and one
in Port Moresby. Prior to Board meetings in Singapore, the
Board conducted informal discussions in Port Moresby
including with Ministers and Government officials.
The Board also visited Western, Milne Bay, West and East
New Britain, and Eastern Highlands provinces, meeting
provincial leaders, NGOs, church and business communities
and various projects and activities.
The Company convened its first Annual Report Meeting with
stakeholders in Port Moresby on June 12, 2003.
Representatives of the Government of Papua New Guinea,
the Western Provincial Government, Ok Tedi Mining Limited,
international development partners and communities
attended. A seminar on oil palm industry opportunities was
held in conjunction with the Meeting. The Company’s
Advisory Council was appointed, consisting of seven Papua
New Guineans with extensive experience in government,
church and community organisations. It held its first meeting
on 28 October 2003.
Administration
The Company’s permanent office in Port Moresby was
established and a full staff complement of Papua New
Guineans appointed, supplemented by short-term
international and Papua New Guinea technical and advisory
personnel. Deloitte Touche Tohmatsu, Port Moresby, was
appointed as the Company’s accountants for a twelve-month
period.
Looking Ahead
Investment Operations of the Company, most importantly the
Long Term Fund, will be strengthened with significant income
from Ok Tedi Mining Ltd expected during 2004, the
appointment of a second Investment Adviser/Funds
Manager, and the identification of possible low-risk
investments in Papua New Guinea. The Company’s first
sustainable development projects are expected to begin
during 2004, and substantial progress made in finalising the
scope of development projects in rubber, palm oil, power,
microfinance, road infrastructure rehabilitation, and
communications within Western Province and other parts of
Papua New Guinea. Improved understanding and
relationships were established with stakeholders in Papua
New Guinea and partnerships established with key
international development and business partners.
Page 6
PNGSDP Ltd made solid
progress through 2003 in
each of its three areas of
responsibility. Progress was
supported by a strong team of
experienced and effective
Papua New Guinean managers,
which was brought together
during the year by Chief
Executive Officer Robert Igara.
The central function of PNGSDP Ltd is to promote
sustainable development in Western Province and Papua
New Guinea more generally. The company has formed the
view that it can make its most valuable contribution through
support for sustainable income-generating activities in
Western Province and in rural Papua New Guinea.
Sustainability is understood to have governance,
management, financial, environmental and social
dimensions. Projects in agriculture, agro-forestry, economic
infrastructure (including sustainable power generation) and
micro-finance are at an advanced stage of preparation.
Decisions on the allocation of development funds amongst
income-generating activities will be guided by the number of
sustainable minimum family income units that are generated
for each thousand kina spent. A common model for income-
generating projects will be the “nucleus estate – outgrower
model”, where an established business with appropriate
experience manages a commercial enterprise and receives
payments from PNGSDP Ltd development funds for
delivering services for associated rural communities.
A Sustainable Community Development Fund has been
established to support the delivery of a wider range of
services, not necessarily related to income growth, through
community organisations.
PNGSDP Ltd will work through specialised service delivery
entities, rather than develop its own delivery capacity. To this
end, the company is establishing cooperative relations with a
range of commercial and development organisations with
service delivery capacity or with experience that can assist in
identification of suitable partners. I note in particular the
positive interest of the World Bank and its associate, the
International Finance Corporation, in working with PNGSDP
Ltd on several substantial projects.
Another main function of PNGSDP Ltd is to manage the
Long-Term Fund, so that it can support a high level of
development expenditure in Western Province in particular
and Papua New Guinea in general for at least 40 years after
the closure of the mine. Through 2003, the Long Term Fund
generated an average return of 8.06% and increased from
US$3.6 million to US$42.1 million. During the year, the UK
funds management firm Newton Investment Management
Ltd was contracted to manage the company’s offshore
investments. A second manager is to be appointed. PNGSDP
Ltd will invest part of the Long Term Fund in Papua New
Guinea where it identifies low-risk investments with
satisfactory expected returns. Evaluation of low-risk
investments in companies that are operating commercial
“nucleus estates” and also supplying development services
will be given priority.
The company’s other substantive responsibility is as majority
owner that shares control of the Ok Tedi mine with the State
of Papua New Guinea and Inmet Mining. Through its
representative on the Board, PNGSDP Ltd supported mine
management in a thorough review of OTML community
relations and development functions. The review revealed
significant weaknesses, against which firm remedial action
has been taken. The weaknesses and the response are
reported by the Managing Director in OTML’s Annual Report.
PNGSDP Ltd has also supported mine management in
measures to improve the commercial performance of the
mine, which are yielding positive results.
Since the last Annual Report Meeting, the Independent State
of Papua New Guinea, BHP Billiton and PNGSDP Ltd have
agreed on two changes in the company rules with
substantive implications for operations. The definition of low-
risk investments of the Long Term Fund is now
unconstrained. And the requirement to deliver projects
through a Program Manager has been revised to allow more
flexible approaches.
The Board membership reached its full complement in
2003, with the appointment of Sir Ebia Olewale by the Papua
New Guinea Treasurer and of Lim How Teck by the company.
Board committees have been established, with
responsibilities for the Western Province development
program, the National development program, Investment
and Audit. The appointment of an excellent Advisory Council,
with Ms Felecia Dobunaba in the chair, strengthens company
governance.
The company has been assisted in progress so far by strong
support from all relevant Ministers of the Papua New Guinea
State, and in particular from the Ministers with portfolio
responsibilities for the company, Treasurer Bart Philemon
and Minister for Mining Sam Akoitai. The company also
attributes high importance to cooperation with Governor Bob
Danaya and other Western Province members of the
National Parliament.
The company is now ready to take its place as a substantial
participant in Papua New Guinea and especially Western
Province development.
ROSS GARNAUT AO
Chairman, Board of Directors
6 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
C h a i r m a n ’ s R e p o r t
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P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 7
G o v e r n a n c e S t r u c t u r e P N G S D P Ltd
BHP BILLITON PNG Government
PNG Stakeholders
Members of
PNGSDP Ltd
Jim Carlton
Don Manoa
Lim How Teck
Annual Report Meeting
Port Moresby
Board of
Ok Tedi Mining Ltd
Auditor
PricewaterhouseCoopers
Board of Directors of PNGSDP Limited
Ross Garnaut (Chairman)
Jim Carlton Don Manoa
Patricia J Caswell Sir Ebia Olewale
Lim How Teck Jakob Weiss
Audit
Committee
Investment
Committee
Company Secretary
Madelyn Kwang
WesternProvinceProgram
Committee
National
Program
Committee
Advisory Council
Felecia Dobunaba
(Chairperson)
Betty Lovai
Rev Samson Lowa
Brown Bai
Steven Nion
Blasius Iwik
Navu Kwapena
Chief Executive Officer (Robert Igara)
and staff of PNGSDP Limited
Port Moresby, Papua New Guinea
Page 8
8 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
T h e B o a r d o f D i r e c t o r s
The Board of Directors is responsible for strategic direction
and for managing the business of PNG Sustainable
Development Program Limited, including monitoring its
performance to ensure consistency with the Company’s
Program Rules. The Board also reports to the Members, to
the Government of Papua New Guinea, to BHP Billiton, to Ok
Tedi Mining Limited, and to other Papua New Guinea
stakeholders. The Board is not subject to the direction or
control of BHP Billiton or the Independent State of Papua
New Guinea.
The Board of Directors consists of Dr Ross Garnaut
(Chairman), Mr Donald Manoa, Sir Ebia Olewale,
Dr Jakob Weiss, Mr Jim Carlton, Ms Patricia Caswell, and
Mr Lim How Teck.
Board Meetings
The Board has adopted a policy of visiting Papua New Guinea
to discuss development priorities and programs every three
months prior to its scheduled meetings in Singapore. The
Board held eight meetings during 2003 as follows: 31st
January (Singapore two meetings), 1st August (Singapore),
9th April (Singapore), 24th September (Singapore), 3rd May
(Singapore), 11th June (Port Moresby), 7th November
(Singapore), 10th December (Singapore).
Number of Meetings Director Attended 2003* Date of Appointment
Ross Garnaut 8 20 May 2002
Jakob Weiss 8 13 November 2001
Jim Carlton 8 20 May 2002
Ebia Olewale 6 9 April 2003
Patricia Caswell 7 20 May 2002
Donald Manoa 8 10 October 2002
Lim How Teck 7 31 January 2003
* This included one meeting conducted on 3 May 2003, which was attended through teleconference.
Board Committees
The Board has established four Committees to assist with its work. They are:
Details of Directors’ Appointments and Attendance
Audit Committee
Lim How Teck (Chairman)
Ross Garnaut
Jakob Weiss
Investment Committee
Jakob Weiss (Chairman)
Ross Garnaut
Lim How Teck
Western Province Program Committee
Sir Ebia Olewale (Chairman)
Ross Garnaut
Don Manoa
National Program Committee
Don Manoa (Chairman)
Ross Garnaut
Jim Carlton
Patricia Caswell
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P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 9
T h e D i r e c t o r s
Dr Ross Garnaut AO, BA, PhD - Chairman
Appointed by BHP Billiton on 20 May 2002. Dr Garnaut is Professor of Economics in the Research
School of Pacific and Asian Studies at the Australian National University. He has written extensively
on East Asia and the Southwest Pacific economies, and serves on university and research
institution boards in Australia, the US, China, and Indonesia. He has been Head of the Department
of Economics and Director of the Asia Pacific School for Economics and Management. He was
Senior Economic Adviser to Australian Prime Minister Robert Hawke, and subsequently served as
Australia’s Ambassador to China. He is currently Chairman of Lihir Gold Ltd; Chairman of Lonely
Planet Publications Pty Ltd; and former Chairman of the Bank of Western Australia Ltd and of the
Primary Industry Bank of Australia Ltd. Dr Garnaut is also a director of Ok Tedi Mining Ltd as the
nominee of PNG Sustainable Development Program Limited. He served as First Assistant
Secretary responsible for financial and economic policy in the Department of Finance in Port
Moresby in 1975 and 1976.
Honorable Sir Ebia Olewale Kt
Appointed to the Board on 9 April 2003 on the nomination of the Minister for Treasury. Sir Ebia,
from the Western Province, was a member of the House of Assembly from 1968 to 1982. He
was a member of the Select Committee that played a major role in the nation’s preparation for
Independence, and held the Ministries for Education and Commerce in the self-government
period, 1972-75. During the year of Independence in 1975, Sir Ebia was Minister for Justice and
therefore politically responsible for the adoption of Papua New Guinea’s Independence
Constitution. After the 1977 election he served as Deputy Prime Minister, Minister for Justice
and Minister for Foreign Affairs and Trade. He also served as a member of the Commonwealth
Observer Mission to the first multi-racial elections in post-apartheid South Africa in 1994. He is
currently Chancellor of the University of Goroka. Prior to his appointment he was a consultant to
Ok Tedi Mining Ltd.
Honorable Jim Carlton AO, BSc
Appointed to the Board on 20 May 2002 on the nomination of BHP Billiton. Mr Carlton was, for
seven years, the Secretary-General of the Australian Red Cross. Prior to that he was a Federal
Member of Parliament in Australia from 1977 to 1994, serving as Minister for Health, and
Minister Assisting the Minister for National Development and Energy. He also held a number of
Shadow Ministry positions in Opposition, including Sustainable Development and Environment,
Health, Treasury, Education and Defence. Mr Carlton led two Australian Parliamentary delegations
overseas and served as a Commonwealth Observer at the return of Zambia to democracy in free
elections. He also served on the Australian National Commission for
UNESCO, the Australian Foreign Minister’s Aid Advisory Council, and the Australian National
Advisory Council on Peace and Disarmament. He is a former Chairman of the Advisory Council of
the National Archives of Australia. He is currently Chairman of the Australian Innovation
Association, Council Member of the Australian Strategic Policy Institute, Board Member of the
Australian New Zealand School of Government, Senior Advisor to the Boston Consulting Group,
and a Professorial Fellow in the Centre for Public Policy at Melbourne University.
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10 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
Mr Donald Manoa
Appointed to the Board on 10 October 2002 on the nomination of the Papua New Guinea
Chamber of Commerce and Industry. Mr Manoa was most recently a Commissioner with the
Commission of Inquiry into the National Provident Fund. He served as General Manager of the
Papua New Guinea Electricity Commission in 1987, and subsequently joined Shell and was
General Manager of Shell Papua New Guinea Limited from 1991 to 2000. He is at present
Chairman of New Guinea Islands Produce, a director of Barclay Bros (PNG) Ltd, Agmark Pty Ltd
and First Investment Finance Ltd. Mr Manoa has served as Chairman of Shell (PNG) Ltd, and as
a director of ANZ Banking Group (PNG) Ltd, Air Niugini and Shorncliffe PNG Ltd. He has also
served in community services roles, including in the National Volunteer Service.
Ms Patricia Caswell, BA (Hon), BEd
Appointed to the Board on 20 May 2002 on the nomination of BHP Billiton. Ms Caswell is
Executive Director of the Global Sustainability Institute at the Royal Melbourne Institute of
Technology University in Melbourne. She has served as the Executive Director of the Australia
Conservation Foundation, Executive Director of PLAN International Australia, as a secondary
school and TAFE teacher, a trade union leader, and on various public and private bodies in
Australia.
Dr Jakob Weiss, BA Econ, MA Econ, MBA, PhD
Appointed to the Board on 13 November 2001 on the nomination of the Bank of Papua New
Guinea. Dr Weiss, from Tel Aviv, Israel, is currently Dean of the Department of Economics at the
College of Management in Israel. He was a long-serving official with the Bank of Israel and the US
Federal Reserve Bank. He was seconded from the IMF to the Bank of Papua New Guinea from
1988 to 1994 and was an advisor to the Bank of Papua New Guinea until August 2002. He was
an advisor to several former Soviet Republics, served as a member of the Board of the Mercantile
Discount Bank of Israel, and on the Board and as Chairman of the Investment Committee of a
large pension-superannuation fund with operations in the United States, Europe and Israel. Dr
Weiss is also Adjunct Professor of Economics at Ben Gurion University in Israel and Georgetown
University and the State University of New York.
