Mayur Resources (MRL) has been granted environmental approval for bulk sample extraction of coal in Papua New Guinea (PNG), as well as PNG’s first vertically integrated lime and cement project.

Example of coal outcrop in Gulf province

This is the first time that the Conservation and Environmental Protection Authority (CEPA) has issued an Environmental Permit for coal bulk sampling in PNG to enable commercial grade shipments. The permit covers coal bulk sample extraction from EL1875, which is owned by the company’s subsidiary in PNG (Waterford Ltd) and is situated in Gulf Province, including the Depot Creek project in PNG.

The conditions of the permit include the submission and implementation of a robust Environmental Management Plan (EMP). The Permit enables the provision of bulk samples of coal for market and end user testing. The objectives of which would be to secure bankable and legally binding offtake contracts with various Asian markets that have been seeking to secure coal for power generation from PNG as an alternative supply jurisdiction with the benefit of the coal being low in environmental contaminants.

MRL Managing Director, Paul Mulder sees this as an exciting step in bringing PNG coal to the international market as a potential new source of energy coal.

“The coal from PNG is attractive as it possesses very low in situ ash content of 3-10 per cent, sulphur of around 0.5 per cent, and tests to date have yielded good energy values without the need for washing,” said Mr Mulder. “Therefore, this type of thermal coal has strong demand in Asia. It is of superior quality and cleaner compared to, for example, much of the thermal coal that Australia utilizes for its own power generation requirements. Coal still provides most of Australia’s critical baseload power via the provision of reliable, affordable and sustainable electricity supply to support its first world living standards. Coal is also the dominant fuel source in China and India as well as in SE Asia.”

The bulk sampling test works will also help to confirm suitability of the coal for use in domestic power generation. MRL other subsidiary (Mayur Power Generation PNG Ltd) is also developing a proposed 50MW power station outside PNG’s industrial port city of Lae at the Western Tidal Basin, and would propose to use largely domestic coal as a fuel source for this power station. Lae currently suffers from chronic power supply issues and has significant reliance on burning diesel and HFO for its power needs.

The Lae project aims to provide a new supply of baseload power and help the PNG government achieve its electrification targets of 70 per cent by 2030.

Given coal has never been mined in PNG, any future production and subsequent exports from PNG would represent just a tiny fraction of the international seaborne market that is dominated by the likes of Australia (exporting over 200 million tonnes per year) and Indonesia (exporting over 350 million tonnes per year). Moreover, for context, at 50MW the Lae power project is also very small by world standards and would only require around 300,000 tonnes of coal per annum.

Indicative project layout on Kido coastline

PNG’s first vertically integrated lime and cement project

Adding to its cache, Mayur Resources was also granted CEPA for the development of its Port Moresby vertically integrated lime and cement project in PNG. The project, which is owned by the company’s subsidiary in PNG Mayur Iron, is located on EL2303 situated in Central Province, approximately 25km north of the capital Port Moresby and 7km from the ExxonMobil PNG LNG plant and export terminal.

The permit has been issued for quarrying of limestone and processing into quicklime, clinker and cement. The permit conditions and associated environmental management documents shall guide the project development activities that include the extraction of limestone, processing of this material and the manufacture of quicklime, clinker and cement, together with the associated transport, utilities and other infrastructure.

Following the delineation of the maiden JORC Resource in early 2018 and a subsequent capital raise on the ASX by the company in April 2018, a definitive feasibility study commenced on the commercialisation of the lime resource to initially produce 250,000 tonnes of quicklime and 1,500,000 of clinker/cement. This will be PNG’s first quicklime and cement project and will help provide a key piece of industrial ‘nation building’ infrastructure adjacent to the US$19 Billion PNG LNG facility. The definitive feasibility study is due for completion in final quarter of 2018.

Mr Mulder acknowledges that this is “yet another significant development for Mayur’s nation building project portfolio in PNG”.

“This is our strategy of import replacement, vertical integration and establishing new and competitive export industries to build wealth inflows into PNG. This permit grant is a key project enabling development milestone and shows the progressive attitude being shown by the PNG regulatory authorities and their commitment to diversifying and adding in country value to PNG’s mineral wealth and promoting the industrialisation of PNG,” said Mr Mulder.

Mayur’s facility design proposes an integrated clinker/cement, quick lime and power facility so as to employ modern waste heat recovery technology to increase energy efficiency and reduce emissions. With the plants proximal location to Port Moresby the plant also brings new options to bring in waste material from Port Moresby and its near surrounds and more effectively utilise such material by deploying proven European and Asian waste management technologies.