Mr Lim How Teck, BAcc, CPA, FCMA, AIBA, PBM
Following an extensive independent search by the international executive search firm Egon
Zehnder International, Mr Lim was appointed to the Board on 31 January 2003 as a Singapore
resident director by the Board of PNG Sustainable Development Program Limited. Mr Lim, a
certified public accountant, is at present a Board member, Executive Director and Group Chief
Financial Officer of Neptune Orient Lines Ltd of Singapore. He continues to serve on several
statutory boards in Singapore and corporations around the world. He has been honored by the
Singapore Government for his contribution to Singapore with a PBM. Mr Lim replaced Mr John
Moline, who had been appointed on an interim basis. Mr Moline resigned on 31 January 2003.
Page 11
‘Promoting development that meets the needs
of the present generation and establishes
the foundation for continuing progress for
future generations of Papua New Guineans’
P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 11
Page 12
M e m b e r s o f t h e C o m p a n y
As a Company limited by guarantee, PNG Sustainable
Development Program Limited does not have shareholders.
In addition to the Board of Directors, the Constitution of the
Company provides for the appointment of a minimum of two
people as Members of the Company.
The Members of the Company are responsible for adopting
the Annual Accounts and Audit Report, appointing the
Auditors and approving other business that the Board of
Directors may refer to Members from time to time. This
includes amendments to the Memorandum and Articles of
Association and Program Rules. Changes to the Program
Rules can only be made with the consent of BHP Billiton and
the Independent State of Papua New Guinea.
The Members meet during the Annual General Meeting and
during Extraordinary General Meetings. The Chairman of the
Board of the Directors also serves as Chairman of the
Annual General Meeting and Extraordinary General Meetings
but has no voting power.
The Members of the Company have convened several
Extraordinary Meetings to approve amendments to the
Memorandum and Articles of Association and Program
Rules of the Company. During 2003, an Annual General
Meeting of Members was held in Singapore on 9 April
to adopt the 2002 Accounts. It appointed
PricewaterhouseCoopers of Singapore as the Company’s
auditors for 2003.
Company Secretary
The Company Secretary is Ms
Madelyn Kwang, who was
appointed on 6 December
2002, and works from the
Company’s registered office at
20 Raffles Place #09-01,
Ocean Towers, Singapore
The Members of the Company as at
31 December 2003 were:
• Jim Carlton.................Appointed 19 June 2002
• Donald Manoa.............Appointed 8 November 2002
• Lim How Teck ............Appointed 11 March 2003
12 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
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P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 13
The end of 2003 completed
the first full year of operations
for the PNG Sustainable
Development Program
Limited. Priority activities
included assisting the Board
in the development of
Company policy and strategy,
getting the Advisory Council
appointed, establishing a
permanent office and appointing core staff, appointing our
accountants and a funds manager, assessing the best way
for the Company to deliver its development program, and
identifying sustainable development and investment
opportunities.
The appointment of Newton Investment Management Ltd as
funds manager to manage the Long Term and Short Term
Funds from September 2003 has enabled management and
staff to focus on development programs within the country.
The portfolio of specific investment and development projects
investigated ranges from community-level and people-centred
development work such as the Community Sustainable
Development Program (CSDP) and the National Micro
Finance Project, to larger commercial development
investments in oil palm and rubber and conventional public
and donor-funded development projects such as the
Highlands Highway Rehabilitation Project.
These provide a challenge to management and staff as they
require different skill sets. These projects also provide
insights into the policy and operational issues and challenges
confronting the delivery of programs and projects within the
country and Western Province in particular. The need for
clear supporting public policy, improved project preparation,
and sustainability of project benefits are prominent. In all the
projects investigated by the Company, these three factors,
plus weaknesses in critical infrastructure, add cost to the
project preparatory costs as well as lengthen the time taken
to bring projects to investment decision stages.
The recently appointed Advisory Council brings a wealth
of expertise and experience to the Company and I
will seek their independent advice in developing
appropriate strategies and practices for improving our
development programs.
To ensure best international practice and full accountability,
the company appointed Deloitte Touche Tohmatsu to
establish and provide accounting services.
The experience and skills of the staff of the Company
and access to proven advisory and support expertise,
including international funds management and accounting
services, strengthen the Company’s capacity to meet the
challenges ahead.
Management and staff recognise the special responsibility of
the Company to Western Province and to its role in
supporting programs that can provide alternative income
and employment opportunities to the communities affected
by the closure of the Ok Tedi Mine. The advice and support
of the Managing Director of Ok Tedi Mining Limited, Mr Keith
Faulkner, and his team in Tabubil and Port Moresby, have
been invaluable. Strong relationships are being established
with the Western Province Administration. The
Administration assisted the Company during familiarisation
visits to the Province and Provincial staff participated actively
in project investigations.
The Company also received valuable assistance from the
Milne Bay, Eastern Highlands, West and East New Britain
Provincial Governments, Members of Parliament, Provincial
Administrations, and businesses, church and community
organisations during visits to the provinces and project sites
during the year.
The Prime Minister and Ministers responsible for Treasury,
Planning, Mining, and Public Enterprises, as well as the
Central Agencies Coordination Committee (CACC), the Chief
Secretary to Government and the Secretaries of Treasury,
National Planning, and Mining provided valuable support and
advice during the year. This included briefings for the
National Executive Council and to Government Caucus
Meetings during the year.
The past 12 months have been a period of development and
consolidation. The investigations of and negotiations relating
to investment and development projects will be progressed
in the coming months and this should further improve the
capacity of the Company’s management and staff for project
preparation, as well as understanding and support amongst
Papua New Guinea stakeholders and partners, and amongst
potential international development partners and businesses.
Finally, I would like to thank the Chairman and the Board of
Directors for providing guidance and inspiration during the
formative and consolidation phases of the Company in 2003.
I look forward to working with them, the Advisory Council
and Company Staff and supporting advisors and professional
firms to meet the challenges of 2004, as PNG
Sustainable Development Program Limited proceeds
to the implementation phase of its sustainable
development projects.
ROBERT IGARA, CMG
Chief Executive Officer
PNG Sustainable Development Program Limited
C h i e f E x e c u t i v e O f f i c e r ’ s R e p o r t
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14 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
T h e M a n a g e m e n t T e a m
Robert Igara, CMG, BEcon, Grad Dipl in Intl Law, MBA
Chief Executive Officer
Mr Igara served as the Chief Secretary to Government between 1997 and 2002, and
concurrently as Acting Secretary for Treasury from July 2001 to August 2002. He has also
served as Secretary for Trade and Industry, as Director of the Office of International Development
Assistance, and has held several senior positions in the Departments of Foreign Affairs and
Trade, including diplomatic postings in Fiji and Australia. He was also Chairman of the Boards of
Directors of several statutory agencies - the Papua New Guinea Investment Promotion Authority,
the Papua New Guinea Forestry Authority, and the Small Business Development Corporation. He
served as a Director of Orogen Minerals Ltd and PNG-Halla Cement Corporation, and is at
present a Director of the Bank of Papua New Guinea and Oil Search Ltd.
Gago Mamae (Brig-General Retired)
Manager - Public Affairs and Community Relations
Gago Mamae CBE is a retired Brigadier-General of the Papua New Guinea Defence Force. He is
a graduate of the Australian Army Staff and Command College and the Australian Administrative
Staff College. He has held several key positions in the PNGDF, including Director of Supplies,
1976; Chief of Logistics 1977 to 1980; and Commander PNGDF 1981 to 1983. He served as
a civil servant in the Department of Finance and Planning as Assistant Director in the Office of
International Development Assistance from 1990 to 1992 and the Department of National
Planning and Monitoring (Foreign Aid Management Division) as Assistant Director for Special
Programs from 1993 to 2000. He was Director-General of the National Security Advisory
Committee in the Department of Prime Minister and NEC from June 2000 to May 2003.
Sean Ngansia, BEcon, Dip in Eco Policy Analysis
Program Manager - National Development Programs
Prior to joining the Company, Mr Ngansia was Acting Assistant Secretary of the
General Investments Branch of the Commercial Investments Division, Department of Treasury.
Mr Ngansia joined the Papua New Guinea Public Service in 1992 as a Senior Programs Officer
in the Department of Finance and Planning from 1992 to1994, the Department of Trade
and Industry from 1995 to 1997, before joining the Department of Treasury, serving
there from 1998 to 2001.
Henry Ivarature, BA (Hons), MA, PhD
Program Manager - Western Province Program
Dr Ivarature, prior to his appointment to the Company on 27 January 2003, was Head of the
Papua New Guinea APEC Unit and Papua New Guinea’s Senior Official to Asia Pacific Economic
Cooperation (APEC) within the Department of Prime Minister and National Executive Council,
where he also served as Director of Special Projects within the Central Agencies Coordination
Committee Secretariat and the Office of Chief Secretary to Government.
Page 15
P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 15
Ati Wobiro, BEcon, MA Econ & Soc Studies, M Dev Admin
Development Specialist
Prior to Mr Wobiro’s appointment on 4 August 2003, he was a lecturer in management at the
University of Papua New Guinea. He has also served in the Western Province Administration as
the Provincial Planner; World Vision International as the Program Development Manager; the
Papua New Guinea Telecommunications Authority as Executive Manager for Finance and
Corporate Planning; as a lecturer in economics at the Papua New Guinea University of Technology
and as a private consultant in project management.
Page 16
16 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
A d m i n i s t r a t i o n a n d C o r p o r a t e S e r v i c e s
The Staff
As at 31 December 2003, Company staff numbered 11 and consisted of :
Standing Left to Right: Ashley Emberson-Bain, Gago Mamae, Ati Wobiro, Sean Ngansia, Joe Ikau, Jonathan Micah and Wesley Mondo.
Sitting Left to Right: Dr Henry Ivarature, Dorothy Pomat, Robert Igara, Fae Maso and Gertrude Waite-Uma
Chief Executive Officer Mr Robert Igara
Personal Assistant to the Chief
Executive Officer Ms Dorothy Pomat
National Programs Manager Mr Sean Ngansia
Western Province Program Manager Dr Henry Ivarature
Manager Public Affairs and
Community Relations Mr Gago Mamae
Development Specialist Mr Ati Wobiro
Accountant Administrator Ms Janet Sios*
Secretary/Receptionist Miss Fae Maso
*Resigned December 2003
Office Assistant Mr Joe Ikau
Office Assistant Mr Wesley Mondo
Office Assistant Mr Jonathan Micah
Deloitte Touche Tohmatsu Accounting Staff
Accountant Miss Rowina Hehona
Assistant Accountant Ms Getrude Waite-Uma
Short-Term Technical Advisory Staff
Business & Investment Advisor Mr Ashley Emberson-Bain
Agriculture Adviser Mr Keith Armstrong
Power Business Adviser Mr Sev Maso
The Company established and moved into a permanent office
in Port Moresby in April 2003, enabling permanent office
systems and administrative support to be established.
A full complement of staff was appointed and all staff gained
first-hand experience of the diverse nature of the Company’s
operations, their own responsibilities, and the realities of
providing effective supporting services, and delivery of
development programs.
Secretariat support was also provided to the Board, with
operational relationships between the Company’s Port
Moresby office and the registered office in Singapore also
improved. Support was given to audits, preparation of the
2002 Annual Report, and the convening of the Company’s
first Annual Report Meeting in Port Moresby in June 2003.
Support was also provided to the Advisory Council during late
2003 and this will increase from 2004 as the Council moves
into full operations.
The Company increased its understanding of regulatory
requirements and established relationships with key
regulatory bodies and its own supporting service providers in
Papua New Guinea, Singapore, Hong Kong and London. Staff
have explained the Company’s mandate to stakeholders,
especially Government agencies and OTML.
The Company also commenced investigations of potential
development projects that may be supported by the
Company with the backing of short-term advisory teams.
The year’s operations have also enabled management and
staff to commence preparations of the Company’s code of
conduct, operational guidelines and legal documentation for
the administrative and accounting functions, funds
management and investment operations, and development
program activities. These will be finalised during 2004.
During the year, following a review of the requirements of the
Company, Deloitte Touche Tohmatsu was appointed as the
Company’s Accountants for a period of 12 months. This
ensured that the resources of Deloittes were available to
establish accounting systems, meet the Company’s diverse
operational requirements, and ensure that the Company
complies with best international practice and reporting
requirements.
Page 17
P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 17
Auditor
Pricewaterhouse-
Coopers Company Secretary
• Personal Assistant
Ms Dorothy Pomat
• Secretary/Receptionist
Miss Fae Maso
• Office Assistants
Mr Joe Ikau
Mr Wesley Mondo
Mr Jonathan Micah
NationalDevelopment
Program ManagerMr Sean Ngansia
Western ProvinceDevelopment
ManagerDr Henry Ivarature
DevelopmentProgram Specialist
Mr Ati Wobiro
Manager PublicAffairs &
CommunityRelations
Mr Gago Mamae
Advisory Council
Communities and People of Papua New Guinea (especially Western Province)
Project and Business PartnersResponsible for management and Implementation of Projects
Accountant
Deloitte Touche
Tohmatsu
Lawyers
Gadens Lawyers
Funds ManagerNewton InvestmentManagement Ltd
London
Chief Executive Officer
Robert Igara
O r g a n i s a t i o n a l a n d P r o g r a mM a n a g e m e n t S t r u c t u r e
Board of Directors
Page 18
T h e A d v i s o r y C o u n c i l
The Company’s Program Rules provide for the Board to
appoint up to seven eminent and appropriately skilled Papua
New Guineans, each for a term of two years, to serve on the
Advisory Council to the Company. They are to provide
impartial advice and comment on the Program of the
Company. The Council reports to the Chief Executive Officer.
Its function is to provide the CEO with:
• Strategic advice on the development and implementation
of the Program, including advice on the integration of the
Program’s initiatives within the overall development
objectives of Papua New Guinea;
• Assistance with sharing and disseminating information
about the Program to Project Partners and Stakeholders;
• Feedback in relation to Project proposals put to the
Company for funding; and
• Assistance to monitor and review Projects funded by the
Company.
The Board, following consultations with the National
Departmental Secretaries responsible for National Planning
and Mining in the Government of Papua New Guinea,
appointed Ms Felecia Dobunaba, Dr Betty Lovai, The Rev.
Samson Lowa, Mr Brown Bai and Mr Steven Nion to the
Council on 11 June, Dr Navu Kwapena on 1 August, and Mr
Blasius Iwik on 24 October 2003. Mr Gago Mamae is the
Secretary to the Advisory Council.
The Council members are all eminent Papua New Guineans
and bring significant expertise and experience to PNG
Sustainable Development Program Limited. They represent
key sectors of the wider community and provide the
Company with access to independent monitoring and
advisory support. Two members, Dr Betty Lovai and Mr
Blasius Iwik, are from Western Province, ensuring that the
Company maintains its special focus on the province.
The Advisory Council held its first meeting in Port Moresby
on 28 October and appointed Ms Felecia Dobunaba as its
first chairperson. The Council also held its first meeting with
the Board members in Port Moresby on 5 November 2003.
During the period the Council was briefed by management on
the Company’s strategy and operations and on the role and
functions of the Council. The Council is expected to fully
commence its activities during 2004, including visits to
Western Province and other parts of the country.
18 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
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P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 19
T h e M e m b e r s o f t h e A d v i s o r y C o u n c i l
Dr Betty Lovai, PhD (Social Work), MA (Social Work), BA Hon BA
Appointed to the council on 11 June 2003. Dr Lovai is a Lecturer in Sociology and Anthropology
at the University of Papua New Guinea. She has carried out social work amongst the poor in
urban and in rural areas where essential services such as social and economic infrastructure are
lacking. She has research and teaching experience in situation studies of communities and
villages. Dr Lovai has undertaken consultancy work with UNICEF, the ADB, AusAID, JICA, and
World Vision.
Ms Felecia Dobunaba, OBE, BA (SW)
Chairperson of the Advisory Council. Appointed to the Council on 11 June 2003, and by the
Council members as Chairperson on 28 October 2003. Ms Dobunaba has extensive knowledge
of and experience in social and development planning and program implementation. She has
served as the Director of the Office of National Planning and as Secretary of the Department of
Home Affairs and Youth. Ms Dobunaba is at present Director-General (Central Agencies Co-
ordination Committee Secretariat) in the Department of Prime Minister and National Executive
Council.
Page 20
The Reverend Samson Lowa, Bachelor of Divinity, Bachelor of Education,
Diploma in Secondary Teaching, Diploma in Theology
Appointed to the council on 11 June 2003. Rev Lowa is the Moderator of the United Church of
Papua New Guinea and the Solomon Islands, and is the President of the Papua New Guinea
Council of Churches, and Director, Evangelism Exposition Ministry International, Fort Lauderdale,
Florida, USA. He is also a Director of the Bank of Papua New Guinea and a Director of Post PNG.
Rev Lowa was, prior to joining the priesthood, a secondary school teacher.
Mr Brown Bai, CBE, BEcon
Appointed to the council on 11 June 2003. Mr Bai has served within the Public Service of Papua
New Guinea with distinction as head of the departments of Treasury and Finance, Prime Minister
and National Executive Council, and Primary Industry. He is also a former Deputy Director of the
Office of National Planning. Mr Bai has held a number of senior diplomatic posts, including as
Ambassador to the EEC, UNESCO, Italy, and Greece. He has been Managing Director of Papua
New Guinea Banking Corporation. Mr Bai is an appointee to the Centre for International
Agricultural Research (ACIAR) and is Chairman of the Rural Industries Council, Chairman of the
Public Service Reform Advisory Group, Managing Director of Alam Investments Corporation, and
a Director of Ramu Sugar Ltd, Hargy Oil Palm Ltd, and Galley Reach Rubber Company.
20 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
Page 21
Mr Steve Nion, BSc (Geology), MSc (Geology)
Appointed to the council on 11 June 2003. Mr Nion is Deputy Secretary of the Department of
Mining. He has held the post of Chief Geologist, responsible for co-ordinating and managing the
Papua New Guinea Geological Survey’s mapping and data activities. Mr Nion is a member of the
Earth Science Advisory Board, the South Pacific Geosciences Commission, and Alternative Papua
New Guinea National Representative to the Coordinating Committee for coastal and offshore
geosciences programme in East and South East Asia.
Dr Navu Kwapena, PhD, MSc, BSc
Appointed on 1st August 2003. He is an Environmental Ecologist. Currently he is the secretary
of the Papua New Guinea Bio-Diversity and National Conservation Council. Dr Kwapena was Chief
of Wild Life and Chief Ecologist from 1974 to 1976. From 1980 to 1986 Dr Kwapena was First
Assistant Secretary and Head of Wildlife Research, Management, and Conservation in the
Department of Environment and Conservation. In the period 1986-1991 Dr Kwapena completed
a post-graduate degree course at the University of Sydney in the School of Biological Sciences. In
April 2003 he was Acting Deputy Secretary in the Department of Environment and Conservation.
Dr Kwapena is an ecologist and biologist who is concerned about the protection of native fauna
and flora and sustainable use of natural resources and equitable sharing of benefits.
Mr Blasius Iwik, Diploma (Religious Studies)
Appointed on 24 October 2003, representing the landowners of Western Province. Mr Iwik
serves with the Roman Catholic Church in Kiunga, Western Province. He served as pastoral
worker with St Brigid’s Parish from1986 to 1992. He was Diocesan Development Secretary from
1993 to 1997. He served as Communications and Public Relations Officer from 1997 to 2003
and he is now serving with the same division with added responsibilities of Catholic Education
Secretary in Western Province. He has extensive experience working with communities.
P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 21
Page 22
T h e A n n u a l R e p o r t M e e t i n g
The Company is required under its Rules to report annually
to its stakeholders in Papua New Guinea. The first Annual
Report Meeting was convened at the Crowne Plaza Hotel
Conference Room, Port Moresby, on 12 June 2003, during
which the Company presented its 2002 Annual Report. The
Meeting was officially opened by the Honorable Bart
Philemon, MP, Minister for Treasury and Finance.
Representatives of key stakeholders who attended the
Annual Report Meeting included: the Governor of Western
Province, Hon Robert Danaya, MP; the Member for South
Fly, Hon Conrad Haoda, MP; the Member for North Fly, Hon
Martin Tabi, MP; the Member for Middle Fly, Hon Roy
Biyama, MP; the Western Province Acting Administrator, Mr
Babalela Kalama, and Administration officials; Western
Province Landowner Representatives; the Governor of East
Sepik Province, Hon Arthur Somare, MP; the Secretary for
Treasury, Mr Koiari Tarata; the Secretary for National
Planning, Mr Valentine Kambori; the Secretary for Mining,
Mr Kuma Aua; the Managing Director of Ok Tedi Mining
Limited, Mr Keith Faulkner, and Senior Management; and
representatives of international development partners.
The Company was represented by the Chairman and
Directors of the Board, the Chief Executive Officer and Staff,
and PricewaterhouseCoopers, Auditors of the Company.
The Meeting was addressed by the Governor of Western
Province, the Governor of East Sepik Province, and by the
Hon Lady Carol Kidu, MP, Minister for Social Development
and Community Affairs (through her representative) and the
Secretaries for Treasury and National Planning.
The first Annual Report Meeting proved a valuable
opportunity to explain to key stakeholders the Company’s role
and potential contribution to Papua New Guinea’s
development, particularly in the Western Province.
The Meeting also provided an opportunity to expand dialogue
on the challenges the nation and the Western Province will
face when the Ok Tedi Mine closes.
The Second Annual Report Meeting on 27 May 2004 will
also provide an opportunity to improve consultation and
coordination between the National Government, Western
Provincial Government, Ok Tedi Mining Ltd and the Company
on initiatives to support development programs within the
Western Province.
22 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
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P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 23
I n c o m e , F u n d s , A l l o c a t i o n s a n dE x p e n d i t u r e t o 3 1 D e c e m b e r 2 0 0 3Income
The principal income of the Company during the year
continued to be from its shareholding in Ok Tedi Mining
Limited, receiving several payments of gross dividends
totalling US$65.5 million (K233.4 million) during 2003. The
Company also earned US$2.4 million (K8.7 million) from
dividends, interest and foreign exchange gains from its funds
and investment operations.
Expenditure
Total expenses during the year were US$9.5 million (K33.4
million), consisting of US$6.5 million (K23.3 million) as
Dividend Withholding Tax payments to the Internal Revenue
Commission of Papua New Guinea, US$0.8 million (K2.8
million) paid to Ok Tedi Mining Ltd under the Subsidy Deed
(which requires PNG Sustainable Development Program
Limited to subsidise OTML for increases in its borrowing
costs associated with the withdrawal of BHP Billiton),
US$1.8 million (K6.3 million) for establishment and
administration costs, and US$0.3 million (K1.0 million) for
development program activities.
Total allocations as at the end of the year for the Long Term
Fund were US$42.1 million (K138.3 million), and for the
Development Fund US$20.9 (K68.8 million). US$6.9 million
(K22.7 million) was allocated to the Western Province
Program and US$14.0 million (K46.1 million) to the National
Development Program.
As of the end of 2003 the Company had committed from the
Development Fund a total of K33.5 million for three
projects, consisting of K15.0 million over five years for the
Community Sustainable Development Program Fund (K5.0
million for Western Province and K10.0 million for the rest
of Papua New Guinea), K11.8 million for the Lake Murray
Village Rubber Project, and K7.5 million as part of the
counterpart financing for a portion of the Highlands Highway
Rehabilitation Project. Expenditure will commence during
2004 only after Project Funding Agreements have been
signed.
The Long Term Fund
The Long Term Fund represents two-thirds of the income
received from Ok Tedi Mining Limited after deducting
operating expenses and all other contractual obligations
arising out the BHP Billiton exit arrangements.
As at 31 December 2003, the Long Term Fund allocation
amounted to US$42.1 million (K138.3 million). With current
expected dividend payments from OTML, the Long Term
Fund should increase substantially by the end of 2004.
The Long Term Fund must be invested in low-risk
investments. The Fund can be used before the Ok Tedi mine
closes to meet contractual obligations (for example under
the Subsidy Deed) and to meet a call by OTML for further
capital requirements. After the mine closes (in 2010 on
current understandings), the Long Term Fund is to be used
to fund sustainable development programs in Western
Province and elsewhere in Papua New Guinea. There will be
special emphasis in the Western Province on mitigating the
social and economic impact of mine closure.
The PNG Sustainable Development Program Limited
therefore aims to increase and diversify Long Term Fund
investments in a way that supports a maximum contribution
to development in Papua New Guinea and particularly the
Western Province. The Company is mindful of the desirability
of building the Fund and its sustainable earnings to a point
that enables annual earnings from investments to meet
annual expenditure requirements after mine closure without
diluting the real capital of the fund for 40 years.
The Development Fund
The Development Fund represents one-third of the income
received from Ok Tedi Mining Limited after deducting
operating expenses and all other legal contractual
obligations. The Development Fund is to be used to support
and finance programs and projects that promote sustainable
development to benefit the people of Papua New Guinea, in
particular of the Western Province. In accordance with the
rules, one-third of the funds is to be applied to programs
benefiting the people of Western Province, and the other
two-thirds are to be applied to programs that benefit all the
people of Papua New Guinea.
By the end of December 2003, the Development Fund
balance was US$20.9 million (K68.8 million). Of this
amount, US$6.9 million (K22.7 million) is for programs and
projects within Western Province, and US$14.0 million
(K46.1 million) is for programs and projects throughout the
rest of Papua New Guinea.
The General Fund
In accordance with Clause 14 of the Rules of the Program,
a yearly budget of administration costs must be prepared
and approved by the Board. The General Fund allows for an
allocation to fund the Budget of the Company. The General
Fund allocation as at 31 December 2003 was US$1.4
million (K4.7 million).
Page 24
I n v e s t m e n t A c t i v i t i e s
Investment Policy and Guidelines
In pursuing its goals and objectives, the Company is able to
invest and utilise its resources from the Long Term Fund,
the Development Fund and the General Fund in accordance
with the Program Rules of the Company. The Rules
require that investments in the Long Term Fund be placed in
low-risk investments.
The objectives of the Company’s investments are to:
• Significantly build up the Long Term Fund through interest
rate earnings, dividends, capital gains and foreign
exchange gains;
• Diversify its investment portfolio against interest rate,
foreign exchange and other financial market risks; and
• Invest portions of the Long Term Fund in Papua New
Guinea in low-risk strategic investments. These may be in
some investment projects that generate significant
sustainable economic and development benefits for Papua
New Guinea and its people.
The Board has established an Investment Committee to
oversee its Investment Policy and Guidelines, and approved
Preliminary Investment Guidelines under which the
Company’s investments are to be managed.
Funds Management Operations
Following the evaluation of proposals from seven
international investment houses, PNG Sustainable
Development Program Limited appointed Newton Investment
Management Ltd of London as its Investment Adviser &
Funds Manager. Newton commenced its mandate on 11
September 2003.
To spread risk and encourage high levels of performance, the
company is also negotiating with other investments houses.
One will be appointed to be the second Funds manager of
the Company.
In accordance with guidelines set by the Board, Newton has
invested 80% of the funds in Fixed Income Assets and 15%
in Global Equities. As at 31 December 2003, the Funds
Balance managed by Newton amounted to US$64,229,254
(K210,933,511).
Return on Funds Managed
During the 2003 year, the weighted average rate of return
on the Company’s investment portfolios was 8.06 per cent
for the Long Term Fund and 9.15 per cent for the
Development Fund.
Papua New Guinea Investment Opportunities
The Company investigated two opportunities in Papua New
Guinea agricultural companies for possible equity investment
from its Long Term Fund. In addition to potential dividend
income from these investments, the Company saw strategic
opportunities from the operations of these companies in
expanding village and smallholder income and employment
opportunities on a sustainable basis. Negotiations with
relevant parties are continuing.
The Company also explored potential opportunities for
investment in the generation and supply of power from gas
or geothermal sources to major resource projects.
24 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
Page 25
S u s t a i n a b l e D e v e l o p m e n tP r o g r a m A c t i v i t i e sPNG Sustainable Development Program Limited focused its
attention and efforts during 2003 on identifying suitable
programs and projects for support, and capable
development partners to share in the ownership,
management and implementation of these programs
and projects.
Board and Management visited Western, Milne Bay, West
and East New Britain, and Eastern Highlands provinces
during 2003. Visits to Central, Morobe and Bougainville are
planned for 2004. The Company was impressed with the
successful 'living' examples of sustainable development within
the country, especially in agriculture. These examples
demonstrate that Papua New Guinea can achieve
international standards of performance and competitiveness.
They also provide models for addressing the critical
constraints of poor infrastructure, a shortage of
management, technical and business expertise, and a lack of
financial resources.
They also reaffirm the soundness of PNG Sustainable
Development Program Limited’s priorities and strategies on
economic production, especially in agriculture and in working
with church development agencies and NGOs to promote
community sustainable development. The Company’s
initiatives have the potential to provide tangible long-term
benefits to significant sections of the rural population within
Papua New Guinea, especially the Western Province.
In pursuing its activities the Company has sought to ensure
that all stakeholders, including the Government of Papua
New Guinea and the Western Provincial Government, are
consulted and kept fully informed on program progress.
Criteria for Support of Programs and Projects
The Company seeks to ensure the programs and projects it
supports meet four principles and objectives:
• Effective participation of local communities in the project,
specifically by ensuring-
- Proper awareness of and commitment to projects
through close consultation and involvement;
- Maximum engagement in all facets of projects, from
planning, development, construction and maintenance
through to production and marketing; and
- Employment and training for communities in skills
associated with the project or other alternative
employment and life skills;
• Demonstrated benefits to the local communities,
specifically by-
- Increasing the number of sustainable minimum family
income units;
- Improving access to and quality of education and health
services; and
- Strengthening local leadership and organisational
capacity;
• Demonstrated managerial, financial, technical, marketing,
and environmental capability to sustain operations or
continuation of the benefits from the project for the long
term; and
• Compliance with international best practice and human
rights, cultural, social, economic, gender and environment
standards.
PNG Sustainable Development Program Limited will
further develop and publicise its criteria, and progress
in meeting them, during 2004 as it moves towards
project development.
P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 25
Page 26
S u s t a i n a b l e D e v e l o p m e n t P r o g r a m I n i t i a t i v e sDuring the year the Company focused its efforts on several
strategic initiatives, which, if taken forward, would involve
total project development costs of about K153 million over
the next five years, with expenditures averaging about K6
million a year for Western Province Programs and K20
million for National Programs. They will continue to form the
main focus of attention during 2004, with additional projects
supporting agricultural production, forestry, fisheries,
tourism, education and technical training, health and applied
research.
Community-Level Sustainable Development
Program Initiatives
a) The Community Sustainable Development Program (CSDP)
b) The National Micro Finance Institution Project
Western Province Sustainable Development
Program Initiatives
• Rubber Rehabilitation and Expansion Program
- Lake Murray Village Rubber Expansion Project
- North Fly Rubber Ltd Support
- Lower-Middle & South Fly Rubber Estate & Village
Development Project
• Western Province Communications Project
• Western Province Shipping Service Project
• Provincial Financial Management Improvement Project
National Sustainable Development Program Initiatives
• National Oil Palm Industry Estate and Village/Smallholder
Expansion Program
- Milne Bay Oil Palm Expansion Project
• National Road Infrastructure Rehabilitation Program
- Highlands Highway Rehabilitation Project
• National Power Rehabilitation and Rural Electrification
Program
- New Britain Power Rehabilitation and Rural
Electrification Project
Promoting Community-Level Sustainable Developments
The Company recognises the importance of supporting
community-level sustainable development projects that will
strengthen institutional capacity, including community-level
leadership, aid the delivery of health, education and training
services, enhance basic infrastructure, promote community
self-reliance and economic and income-earning
opportunities, and support social and environmental
objectives. The Company has therefore decided to support
two key programs for these purposes - the Community
Sustainable Development Program and the National Micro-
Finance Project.
The Community Sustainable Development Program
The Company in November 2003 approved a Community
Sustainable Development Program Fund and committed a
total of K15 million over five years for the Fund to support
community-level projects throughout the country. From this
amount K1 million a year is committed for projects within
Western Province and K2 million a year is for projects in
other parts of Papua New Guinea. The cost of administering
this program will be additional. The Company will provide a
minimum of K50,000 per project in partnership with
community organisations and development partners.
Special emphasis will be given to ensuring strong
partnerships with communities, sustainability and the
promotion of self-reliance.
The Company will formally launch the Program during 2004.
Management of the Program is being undertaken by the
Company with support from Deloitte Touche Tohmatsu. A
permanent program management structure is to be
established by mid-2004.
26 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
Page 27
The National Micro Finance Project
PNG Sustainable Development Program Limited has decided
to support financial services to rural areas. A 1999 Asian
Development Bank report estimated that the potential credit
market for the micro and small business sector in Papua
New Guinea, using a loan size of K2160 (US$800) for
255,000 borrowers, to be in the order of K200 million.
The Company’s initial assessment, supported by the
successful experience of the Ok Tedi Development
Foundation Microfinance Project and similar initiatives
undertaken overseas, is that the provision of micro finance
involving both credit and savings services is commercially
viable. Micro finance builds on entrepreneurship,
reduces dependency, and makes positive contributions to
people’s lives.
The Company considered in early November 2003 a
proposal to establish a national micro finance institution,
expanding on the successful Ok Tedi Development Foundation
Microfinance Project. This project is managed entirely by
Papua New Guineans under the oversight of Opportunity
International and through an agency arrangement with ANZ
Bank. It has during the past 15 months funded 780 small
business loans totalling K707,000, and has not had to write
off any loans during the period. It has also mobilised K1.3
million in depositors’ balances and now has 9160 depositors
operating accounts through its branches.
PNG Sustainable Development Program Limited engaged a
team to prepare a Business Plan for a fully licensed micro
finance company operating beyond Western Province.
Western Province Sustainable
Development Program
The Company recognises its special responsibility towards
the people of Western Province, especially to support
strategic investments that will provide the province with
alternative economic, income-earning and employment
opportunities after the Ok Tedi mine closes. In developing its
strategy PNG Sustainable Development Program Limited has
consulted the Provincial Government and OTML and visited
several parts of the Province.
PNG Sustainable Development Program Limited recognises
the significant financial resources available to the Western
Province from transfers from the National Government, from
the tax credit scheme delivered by OTML, provincial
government and landowner benefits from OTML including
from the Province’s equity in OTML, benefits to communities
and the value of OTML’s purchases of goods and services.
Between 2002 and 2010, the anticipated total value of
benefits for Western Province will be US$370 million (K1.27
billion). This resource provides significant opportunities to
establish a broader base for sustainable social and economic
development of the province.
PNG Sustainable Development Program Limited has
benefited from the operational support of the Administration
and OTML during field visits to the province for familiarisation
and project study.
During the period PNG Sustainable Development Program
Limited has been investigating several opportunities in
rubber development, oil palm and economic infrastructure,
in addition to the community-level development program and
micro finance project.
P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 27
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28 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
Western Province Rubber Rehabilitation and Expansion
Rubber-growing is carried out throughout Western Province
entirely by village households with the support since 1994 of
North Fly Rubber Ltd, a joint venture between a Western
Province trading company, Progress Pty Ltd, and Ok Tedi
Mining Ltd. North Fly Rubber provides training, technical
advice and transportation and buying of rubber. The total
area under rubber plantings in Western Province is 1958
hectares, with total production during 2002 of 675 tonnes
and exports of about 400 tonnes of PNG Certified Rubber
10. North Fly Rubber Ltd plans to expand total area under
rubber to 10,000 hectares.
The Company will support the industry in the Province in
cooperation with North Fly Rubber Ltd in the North and
Middle Fly areas; and with a potential new international
rubber business partner in the Lower-Middle Fly and South Fly
areas. Through this approach, extension services, marketing
and high-yielding clones would be provided.
Page 29
The Lake Murray Village Rubber Growing Project
PNG Sustainable Development Program Limited assessed a
proposal to establish a village rubber project in the Lake
Murray area. The Board has approved and committed a total
of K11.8 million for the project, consisting of K7 million as a
development grant and K4.8 million in concessional loans for
village growers. The loan facility is to provide livelihood
support and sustenance during the land clearing and planting
period, estimated to be four years. Repayments will be
deducted from sales of rubber to North Fly Rubber Limited.
The project will involve 840 families (about 4000 people, or
nearly half the population of the Lake Murray area) planting
high-yielding rubber trees on 2200 hectares, with rubber
tapping expected to commence in 2012.
The Company is continuing negotiations to finalise a Project
Funding Agreement, and for a village grower loan scheme.
These are expected to be concluded during the first
quarter of 2004.
Lower-Middle and South Fly Rubber Estate and
Village Grower Project
PNG Sustainable Development Program Limited has reached
agreement with an international company to carry out a
feasibility study on a 5000-hectare rubber project at Wipim,
Oriomo, Wasua and Balimo. If the project is found to be
feasible, a joint-venture company would be created to develop
and operate the estate and village grower scheme. The
proposal is to establish an estate to provide the critical
capacity required, complemented by village out-growers
throughout the Lower-Middle and South Fly districts.
P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 29
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Western Province
Oil Palm Development
The Company has been impressed with the economic and
development impact of oil palm investments in several
provinces of Papua New Guinea, the significant participation
of smallholders and the income streams flowing to them, and
the international competitiveness and sustainability of the
industry. There is strong interest in oil palm development in
Western Province.
PNG Sustainable Development Program Limited explored
with potential partners the possibility of undertaking a
feasibility study of an Oil Palm nucleus estate and
village-holder production in Western Province which is
planned for 2004.
Western Province Economic Infrastructure
During 2003, the Company conducted field surveys in the
province to gather information on the state of its
communications, transport and other economic
infrastructure in relation to development requirements. The
surveys found that major work on rehabilitation and
expansion was necessary for sustainable development. PNG
Sustainable Development Program Ltd will focus strongly on
projects in these areas in the year ahead.
Western Province Financial
Management Strengthening Project
The Company was unable to implement the project during
the period given the appointment of a new Administrator for
the Province and the changes in operating arrangements
within the province. The Company retains its interest in
supporting the proposal.
30 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
Page 31
National Sustainable Development Program
The policy adopted for the National Sustainable Development
Program is to invest in sustainable economic activities,
especially in agriculture, forestry, fisheries and tourism, with
the objective of generating sustainable increases in incomes
and living standards for large numbers of people in the rural
areas of Papua New Guinea. In doing so, PNG Sustainable
Development Program Limited notes that this approach is
consistent with the development priorities of the Government
of Papua New Guinea under its Medium Term Development
Strategy.
The strategy to achieve this development policy will use the
nucleus and smallholder estates model, which has been
successful in the oil palm sector. The Company will replicate
this model in the agriculture and economic infrastructure
sub-sectors, which have the necessary elements for its
application and the potential for the development of
sustainable projects.
The Company proposes to participate as a cornerstone
investor in potential development projects with strategic
partners that have the necessary skills and experience in
relevant sectors and can provide additional project
investment capital.
It is recognised that an essential prerequisite for the
expansion of the agriculture sector is rural infrastructure,
and the Company intends to support the rehabilitation and
expansion of such vital infrastructure in association with
donor partners.
Consistent with its broad strategy, the Company also
investigated during the year opportunities to support
several projects to be implemented in other parts of
Papua New Guinea in agriculture, and transport and power
infrastructure rehabilitation and expansion. These are
consistent with the pronouncements of the Government in its
Budget statements and development strategy focusing on
promoting exports, especially in agriculture.
P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 31
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National Oil Palm Industry Estate andVillage/Smallholder Grower Expansion
During the year the Company carried out investigations and
discussions on the opportunities within the oil palm sector
and concluded that external market and internal production
potential would support substantial oil palm expansion in
Papua New Guinea.
PNG Sustainable Development Program Limited entered into
negotiations with industry participants in relation to
partnerships in future expansion, particularly through village
and smallholder grower production. The Company’s interest
in possible partnerships in oil palm directly relate to its
strategy to promote expansion of oil palm with significant
smallholder and village grower participation in Western and
other provinces.
Rubber Industry Rehabilitation and Expansion
Rubber schemes have long been seen as a way of
encouraging employment and income-earning opportunities
in remote areas. Rubber is ideal for smallholder conditions,
growing in a range of soils and conditions and with limited
requirements for processing and storage.
The total area under rubber production in 2000 was about
18,000 hectares, consisting of about 5000 hectares under
estates and 13,000 hectares under village and smallholder
schemes. Approximately 11,795 households (or 70,000
people) are involved in rubber production. The main rubber-
growing areas are Central Province (Sogeri, Galley Reach
and Cape Rodney), Epo in Gulf Province, Gavien in East Sepik
Province, and throughout the Western Province.
PNG Sustainable Development Program Limited is interested
in supporting rehabilitation and expansion of the industry.
The Highlands Highway Rehabilitation Project
To support the Highlands Highway Rehabilitation project, the
Board approved a contribution of K7.4 million, equivalent to
50% of the Papua New Guinea Government’s counterpart
funding required for one component of the Highway Project.
This support depends on agreements between the State and
the ADB.
New Britain Power Rehabilitation and Rural Electrification Project
During the year PNG Sustainable Development Program
Limited investigations of the status of existing power
generation and transmission in the East and West New
Britain provinces revealed significant under-utilisation of
capacity, owing largely to lack of maintenance causing
frequent supply interruptions. Potential for significant
improvement was identified from rehabilitation and expansion
of the system, immediately benefiting about 25,000 rural
households, or almost 150,000 people.
The Company’s assessment is that subject to certain
efficiency improvement measures, new strategic
investments and an experienced power system
Manager/Operator being engaged, significant operating
efficiency could be restored immediately and profitability
improved over the medium term.
PNG Sustainable Development Program Limited is studying
the potential for a joint-venture company that would help
rehabilitate the power system, and manage it efficiently. PNG
Sustainable Development Program Limited may use
development funds to expand the supply of electricity to
agricultural activities, village communities, rural schools,
health centres, and government stations throughout both
provinces with contributions from communities that benefit
from the expanded services.
32 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
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Promoting Dialogue and Research on Sustainable Development
The Company convened a seminar on oil palm industry
opportunities in 2003, which was addressed by senior
representatives of international companies. A Sustainable
Development Seminar will be held on 26 May 2004 prior to
the Annual Report Meeting.
It will focus on successful examples of sustainable
development within Papua New Guinea, future opportunities
in Western Province beyond the Ok Tedi Mine closure, and
the promotion of agricultural investment and development.
The Company proposes to sponsor such a seminar as an
annual event.
Working With International Business
and Development Partners
The project initiatives investigated by PNG Sustainable
Development Program Limited require credible and
competent business partners to help drive, implement and
manage each project. The Company is not seeking to control
or manage any of its initiatives. But it recognises that risk
perceptions and the realities of doing business in Papua New
Guinea require a degree of leadership and ownership from
the Company. Through arrangements such as counterpart
financing of road projects, PNG Sustainable Development
Program Limited would like to facilitate the efficient use of
the large concessional and grant financing that is available to
Papua New Guinea from international development partners.
P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 33
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34 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
O K T e d i M i n i n g L i m i t e d O p e r a t i o n s
The year 2003 saw Ok Tedi Mining Limited consolidate its position as an independent world-class miner under its new Board and
Management since the exit of BHP Billiton in 2002.
Ownership of OTML
The ownership of OTML as at 31 December 2003 is:
*The State’s interests consist of: Independent State of PNG (15%), Mine Lease Landowners (2.5%) and the people of Western
Province (12.5%). While the Company is the major shareholder of the Ok Tedi mine, it does not have the powers of a majority
shareholder in a private company. It shares control of Ok Tedi Mining Ltd with the other shareholders.
Ordinary Shares % Holding
PNG Sustainable Development Program Limited 122,200,000 52
Independent State of Papua New Guinea 70,500,000 30*
Inmet Mining Corporation (of Canada) 42,300,000 18
Page 35
Mine Operations and Performance
The mine continued improvements in its operations and
benefited from rising international prices for copper, silver
and gold during 2003. OTML declared and paid out dividends
during the period totalling US$125.9 million (K448.9
million). PNG Sustainable Development Program Limited’s
share of this dividend amounted to US$65.5 million (K233.4
million). This level of performance is expected to continue
and, subject to international prices, should result in higher
dividend payments throughout 2004.
The Environment
A new environmental regime is provided for in the new Ok
Tedi arrangements. As part of this regime, OTML has
converted its test dredging operation at Bige into a
permanent one to mitigate the future impact of aggradation
in the Ok Tedi and Fly River systems, at an annual cost of
approximately US$30 million. Through its ongoing
investigations, Ok Tedi has identified the potential for acid
rock generation (ARD) at the dredge sand stockpiles as an
environmental issue requiring research into long-term ARD
mitigation options. Although there is no occurrence of ARD
at this time, in either the dredge stockpiles at Bige or in the
waste rock dumps at the mine, OTML has identified the need
to mine additional limestone to provide a sufficient safety
factor for the neutralising capacity of the waste rock and
tailings discharge in the Ok Mani and Ok Tedi river systems.
OTML has adjusted its mine plans to obtain the necessary
levels of limestone production.
Western Province Mine Communities’ Support
The majority of the Mine Communities continue to support
the continued operation of the mine. Class action
proceedings against Ok Tedi Mining Ltd have been dismissed
by the Victorian Supreme Court. This has allowed for
increased cooperation and benefits to the people of the
Western Province, especially those covered by the
Community Mine Continuation Agreements (CMCAs). The
large majority of villages, representing more than 50,000
people, are signatories to these agreements. These
agreements define the terms under which the communities
affected by the mine’s operations have supported the mine’s
continuation. During 2003, Ok Tedi continued to implement
various aspects of the CMCAs and committed itself to
working with the communities to ensure that the funds
generated from these agreements are put to good use. An
invitation has been extended to other communities and
individuals in the CMCA areas who did not sign the CMCAs
to sign so that they can benefit from the development
programs and other benefits from the mine.
Contribution to Papua New Guinea
With a turn-over of K1.5 billion during 2003, Ok Tedi mine is
the largest single contributor to Papua New Guinea’s national
revenue, both directly and indirectly. The mine has made the
following contributions:
P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 35
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36 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
Production Materials moved: 235,000 tonnes per day; ore processed: 80,000 tonnes per day; copper
produced: 200,000 tonnes per annum; gold produced: 500,000 ounce per annum.
Exports K1.5 billion, which is 18% of PNG’s total exports and 10% of GDP.
Royalties K17.39 million to Western Province Government and K7.1 million to landowners.
Mining Levy K43.8 million to the Papua New Guinea Government.
Dividends K448.9 million to shareholders, including K121.2 million to the Papua New Guinea
Government, K13.5 million to Mineral Resources Ok Tedi No.2 Limited and K233.4 million
to PNGSDP Ltd.
Dividend Withholding Tax K31.4 million (K23.3 million from PNGSDP Ltd & K8.1million from Inmet).
Tax Credit Scheme K45 million spent so far on Government-led development projects in health, education,
roads, bridges, airports, police and utilities in the Western Province.
Training Expenditure K5.4 million on staff training and community education scholarships, totalling K40.62 million
since 1981.
Employment 2000 people employed, 93 per cent of whom are PNG citizens, and 694 from the preferred
area. Total PNG wage and salary payments of K80 million.
Contractors K446.6 million on contractors, K316.1 million of which was paid to PNG companies.
OTML’S Contribution to Papua New Guinea
PNG Sustainable Development
Program Limited and OTML
Apart from having a 52% interest in Ok Tedi Mining Ltd and
the obligations that arise from that interest, the Company
has certain obligations under the BHP Billiton exit
arrangements. It also shares a common interest with OTML
in promoting sustainable programs within the Western
Province and in facilitating a mine closure that minimises
impacts on affected communities, including in finding
economic use for mine-related infrastructure.
A) Contractual Obligations to OTML
The new ownership arrangements also impose
contractual obligations on the Company in relation to
OTML in recognition of the importance of OTML as the
Company’s sole source of income and to ensure that
OTML remains a profitable and responsible mining
operation over its remaining economic life.
B) Directors’ Remuneration
PNG Sustainable Development Program Limited appoints
one director to the Board of OTML and the Board of the
Company has appointed Dr Garnaut to the Board of
OTML. It is a requirement under the OTML Constitution
for non-independent directors’ fees to be paid by their
nominating body and therefore Dr Garnaut’s fees are met
by the Company.
C) Deed of Indemnity to OTML Independent Directors
As part of the new arrangements, the Company is a party
to an Option Deed signed with OTML on 6 February 2002
under which OTML has a right to require the Company to
execute a deed of indemnity in respect of a person who
is, or is about to be, appointed or deemed to be appointed
a director under paragraph 59(2) of OTML’s Constitution
if OTML is unable to obtain, maintain or renew Directors’
& Officers’ Insurance for that person on 'Commercial
Terms'. Such directors are independent non-executive
directors with extensive professional experience relating
to the mining industry, and OTML’s Managing Director is
deemed to be a director appointed under paragraph
59(2) (the Independent Directors). OTML exercised its
right under the Option Deed and the Board approved the
Deeds of Indemnity for each independent director of
OTML which were executed with Mr Keith Faulkner, Mr
Richard Zandee and Mr Peter Roberts during 2003.
OTML (Financing) Subsidy Deed
The Company paid US$0.8 million (K2.8 million) to Ok Tedi
Mining Ltd during the year in accordance with the Subsidy
Deed between the Company and OTML of 11 December
2001. Under this deed the Company has agreed to pay as a
non-refundable subsidy an amount equal to increased
borrowing costs and charges incurred by OTML as a result
of not being a subsidiary of BHP Billiton up to an average
weighted increase of all rates, costs and charges of 2.5%
and on a maximum loan commitment of US$120 million.
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P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 37
Ok Tedi Mine Closure Planning
The Ok Tedi Mine closure will have a significant impact on
Western Province and the nation. PNG Sustainable
Development Program Limited is required to give first priority
under the Long Term Fund to supporting economic and
social services that mitigate the consequences of mine
closure within Western Province. As part of the new
arrangements, OTML is required to prepare and submit a
Mine Closure Plan to the State. A major component is
consultation between all interested parties to identify and
examine the feasibility of alternative uses for key
infrastructure after the mine closes. OTML is required to set
aside funds (currently estimated at US$100 million) for mine
closure and decommissioning.
In 2003 PNG Sustainable Development Program Limited
was invited by the Department of Mining and OTML to be a
member of the Mine Closure Planning Committee. This
Committee is responsible for overall planning and
coordination of all activities leading to the closure of the
mine, provisionally estimated to take place in 2010. The
Committee is chaired by the Department of Mining and
has representatives from all major stakeholders. The
Company is represented on all five sub-committees and the
main Mine Closure Planning Committee. The five sub-
committees are: training and education; health; business
development; infrastructure; provincial liaison, and
community consultation.
Post Mine Closure Sustainable Development Programs
The Company has a special responsibility to support
programs and projects that help mitigate the impact of the
Ok Tedi Mine closure. Funding for this purpose after mine
closure would be from the Long Term Fund.
There are two dimensions to this responsibility. The first
relates to supporting mine-related physical and service
infrastructure that would be required for continued social
and economic services and activities after mine closure. The
second relates to supporting economic and social
development investments that will sustain communities
affected by the mine’s closure. Given the large size of the
mine’s operations and activities throughout the Western
Province and the Telefomin District of West Sepik Province,
the Company’s strategy and programs will need to extend
beyond the immediate mine communities.
OTML has significant experience in development activities
within the Western Province, which has been valuable
to the Company.
Ok Tedi Mining Ltd also provided valuable logistical support,
advice and information to the Company for studies relating to
the Lake Murray Village Rubber Project, surveys of the
provincial power and communications systems, and
investigation of the Micro Finance and Technical Training
projects. The proposed Lake Murray Village Rubber and
National Micro Finance projects are examples of program-
level cooperation between the Company and OTML.
PNG Sustainable Development Program Limited also
conducted a pre-feasibility study during 2003 of options for
supporting the OTML Training Facilities at Tabubil after the
Ok Tedi mine closes. The study included visits to the Western
Province for discussions with relevant stakeholders and
institutions involved with providing technical skills training in
the province. The study identified four types of training
offered at Tabubil: mine-related trade training, generic trade
training, CODE studies and community training programs.
The study also identified options for several of OTML’s
training facilities.
Both OTML and PNG Sustainable Development Program
Limited continue to find ways to improve partnership
arrangements for promoting sustainable development in the
Western Province, and in particular to identify projects that
both could support.
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38 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
D i r e c t o r ’ s R e p o r t o n C o m p a n y A c c o u n t sFinancial Statements
The audited financial statements for the Company for the
financial year ended 31 December 2003 were signed on
2 April 2004.
The summarised statement of financial performance and
statement of financial position set out below have been
extracted from the audited financial statements of the
Company, which are presented in United States Dollars. The
Company has adopted the United States Dollar as its
functional currency, as this is the currency of the primary
economic environment in which the Company operates and
invests. Amounts have been converted to Kina for
supplementary presentation purposes at the year end
exchange rate of 0.3045 (2002: 0.2453) for balance sheet
items and the average exchange rate for 2003 of 0.2806
(2002: 0.2552) for income statement items. Reference
should be made to the financial statements of the Company
for a true and fair view of its financial position as at 31
December 2003 and its performance for the financial year
then ended in accordance with generally accepted
accounting practices, and the auditor’s report thereon.
Summarised Income Statement
Supplementary Information
Period Period
20 Oct 2001 20 Oct 2001
Year ended Year ended Year ended Year ended
31 Dec 2003 31 Dec 2002 31 Dec 2003 31 Dec 2002
US $’000 US $’000 K’000 K’000
Dividend income from OTML 65,504 7,171 233,443 28,100
Other investment income 2,430 9 8,660 35
Total Revenue 67,934 7,180 242,103 28,135
Governance and administration 2,544 503 9,066 1,971
Development and investment programs 292 - 1,041 -
Total Expenditure 2,836 503 10,107 1,971
Operating surplus 65,098 6,677 231,996 26,164
Papua New Guinea Withholding Tax 6,550 717 23,343 2,810
Net surplus after tax 58,548 5,960 208,653 23,354
Page 39
P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 39
Summarised Balance Sheet
Supplementary Information
Dec 2003 Dec 2002 Dec 2003 Dec 2002
US $’000 US $’000 K’000 K’000
Current assets
Cash and cash equivalents 14,824 6,579 48,683 26,820
Available for sale investments 9,842 - 32,322 -
Debtors and prepayments 70 68 230 277
24,736 6,647 81,235 27,097
Non-current assets
Available for sale investments 40,438 - 132,801 -
Investment in OTML at cost 2,904 2,904 9,537 11,839
Property, plant and equipment 218 60 716 245
43,560 2,964 143,054 12,084
Total Assets 68,296 9,611 224,289 39,181
Current liabilities
Loan from BHP Billiton Limited 3,500 3,500 11,494 14,268
Other liabilities 288 151 946 616
Total Liabilities 3,788 3,651 12,440 14,884
Net Assets 64,508 5,960 211,849 24,297
General Fund 1,431 663 4,700 2,703
Long Term Fund 42,114 3,531 138,305 14,395
Development Fund 20,963 1,766 68,844 7,199
Total Funds 64,508 5,960 211,849 24,297
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40 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
D i r e c t o r ’ s R e p o r t o n C o m p a n y A c c o u n t s C o n t i n u e d
Acquisition of Subsidiary
As part of the agreements between BHP Billiton and the
Independent State of Papua New Guinea that came into
effect on 20 December 2001, the Company acquired a 52%
interest in OTML for zero consideration. The Company’s
share of the net tangible assets of the subsidiary at
acquisition was US$108.7 million.
Directors’ Interests in Shares or Debentures
There were no registered shareholdings in the Company and
its subsidiary by any of the directors as at the date of this
report.
Directors’ Remuneration
The Members approved initial Directors’ Fee levels at
A$80,000 per annum and for the Chairman of the Board at
A$120,000 per annum. These levels were established by
the Company prior to the appointment of the current Board,
and were recommended by BHP Billiton as being appropriate
for the Company in the future. Consistent with BHP Billiton’s
recommendation, fee levels will be raised annually from 1
July 2004 in line with the increase in the Australian
Consumer Price Index, taking the index as at 30 June 2003
as the base.
Directors’ Contractual Benefits
Since the date of incorporation, the directors have not
received any contractual benefits entered into with the
Company except for Dr Ross Garnaut, who is a nominee
director of the Company’s subsidiary and will be receiving
remuneration in this capacity.
Tax Payments to Papua New Guinea
The Company paid US$6.5 million (K23.3 million) in Dividend
Withholding Tax to the Internal Revenue Commission of
Papua New Guinea during the period. No tax has been paid
to Singapore authorities.
Appointment of the Auditors
The Auditors, PricewaterhouseCoopers, have been
reappointed as Auditors of the Company for 2004.
Audit Committee
The audit committee is Lim How Teck (Chairman), Ross
Garnaut and Jakob Weiss. The committee is fully responsible
for the internal and external audits of the Company and for
ensuring full compliance with all regulatory requirements.
Accountants
The Company appointed Deloitte Touche Tohmatsu Papua
New Guinea to provide accounting services to the Company
as from 10 December 2003.
BHP Billiton Limited (BHP) Loan Facility
As at 31 December 2003, the amount of US$3.5 million
remained unpaid by the Company under the loan facility with
BHP Billiton.
Development Program Expenditures
As at 31 December 2003, US$292,038 had been spent in
the period on development programs for the Western
Province and for Papua New Guinea as a whole.
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P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 41
F i n a n c i a l S t a t e m e n t s
PNG Sustainable Development Program LimitedIncorporated in Singapore - company Limited by Guarantee
Financial StatementsFor the financial year ended 31 December 2003
C o n t e n t s
Directors’ Report ..................................................................................................................42
Statement by Directors..........................................................................................................43
Auditors’ Report ...................................................................................................................44
Income Statement ...............................................................................................................45
Balance Sheet ......................................................................................................................46
Statement of Changes in Equity...............................................................................................47
Cash Flow Statement.............................................................................................................48
Notes to the Financial Statements...........................................................................................49
Page 42
The directors present their report to the Members together with the audited financial statements of the Company for the financial
year ended 31 December 2003.
Directors
The directors of the Company in office at the date of this report are:
• Jakob Weiss
• James Joseph Carlton
• Patricia Joy Caswell
• Ross Gregory Garnaut
• Donald Wabirao Manoa
• Lim How Teck (appointed 31 January 2003)
• Sir Ebia Olewale (appointed 9 April 2003)
Arrangements to Enable Directors to Acquire Benefits
Neither at the end of or at any time during the financial year was the Company a party to any arrangement whose object was to
enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company
or any other body corporate.
Directors’ Interests in Shares, Debentures and Share Options
The Company is limited by guarantee and has no share capital, debentures, share options or unissued shares.
Directors’ Contractual Benefits
Since the end of the previous financial period, no director has received or become entitled to receive a benefit by reason of a
contract made by the Company or a related corporation with the director or with a firm of which he is a member or with a
company in which he has a substantial financial interest, except that Mr Ross Gregory Garnaut is a nominee director of the
Company’s jointly controlled entity and will be receiving remuneration in this capacity, remuneration payable by the Company.
Auditors
The auditors, PricewaterhouseCoopers, have expressed their willingness to accept re-appointment.
On behalf of the directors
Ross Gregory Garnaut Donald Wabirao Manoa
Director Director
2 April 2004
42 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
P N G S D P L t d F i n a n c i a l S t a t e m e n t s
D i r e c t o r s ’ R e p o r t
Page 43
P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 43
P N G S D P L t d F i n a n c i a l S t a t e m e n t s
In the opinion of the directors,
(a) the financial statements of the Company as set out on pages 45 to 62 are drawn up so as to give a true and fair view of
the state of affairs of the Company at 31 December 2003 and of the results of the business, changes in equity and cash
flows of the Company for the financial year then ended; and
(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they fall due.
On behalf of the directors
Ross Gregory Garnaut Donald Wabirao Manoa
Director Director
2 April 2004
S t a t e m e n t b y D i r e c t o r s
Page 44
44 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
P N G S D P L t d F i n a n c i a l S t a t e m e n t s
We have audited the financial statements of PNG Sustainable Development Program Limited for the financial year ended 31
December 2003 set out on pages 45 to 62. These financial statements are the responsibility of the Company’s directors. Our
responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform
our audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion,
(a) the financial statements of the Company are properly drawn up in accordance with the provisions of the Companies Act, Cap
50 (“the Act”) and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the
Company as at 31 December 2003 and the results, changes in equity and cash flows of the Company for the financial year
ended on that date; and
(b) the accounting and other records (excluding registers) required by the Act to be kept by the Company have been properly
kept in accordance with the provisions of the Act.
PricewaterhouseCoopers
Certified Public Accountants
Singapore, 2 April 2004
A u d i t o r s ’ R e p o r t t o t h e D i r e c t o r s o f P N G S D P L t d
Page 45
P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 45
P N G S D P L t d F i n a n c i a l S t a t e m e n t s
For the Financial
period from
For the 20 Oct 2001,
Financial Year date of
ended incorporation, to
31 Dec 2003 31 Dec 2002
Notes US $ US $
Revenue 4 67,934,362 7,180,076
Expenses
Governance and Administrative 5 (2,543,763) (503,171)
Development and Investment Programs 5 (292,038) -
Operating surplus before tax 6 65,098,561 6,676,905
10% Dividend Withholding Tax paid to the Internal
Revenue Commission (Papua New Guinea) 8 (6,550,440) (717,228)
Net surplus 58,548,121 5,959,677
I n c o m e S t a t e m e n tF o r t h e F i n a n c i a l Ye a r e n d e d 3 1 D e c e m b e r 2 0 0 3
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46 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
P N G S D P L t d F i n a n c i a l S t a t e m e n t s
2003 2002
Notes US $ US $
ASSETS
Current assets
Cash and cash equivalents 9 14,823,622 6,578,593
Available-for-sale investments 10 9,841,791 -
Other debtors and prepayments 11 70,531 68,030
24,735,944 6,646,623
Non-current assets
Available-for-sale investments 10 40,437,944 -
Investment in a jointly controlled entity 12 2,903,581 2,903,581
Property, plant and equipment 13 217,961 60,072
43,559,486 2,963,653
Total assets 68,295,430 9,610,276
LIABILITIES
Current liabilities
Other creditors and accruals 14 3,654,524 3,633,896
Provisions for employee benefit costs 133,091 16,686
3,787,615 3,650,582
Net assets 64,507,815 5,959,694
CAPITAL EMPLOYED AND RESERVES
Members’ subscriptions 15 17 17
Funds, which are comprised of:
- General Fund 1,431,078 662,752
- Long Term Fund 16 42,113,990 3,531,283
- Development Fund 16 20,962,730 1,765,642
64,507,815 5,959,694
B a l a n c e S h e e tA s a t 3 1 D e c e m b e r 2 0 0 3
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P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 47
P N G S D P L t d F i n a n c i a l S t a t e m e n t s
Members’ General Long Term Development
subscriptions Fund Fund Fund Total
US$ US$ US$ US$ US$
Balance at 1 January 2003 17 662,752 3,531,283 1,765,642 5,959,694
Revenue:
Dividends from OTML - 65,504,400 - - 65,504,400
Other Investment Income - - 1,550,451 879,511 2,429,962
Expenses:
Governance and Administrative - (2,543,763) - - (2,543,763)
Development and Investment Programs - - (62,325) (229,713) (292,038)
10% Dividend Withholding Tax paid to
Internal Revenue Commission (Papua New Guinea) - (6,550,440) - - (6,550,440)
Net surplus for the financial year - 56,410,197 1,488,126 649,798 58,548,121
Transfer from General Fund - (55,641,871) 37,094,581 18,547,290 -
Balance at 31 December 2003 17 1,431,078 42,113,990 20,962,730 64,507,815
Balance at 20 October 2001
date of incorporation 17 - - - 17
Revenue
Dividends from OTML - 7,171,184 - - 7,171,184
Other Investment Income - - 5,928 2,964 8,892
Expenses:
Governance and Administrative - (503,171) - - (503,171)
Development and Investment Programs - - - - -
10% Dividend Withholding Tax paid to Internal
Revenue Commission (Papua New Guinea) - (717,228) - - (717,228)
Net surplus for the financial period - 5,950,785 5,928 2,964 5,959,677
Transfer from General Fund - (5,288,033) 3,525,355 1,762,678 -
Balance at 31 December 2002 17 662,752 3,531,283 1,765,642 5,959,694
The allocation of revenues and expenses and transfers from the General Fund to the Long Term Fund and the Development Fund
are determined in accordance with the rules of the Company [refer note 2(n)].
S t a t e m e n t i n C h a n g e s i n E q u i t yA s a t 3 1 D e c e m b e r 2 0 0 3
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48 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
P N G S D P L t d F i n a n c i a l S t a t e m e n t s
For the Financial
period from
For the 20 Oct 2001,
Financial Year date of
ended incorporation, to
31 Dec 2003 31 Dec 2002
US$ US$
Cash flows from operating activities
Operating surplus before taxation 65,098,561 6,676,905
Adjustments for:
Depreciation 72,844 5,086
Interest income (1,436,497) (34,896)
Dividend income (65,507,563) (7,171,184)
Operating cash flow before working capital changes (1,772,655) (524,089)
Change in operating assets and liabilities
Other debtors and prepayments (13,842) (53,473)
Other creditors and accruals 137,033 3,650,582
Cash (used in)/generated from operations (1,649,464) 3,073,020
Dividends received (net of withholding tax) 58,957,123 6,453,956
Interest received 1,447,838 20,339
Net cash inflow from operating activities 58,755,497 9,547,315
Cash flows from investing activities
Payments for investment securities (62,974,379) -
Proceeds from sales of investment securities 12,694,644 -
Payments for investment in a jointly controlled entity - (2,903,581)
Payments for property, plant and equipment (230,733) (65,158)
Net cash outflow from investing activities (50,510,468) (2,968,739)
Cash flows from financing activity
Net proceeds from membership subscriptions - 17
Net cash inflow from financing activity - 17
Net increase in cash and cash equivalents 8,245,029 6,578,593
Cash and cash equivalents at the beginning of the
financial year/period 6,578,593 -
Cash and cash equivalents at the end of the
financial year/period 14,823,622 6,578,593
C a s h F l o w S t a t e m e n tF o r t h e F i n a n c i a l Ye a r e n d e d 3 1 D e c e m b e r 2 0 0 3
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P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 49
P N G S D P L t d F i n a n c i a l S t a t e m e n t s
These notes form an integral part of and should be read in conjunction with the accompanying financial statements.
1. General
The Company is incorporated and domiciled in Singapore. The address of its principal place of business is as follows: Level
7, Pacific Place, Champion Parade, PO Box 1786, Port Moresby, Papua New Guinea.
The principal activity of the Company is to promote sustainable development within, and advance the general welfare of the
people of Papua New Guinea, particularly those of the Western Province of Papua New Guinea, through supporting
programs and projects in the areas of capacity building, health, education, economic development, infrastructure,
community self-reliance, local community leadership and institutional capacity and other social and environmental purposes
for the benefit of those people.
2. Significant accounting policies
(a) Effect of Changes in Singapore Companies Legislation
Pursuant to the Singapore Companies (Amendment) Act 2002, with effect from the financial year commencing on or after
1 January 2003, Singapore-incorporated companies are required to prepare and present their statutory accounts in
accordance with the Singapore Financial Reporting Standards (“FRS”). Hence, these financial statements, including the
comparative figures, have been prepared in accordance with FRS.
Previously, the Company prepared its statutory accounts in accordance with Singapore Statements of Accounting Standard.
The adoption of FRS does not have a material impact on the accounting policies and figures presented in the statutory
accounts for the financial period ended 31 December 2002, except as disclosed in note 3 to the financial statements.
(b) Basis of Preparation
These financial statements have been prepared under the historical cost convention, as modified by the re-measurement
of available-for-sale investments at fair value. The preparation of financial statements in conformity with Singapore Financial
Reporting Standards requires the use of estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the financial year. Although these estimates are based on management’s best knowledge
of current events and actions, actual results may ultimately differ from those estimates.
(c) Revenue Recognition
Dividends are recognised when the right to receive payment is established.
Interest income is recognised on a time proportion basis, taking into account the principal outstanding and the effective
rate over the period of maturity, when it is determined that such income will accrue to the Company.
The difference between the market value of investment in securities [note 2(f)] and cost, as well as gains made on disposal
of investments, are included in revenue as other income from investments.
(d) Property, Plant and Equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses.
Depreciation is calculated on a straight-line basis to write off the cost of property, plant and equipment over the expected
useful lives of the assets concerned. The annual rates used for this purpose are:
%
Computers 100
Motor vehicles 20
Office furniture and equipment 331/3
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50 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
P N G S D P L t d F i n a n c i a l S t a t e m e n t s
2. Significant Accounting Policies Continued
Repairs and maintenance are taken to the income statement during the financial period in which they are incurred.
Where an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to
its recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating
surplus.
(e) Investment in Jointly Controlled Entity
Jointly controlled entities are corporations, partnerships or other entities over which there is contractually agreed sharing
of control by the Company with one or more parties. Investments in joint ventures are stated at cost less impairment
losses in the Company’s balance sheet. Where an indication of impairment exists, the carrying amount of the investment
is assessed and written down immediately to its recoverable amount.
On disposal of an investment, the difference between net disposal proceeds and its carrying amount is taken to the
income statement.
The investment in OK Tedi Mining Limited (“OTML”) has been reclassified from Investment in subsidiary to Investment in
jointly controlled entity as at 31 December 2003 as the Company shares control over OTML with other shareholders.
Accordingly, the investment in OK Tedi Mining Limited is not consolidated and consolidated financial statements are not
prepared by the Company.
(f) Investments
Investments in debt and equity securities are intended to be held for an indefinite period of time and may be sold in response
to needs for liquidity or changes in interest rates and are classified as available-for-sale. They are included in non-current
assets unless management has the express intention of holding the investment for less than 12 months from the balance
sheet date or unless they will mature within that period, in which case they are included in current assets.
Purchases and sales of investments are recognised on the trade date, which is the date that the Company commits to
purchase or sell the asset. They are subsequently carried at fair value, with independent revaluations performed by the
Company’s appointed investment manager on a monthly basis. Unrealised gains and losses arising from changes in the fair
value of securities are recognised in the income statement in the period in which they arise.
Securities listed on an exchange are valued at the latest traded price reported by the principal securities exchange on which
the issue is traded or, lacking any sales, at the closing bid prices.
Securities that are dealt on the Alternative Investment Market of the London Stock Exchange (‘AIM’) are valued by reference
to the closing middle market price based on the stock exchange daily official list on the relevant date.
Securities that are not listed on a stock exchange are valued as at the relevant date using the most recent and reliable
valuations available.
Units in collective investment schemes are valued at the mid market price.
(g) Impairment of Long Lived Assets
Property, plant and equipment and other non-current assets are reviewed for impairment losses whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised
for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of an asset’s
net selling price and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for
which there are separately identifiable cash flows.
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P N G S D P L t d F i n a n c i a l S t a t e m e n t s
2. Significant Accounting Policies Continued
(h) Leases
Operating leases
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are taken to the
income statement on a straight-line basis over the period of the lease.
When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor
by way of penalty is recognised as an expense in the period in which termination takes place.
(i) Deferred Income Taxes
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the financial statements. Currently enacted tax rates are used in the
determination of deferred income tax.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which
the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in joint ventures, except where the timing
of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not
reverse in the foreseeable future.
(j) Provisions
Provisions are recognised when the Company has a legal or constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made.
(k) Employee Benefits
Employee leave entitlement
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the
estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.
(l) Foreign Currency Translation
(1) Measurement currency
Items included in the financial statements are measured using the currency that best reflects the economic substance of
the underlying events and circumstances relevant to that Company (“the measurement currency”). The financial
statements of the Company are presented in United State Dollars (“US$”), which is the measurement currency of the
Company.
(2) Transactions and balances
Foreign currency transactions are translated into US$ using the exchange rates prevailing at the date of transactions.
Foreign currency monetary assets and liabilities are translated into US$ at the rates of exchange prevailing at the balance
sheet date or at contracted rates where they are covered by forward exchange contracts. Foreign exchange gains and
losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities
denominated in foreign currencies, are recognised in the income statement.
(m) Cash and Cash Equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than ninety days’
maturity from the date of acquisition including: cash and bank balances, treasury bills, commercial papers, certificates of
deposit and other eligible bills.
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52 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
P N G S D P L t d F i n a n c i a l S t a t e m e n t s
2. Significant Accounting Policies Continued
(n) Long Term Fund, Development Fund and General Fund
The Company is required by its rules to apply its income from Ok Tedi Mining Limited (“OTML”) and other sources to a Long
Term Fund, a Development Fund and a General Fund attributable to the operations of the Company.
In pursuing its objectives, the Company is able to invest and utilise its available resources from the Long Term Fund, the
Development Fund and General Fund in accordance with the Rules of the Company.
Long Term Fund
The Long Term Fund represents 2/3 of net income received from OTML after deducting operating expenses and all other
legal contractual obligations as specified in the Rules of the Program relating to the application of the income received.
Funds from the Long Term Fund must be invested in low-risk investments.
Before mine closure date, the funds will be used in the following order of priority:
(a) To the extent the amounts under Rules clauses 9.2 (b) and 9.3 (b) and that part of the commitment which is undrawn
are insufficient, to meet contractual obligations.
(b) To the extent the amount under clause 9.2 (c) is insufficient, if determined by the Board, to meet a call by OTML in
accordance with clause 12 (further capital requirements by OTML).
After mine closure the funds will be applied in the following order of priority:
(a) Operating expenses for the next 6 months in accordance with the budget approved by the Board from time to time.
(b) To the extent that distributions and investment income received after the mine closure date are insufficient to meet
contractual obligations as they fall due for payment.
(c) Calls from OTML (on Shareholders).
(d) To fund Sustainable Development Purposes in proportions to be determined by the Board of Directors in accordance
with Rules clause 10.4.
Development Fund
The fund is to be used to support and fund programs and projects that promote sustainable development in accordance
with the “Rules for the PNG Sustainable Development Program” scheduled to and forming part of the Articles of Association
of the Company.
The Development Fund represents 1/3 of income received from OTML after deducting operating expenses and all other
contractual obligations as specified in the rules relating to the application of income received.
In accordance with Rules clause 9.2 (e), the funds are to be applied as follows:
(a) 1/3 of these funds to be used in accordance with the Objects of the Articles of Association of the Company and at
the discretion of the Board for the benefit of the people of Western Province;
(b) 2/3 of these funds to be used in accordance with the Objects of the Articles of Association of the Company and at
the discretion of the Board for the benefit of the people of Papua New Guinea.
These funds will be used mainly to fund projects covering core areas in health, education, capacity building, economic
development, infrastructure, community self-reliance, local community leadership and institutional capacity and other social
and environmental purposes for the benefit of the people of Papua New Guinea, in particular the people of the Western
Province.
General Fund
In accordance with clause 14 of the “Rules for the PNG Sustainable Development Program”, a yearly budget of
administration costs must be prepared and approved by the Board of Directors.
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P N G S D P L t d F i n a n c i a l S t a t e m e n t s
2. Significant Accounting Policies Continued
(n) Long Term Fund, Development Fund and General Fund Continued
The Company budget prepared for each year after the third year of the Program must reflect that the portion of the
operating expenses attributable to the operation of the Company (but not to the running of the Program) should not exceed
15% of the average annual income of the Program during the immediate preceding 3 accounting years.
The administration costs cover the normal operating expenses of the Company and of the Program including (without
limitation) establishment costs, directors’ fees, the cost of directors’ and officers’ liability insurance, expenditure of the
program manager and the program manager’s remuneration, and any tax payable by the Company.
3. Adjustments to Prior Year’s Statutory Accounts
The adoption of FRS does not have material impact on the accounting policies and figures presented in the statutory
accounts for the financial period ended 31 December 2002 except for the use of US$ as the Company’s measurement
currency upon the adoption of INT FRS 19 Reporting Currency - Measurement and Presentation of Financial Statements
under FRS 21 and FRS 29 (INT FRS 19) during the financial year ended 31 December 2003.
Items included in the statutory accounts of the Company for the financial period ended 31 December 2002 were measured
and presented using Singapore Dollars (S$) as the Company was statutorily required to present its statutory accounts in
S$. Upon adoption of INT FRS 19, the Company determined US$ as its measurement currency as US$ best reflects the
economic substance of the underlying events and circumstances relevant to the Company. Items in the financial
statements, including the comparative figures, have been measured and presented in US$.
There is no significant impact on the results or net assets of the Company for the financial period ended 31 December
2002 arising from the adoption of the Singapore Financial Reporting Standards.
4. RevenueFor the Financial
period from
For the 20 Oct 2001,
Financial Year date of
ended incorporation, to
31 Dec 2003 31 Dec 2002
US $ US $
Dividends from investment in jointly controlled entity 65,504,400 7,171,184
Other dividends 3,163 -
Foreign exchange gains/(losses) 1,140,532 (26,004)
Gains/(losses) from market value of securities changes (150,230) -
66,497,865 7,145,180
Interest income on investments and cash balances 1,436,497 34,896
67,934,362 7,180,076
The Company received gross dividend income of US$65,504,400 (2002: US$7,171,184) from its investment in a jointly
controlled entity, OK Tedi Mining Limited, during the financial year. A 10% dividend withholding tax of US$6,550,440
(2002: US$717,228) was deducted in respect of this dividend income and paid to the Papua New Guinea Internal Revenue
Commission during the financial year (see note 8).
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54 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
P N G S D P L t d F i n a n c i a l S t a t e m e n t s
5. Expenses
For the Financial
period from
For the 20 Oct 2001,
Financial Year date of
ended incorporation, to
31 Dec 2003 31 Dec 2002
US $ US $
Constitutional & Establishment 19,872 32,298
Commitment fees paid to OTML (note 20) 796,667 -
Board of Directors 489,054 136,927
Board Committee - 8,638
Company Secretary 21,824 38,637
Advisory Council 15,244 -
Annual Report Meeting 44,319 97
Shareholders’ Costs 17,970 -
Administration 1,138,813 286,574
Total Governance and Administrative Expenses 2,543,763 503,171
Development Program Costs 223,003 -
Investment Program Costs 69,035 -
Total Development and
Investment Program Costs 292,038 -
6. Operating Surplus Before Tax
The following items have been included in arriving at the operating surplus before tax:
For the Financial
period from
For the 20 Oct 2001,
Financial Year date of
ended incorporation, to
31 Dec 2003 31 Dec 2002
US $ US $
Charging:
Depreciation 72,844 5,086
Rental expenses 46,138 -
Audit fees 28,156 8,586
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P N G S D P L t d F i n a n c i a l S t a t e m e n t s
7. Staff Costs
For the Financial
period from
For the 20 Oct 2001,
Financial Year date of
ended incorporation, to
31 Dec 2003 31 Dec 2002
US $ US $
Wages and salaries 308,973 30,527
Employee benefits and on-costs 61,935 4,579
Superannuation contributions 22,393 2,466
393,301 37,572
The number of persons employed at the end of the financial year was 11 (2002: 4).
8. Tax
Tax expense
For the Financial
period from
For the 20 Oct 2001,
Financial Year date of
ended incorporation, to
31 Dec 2003 31 Dec 2002
US $ US $
Tax expense attributable is made up of:
Current income tax - Foreign 6,550,440 717,228
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P N G S D P L t d F i n a n c i a l S t a t e m e n t s
8. Tax Continued
The foreign tax is the dividend withholding tax deducted from the dividend income that the Company received from its jointly
controlled entity, Ok Tedi Mining Limited. The 10% dividend withholding tax has been paid to the Papua New Guinea Internal
Revenue Commission during the financial year.
No Singapore income tax is payable on the basis that the dividend and interest income is not remitted to Singapore.
The tax expense on results differs from the amount that would arise using the Singapore standard rate of income tax due
to the following:
For the Financial
period from
For the 20 Oct 2001,
Financial Year date of
ended incorporation, to
31 Dec 2003 31 Dec 2002
US $ US $
Operating surplus before tax 65,098,561 6,676,905
Tax calculated at a tax rate of 22% (2002:22%) 14,321,683 1,468,919
Effect of different tax rates in other countries (7,860,528) (860,542)
Income not subject to tax (534,592) (1,846)
Tax benefits of deductible expenses not recognised 623,877 110,697
6,550,440 717,228
9. Cash and Cash Equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprises the following balances with less than
90 days’ maturity:
2003 2002
US$ US$
Cash and bank balances 874,103 6,578,593
Cash held in investment funds 4,960,628 -
Commercial papers and certificates of deposit 8,988,891 -
14,823,622 6,578,593
The weighted average effective interest rate on interest-bearing cash and cash equivalent balances at 31 December 2003
of US$14,497,450 was 0.83%.
Currency profile
US Dollars 14,507,783 6,487,973
PNG Kina 315,839 90,620
14,823,622 6,578,593
N o t e s t o t h e F i n a n c i a l S t a t e m e n t sF o r t h e F i n a n c i a l Ye a r e n d e d 3 1 D e c e m b e r 2 0 0 3
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P N G S D P L t d F i n a n c i a l S t a t e m e n t s
10. Available-for-sale Investments
2003 2002
US$ US$
Current
Corporate bonds (quoted) 9,479,702 -
Accrued interest 362,089 -
9,841,791 -
Long term
Government bonds (quoted) 34,693,667 -
Corporate bonds (quoted) 1,067,387 -
Equity securities (quoted) 4,220,922 -
Accrued interest 455,968 -
40,437,944 -
Total 50,279,735 -
Available-for-sale investments are accounted for in accordance with the accounting policy set out in note 2(f). The weighted
average effective interest rate on corporate and government bonds at 31 December 2003 was 3.75%.
Currency profile
US Dollar 35,602,971 -
Euro 10,525,476 -
Canadian Dollar 2,742,909 -
Sterling 649,874 -
Yen 292,909 -
Other 465,596 -
50,279,735 -
11. Other Debtors and Prepayments
2003 2002
US$ US$
Prepayments 62,844 52,026
Interest receivable 3,216 14,557
Deposits 4,471 1,447
70,531 68,030
N o t e s t o t h e F i n a n c i a l S t a t e m e n t sF o r t h e F i n a n c i a l Ye a r e n d e d 3 1 D e c e m b e r 2 0 0 3
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58 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
P N G S D P L t d F i n a n c i a l S t a t e m e n t s
12. Investment in Jointly Controlled Entity
2003 2002
US$ US$
Investment in a jointly controlled entity
(unquoted, at cost) 2,903,581 2,903,581
This amount represents stamp duty and legal fees incurred relating to the transfer of shares in the jointly controlled entity
to the Company.
Under the Companies Act, a company is a legal subsidiary of another company if the latter owns more than 50% of the
equity interest of the former. However, this legal subsidiary is not consolidated because it does not meet the definition of
subsidiaries under FRS 27: “Consolidated Financial Statements and Accounting for Investments in Subsidiaries” as the
Company does not have control in this legal subsidiary independent from other shareholders. Accordingly, this legal
subsidiary has been accounted for as an investment in a jointly controlled entity by the Company in accordance with FRS
31: “Financial Reporting of Interests in Joint Ventures” as this joint venture entity is jointly controlled by its shareholders.
Details of the jointly controlled entity are as follows:
Name of jointly Principal Country of business Equity
controlled entity activities and incorporation holding
Ok Tedi Mining Limited Mining and processing Papua New Guinea 52%
of copper ore
In accordance with the Funding Facility Deed dated 22 November 2001 and the Equitable Mortgage of Shares dated 7
February 2002 between the Company and Insinger Trust (Singapore) Limited, there is an equitable charge over the OTML
shares which creates an interest in the dividend stream from the shares held in OTML (but not the shares themselves).
In 2003, the jointly controlled entity changed its accounting year end from 30 June to 31 December with its financial
statements covering the eighteen months period ended 31 December 2003.
The jointly controlled entity was transferred by BHP Minerals Holdings Proprietary Limited to the Company for nil
consideration on 7 February 2002 and this gave rise to a discount on acquisition of $105,785,694.
The following amounts represent the Company’s 52% share of the results and net assets of the joint venture if the
Company had equity accounted for its share of the results and net assets of its joint venture. When applying equity
accounting, the discount on acquisition is amortised to the income statement over the estimated useful life of the related
non-current assets.
N o t e s t o t h e F i n a n c i a l S t a t e m e n t sF o r t h e F i n a n c i a l Ye a r e n d e d 3 1 D e c e m b e r 2 0 0 3
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P N G S D P L t d F i n a n c i a l S t a t e m e n t s
12. Investment in Jointly Controlled Entity continued
2003 2002
US$ US$
At the beginning of financial year at 7 February 2002 / At date of acquisition 11,268,490 2,903,581
Share of results before tax 65,067,308 23,561,594
Share of tax paid to the Papua New Guinea tax authorities (17,871,407) (7,989,422)
Share of results after tax 47,195,901 15,572,172
Share of other recognised losses (5,967,002) -
Amortisation of discount on acquisition 11,975,739 9,979,782
Dividends received (65,504,400) (7,171,184)
Exchange differences 16,359,158 (10,015,861)
At the end of the financial year/period 15,327,886 11,268,490
The Company’s share of assets and liabilities of the joint venture comprises:
2003 2002
US$ US$
Non-current assets 111,746,032 100,205,136
Current assets 103,207,827 90,378,900
Current liabilities (38,990,113) (20,832,949)
Non-current liabilities (76,805,687) (62,676,686)
Net assets 99,158,059 107,074,401
Contingent liabilities
The Company has incurred the following contingent liabilities in relation to its interests in the jointly controlled entity:
2003 2002
US$ US$
Bank guarantees 14,426 70,302
Capital commitments
The Company has incurred the following capital commitments in relation to its interests in the joint venture:
2003 2002
US$ US$
Capital expenditure 818,237 1,291,373
N o t e s t o t h e F i n a n c i a l S t a t e m e n t sF o r t h e F i n a n c i a l Ye a r e n d e d 3 1 D e c e m b e r 2 0 0 3
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P N G S D P L t d F i n a n c i a l S t a t e m e n t s
13. Property, plant and equipment
Office furniture
Computers Motor vehicles and equipment Total
US$ US$ US$ US$
Cost
At 1 January 2003 12,383 51,290 1,485 65,158
Additions 20,566 65,030 145,137 230,733
At 31 December 2003 32,949 116,320 146,622 295,891
Accumulated depreciation
At 1 January 2003 2,939 1,850 297 5,086
Depreciation charge 23,641 20,505 28,698 72,844
At 31 December 2003 26,580 22,355 28,995 77,930
Net book value
At 31 December 2003 6,369 93,965 117,627 217,961
Net book value
At 31 December 2002 9,444 49,440 1,188 60,072
14. Other creditors and accruals
2003 2002
US$ US$
Amount due to BHP Billiton Limited 3,500,000 3,500,000
Other creditors and accruals 154,524 85,887
Amount due to directors - 48,009
3,654,524 3,633,896
The amount of $3,500,000 due to BHP Billiton Limited (“BHP”) was drawn from the funding facility per the Funding Facility
Deed signed between the Company and BHP on 22 November 2001, and is secured by a charge over the dividend income
stream from the shares held in OTML. Interest is not payable on the amount owing to BHP.
15. Members’ subscriptions
As a Company “limited by guarantee”, the Company does not have any issued shares or shareholders. At 31 December
2003, there were 3 members of the Company (2002: 3).
N o t e s t o t h e F i n a n c i a l S t a t e m e n t sF o r t h e F i n a n c i a l Ye a r e n d e d 3 1 D e c e m b e r 2 0 0 3
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P N G S D P L t d F i n a n c i a l S t a t e m e n t s
16. Long Term and Development Funds
Long Term Fund
The Long Term Fund is accounted for in accordance with the policy set out in note 2(n).
2003 2002
US$ US$
At the beginning of the financial year / at 20 October 2001 3,531,283 -
Investment income for the year/period 1,550,451 5,928
Investment expenses (62,325) -
Transfer from General Fund 37,094,581 3,525,355
At the end of the financial year/period 42,113,990 3,531,283
The weighted average rate of return on investment for the Long Term Fund for the year was 8.06% (2002: 0.58%).
Development Fund
The Development Fund is accounted for in accordance with the policy set out in note 2(n), and is allocated between the
Western Province Program Fund and the National Program Fund as follows:
Western Province National Total 2003 Total 2002
Program Fund Program Fund US$ US$
At the beginning of the financial year
at 20 October 2001 588,547 1,177,095 1,765,642 -
Investment income for the year/period 293,170 586,341 879,511 2,964
Investment expenses (2,237) (4,473) (6,710) -
Development program expenses (125,238) (97,765) (223,003) -
Transfer from General Fund 6,182,430 12,364,860 18,547,290 1,762,678
At the end of the financial year/period 6,936,672 14,026,058 20,962,730 1,765,642
The weighted average rate of return on investment for the Development Fund for the year was 9.15% (2002: 0.58%).
17. Commitments
Operating lease commitments
The future aggregate minimum lease payments under non-cancellable operating leases contracted for at the reporting date
but not recognised as liabilities, are as follows :
2003 2002
US$ US$
Not later than 1 year 32,468 -
Later than 1 year but not later than 5 years 60,224 -
92,692 -
N o t e s t o t h e F i n a n c i a l S t a t e m e n t sF o r t h e F i n a n c i a l Ye a r e n d e d 3 1 D e c e m b e r 2 0 0 3
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N o t e s t o t h e F i n a n c i a l S t a t e m e n t sF o r t h e F i n a n c i a l Ye a r e n d e d 3 1 D e c e m b e r 2 0 0 3
18. Financial Risk Management
The Company’s activities expose it to a variety of financial risks, including the effects of changes in debt and equity market
prices, foreign currency exchange rates and interest rates. The Company’s risk management programme focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the
Company by maintaining an appropriately diversified investment portfolio across asset classes and currencies.
The Company has appointed a professional investment manager to carry out the investment activities in accordance with
the investment strategy and policies approved by the Board of Directors. An Investment and Risk Management Committee
of the Board has been established to monitor investment and risk management performance and the performance of the
investment manager.
The Company does not have any significant concentrations of credit risk, and policies are in place that limit the amount of
credit exposure to any one financial institution.
19. Fair Values of Financial Assets and Financial Liabilities
The carrying amounts of the following financial assets and liabilities approximate their fair values: cash and cash
equivalents, other debtors and prepayments, available-for-sale investments and other creditors and accruals.
20. Related Party Transactions
The following transactions took place between the Company and related parties during the financial year:
(a) Commitment fees paid
Commitment fees of US$796,667 (2002: nil) were paid to a jointly controlled entity in accordance with Clause 2.2 of the
Subsidy Deed between the Company and Ok Tedi Mining Limited signed on 11 December 2001 and are non-recurrent.
(b) Directors’ remuneration
Directors’ remuneration included fees, salary and other emoluments (including benefits-in-kind) computed based on the cost
incurred by the Company, and where the Company did not incur any costs, the value of the benefit is included. In 2003,
the total directors’ remuneration is US$374,552 (2002: US$136,927), comprising directors’ fees of US$347,375 and
allowances of US$27,177. There has been no change in the amount of remuneration payable to individual directors. In
addition a director received US$35,000 from the jointly controlled entity in respect of his services as a director of that
entity.
21. Subsequent Events
The following non-adjusting subsequent events have arisen after the balance date:
(a) Dividends from jointly controlled entity
Gross dividends from OTML of US$20.8 million (US$18.72m net) and US$17.4 million (US$15.6 million net) were
received on 31 January 2004 and 31 March 2004 respectively.
(b) Repayment of advance
The US$3.5 million amount due to BHP Billiton Limited (note 14) was repaid on 22 March 2004.
22. Authorisation of Financial Statements
These financial statements were authorised for issue in accordance with a resolution of the Board of Directors of PNG
Sustainable Development Program Limited on 2 April 2004.
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The Company is a party to a number of the agreements that
were entered into to give effect to BHP Billiton’s exit from Ok
Tedi Mining Limited. A brief description of the documents to
which the Company is a party, and a summary of the
Company’s obligation under each document, is as follows:
Master Agreement dated 11 December 2001 betweenthe Independent State of Papua New Guinea, MineralsResources Ok Tedi No. 2 Limited (MROT), BHP BillitonLimited, BHP Minerals Holdings Proprietary Limited, InmetMining Corporation, Ok Tedi Mining Limited, and PNGSustainable Development Program Limited. This
agreement sets out how the overall transaction is to be
documented and completed. The Company’s principal
obligation under this agreement is that it agreed to comply
with the Rules of the PNG Sustainable Development Program.
Fourth Restated Shareholders’ Agreement dated 11December 2001 between the Independent State of PapuaNew Guinea, Inmet Mining Corporation, MineralResources Ok Tedi No. 2 Limited, PNG SustainableDevelopment Program Limited, and Ok Tedi MiningLimited. This agreement restates the agreements between
the new shareholders of OTML and, where necessary,
amends the previous shareholders’ agreement to reflect the
new shareholding in OTML following the transaction. No
special obligations are imposed on the Company by this
agreement, which governs the relationship between the
shareholders of OTML.
Deed of Indemnity - BHP Billiton dated 11 December 2001between PNG Sustainable Development Program Limitedand BHP Billiton. Under this deed the Company has agreed
to indemnify any member of the BHP Billiton Group (other
than OTML) and their directors officers and employees
against:
• Any liability under a claim for environmental damage
arising out of the operation of the mine after the effective
date of the transaction (7 February 2002); and
• Any claim made in contravention of the undertaking given
by the State to the BHP Billiton parties not to prosecute
them for a breach of environmental laws in relation to the
operation of the mine prior to the effective date as
contained in section 5 of the Mining (Ok Tedi Mine
Continuation (Ninth Supplemental) Agreement) Act 2001
(the Act).
Deed of Indemnity - The State dated 11 December 2001between PNG Sustainable Development Program Limitedand the Independent State of Papua New Guinea. Under
this deed the Company has agreed to indemnify the State
against all liability arising under a claim for environmental
damage caused by the operation of the mine before the
effective date resulting from an act or omission by BHP
Billiton in breach of its obligations under its management
agreement or in breach of environmental law.
Option Deed dated 11 December 2001 between PNGSustainable Development Program Limited and Ok TediMining Limited. Under this deed the Company has agreed at
the request of OTML to indemnify the independent directors
of OTML in respect of claims against them arising out of their
acting as such director to the extent that appropriate
insurance is not available on commercial terms.
Subsidy Deed dated 11 December 2001 between PNGSustainable Development Program Limited and Ok TediMining Limited. Under this deed the Company has agreed to
pay as a non-refundable subsidy an amount equal to
increased borrowing costs and charges incurred by OTML as
a result of not being a subsidiary of BHP Billiton up to an
average weighted increase of all rates, costs and charges of
2.5% and on a maximum loan commitment of US$120
million.
Funding Facility Deed dated 22 November 2001 betweenBHP Billiton Limited and PNG Sustainable DevelopmentProgram Limited. Under this deed BHP Billiton has agreed
to provide a facility to the Company of up to (currently)
US$85 million to enable the Company to meet:
• Capital calls from OTML;
• A claim under an indemnity given by the Company;
• A financing subsidy to OTML under the Subsidy Deed; and
• In certain circumstances, operating expenses.
The facility reduced to US$70 million on 7 February 2004,
and is not available after 7 February 2005. Advances under
the facility do not bear interest, and repayments are only
required out of available cash flow.
All of the Company’s obligations (both actual and contingent)
under the Deed of Indemnity - BHP Billiton, the Deed of
Indemnity - the State, the Funding Facility Deed, and the
Subsidy Deed, are secured by a charge over the dividend
stream attached to the shares held by it in OTML (but not
the shares themselves). This charge is held by a security
trustee, Insinger Trust (Singapore) Limited (Insinger), in trust
parri passu for all parties entitled to a payment under any of
the above documents. Accordingly, the Company is also a
party to the following documents (all dated 7 February 2002)
which give effect to these security arrangements:
• An Equitable Mortgage of Shares in favor of Insinger;
• A Security Deed between PNGSDPL, OTML and Insinger;
and
• A Security Trust Deed between PNGSDPL, BHP Billiton,
ISPNG, OTML and Insinger.
AGREEMENTS ENTERED INTO BY THE COMPANY IN RELATION TO BHP BILLITON’S EXIT FROM OTMLAND TRANSFER OF ITS SHARES TO PNGSDP LTD
A n n e x e s
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64 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
M a p sP a p u a N e w G u i n e a
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66 P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D
W e s t e r n P r o v i n c e
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P N G S U S TA I N A B L E D E V E L O P M E N T P R O G R A M L I M I T E D 67
Details Western Province PNG
Population 153,304 5,190,786
Number of Districts 3 87
1. Middle Fly District 55,853 persons
2. North Fly District 50,914 persons
3. South Fly District 46,537 persons
Number of Local Level Government areas 14 297
Proportion of PNG population 3.0%
Average annual growth rate 1990 - 2000 3.3% 3.2%
Sex Ratio 107 males p/100 females 108 males p/100 females
Population Density 2 persons per km2 11.2 persons per km2
Average household size 6.0 persons 5.1 persons
Land mass 97,300 km2 462,840 km2
Arable Land Area 2,757 km2 60,235 km2
Crude birth rate 46.7% 36.1%
Crude death rate 10.8% 11.8%
Infant mortality rate (per 1,000 live births) 54 73
Child mortality rate per 1,000 live births) 19 31
Population with no education (1990) 52.7% -
Population with Grade 6 + education (1990) 25.7% 16.5%
Literacy rate (1990) 67% 45%
% of persons in formal employment (1990) 21% 18%
% of persons in subsistence &
semi-subsistence employment 1990 69% 74%
B a s i c S t a t i s t i c s
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C o r p o r a t e D i r e c t o r y
Board of DirectorsDr Ross Garnaut AO BA PhD (Chairman)
Sir Ebia Olewale Kt
Honorable Jim Carlton AO BSc
Mr Donald Manoa
Ms Patricia Caswell BA (Hon) Dip Ed BEd
Dr Jakob Weiss BA Econ MBA PhD
Mr Lim How Teck B Acc CPA FCMA AIBA PBM
Registered OfficeDrewCorp Services Pte Ltd
20 Raffles Place
#09-01 Ocean Towers
Singapore 048620
Company SecretaryMs Madelyn Kwang
Tel (65) 6531 4187
(65) 6531 2266
Fax (65) 6533 1542
(65) 6533 7649
Head Office7th Floor
Pacific Place
PO Box 1876
Port Moresby 121
Papua New Guinea
Chief Executive OfficerMr Robert Igara CMG BEcon Grad Dipl in Intl Law MBA
Tel (675) 320 3844
(675) 320 3845
(675) 320 3846
Fax (675) 320 3855
BankersBank of South Pacific
Commercial Centre
PO Box 1710
Boroko
Papua New Guinea
Bankers continuedANZ Banking Group Limited
31/F, One Exchange Square
8 Connaught Place
Central Hong Kong
ANZ Banking Group
10 Collyer Quay
#17-01/07 Ocean Building
Singapore 049315
Funds ManagerNewton Investment Management Limited
71 Queen Victoria Street
London EC4V 4DR
United Kingdom
AccountantsDeloitte Touche Tohmatsu
Level 12, Deloitte Tower
Douglas Street, P.O.Box 1275
Port Moresby, Papua New Guinea.
AuditorsPricewaterhouseCoopers
8 Cross Street #17-00
PWC Building, Singapore 048424
PricewaterhouseCoopers
Credit House, Cuthbertson Street
PO Box 484
Port Moresby
Papua New Guinea
LawyersGadens Lawyers
PO Box 1042
12th Floor Pacific Place
Port Moresby
Papua New Guinea