Tourism still #1 industry

Papua New Guinea recorded the highest percentage of visitor arrivals in the region last year, beating its 2006 record by 34 percent.

The country saw 104,122 visitors compared to 77,731 in 2006.

Overall, the region was visited more by 4.1 percent than in 2006, a result that has pleased south-pacific.travel.

“Given the increased cost of oil, this level of growth is a pleasing result.

“It shows that tourism continues to lead economic development in the South Pacific,” chief executive of south-pacific.travel, Tony Everitt said.

A total of 1,344,685 visitors mostly from Australia and New Zealand visited Cook Islands, Fiji, French Polynesia, Kiribati, New Caledonia, Niue, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu who are members of the south-pacific.travel.

This is compared to the 1,282,267 visitors that visited our shores in 2006.

“Contribution from our southern markets has grown from 39 percent of total visitors to 49 percent in 2007.

“We think this is about a good level to maintain—southern and northern markets each contributing half of our total visitors.

“For one thing, the South Pacific is an ideal winter escape for people living in temperate countries. We have two winters on our planet so it makes sense to draw on both. Also, we want to keep a balanced portfolio of markets so that we don’t become overly exposed to any local downturn,” Everitt said.

In terms of numbers, Vanuatu was behind PNG in number of arrivals with 13,166 visitors—bringing their total number of arrivals to 81,345. Tonga’s arrivals totalled 46,040—an increase of 6589 visitors largely because of the Pacific Islands Forum meeting, while Samoa’s arrivals increased by 6368 to 122,250.

Visitors to the Cook Islands increased by 4937—taking their total number of visitors to 97,019. Increases were also recorded for New Caledonia, Solomon Islands, Niue and Kiribati. Tuvalu visitor arrivals was 1130—a decrease of one visitor.

Factors driving this growth, Everitt said was increased air services and destination marketing. The two big tourist destinations in the region, Fiji and French Polynesia still had the highest number of arrivals. But these numbers were lower than the 2006 arrivals.

Fiji was the leading destination in the region with 539,255 visitors but this was a decrease of 5913 from its 2006 record.

The political instability was the cause of the decline in the number of visitors to Fiji and lost earnings during the year which was estimated at F$200 million.

“Publicity of political events in Fiji impacted on visitor numbers in 2007. Some visitors may have diverted to other South Pacific destinations as a result.

French Polynesia recorded 218,241 visitors, a decline of 221,549 from 2006.

“In French Polynesia’s case, the USA is a key market and its downturn as a result of the economic issues there has impacted the total result. It’s pleasing to see increases in smaller destinations like Kiribati. The introduction of Air Pacific’s reliable weekly service to Kiritimati has allowed further development of niche tourism products, such as fishing tours in the Japanese market,” Everitt says.

Visitors to the region from Australia increased by 6.9 percent to 374,286 while from New Zealand it grew by 7.8 percent to 270,371.

“This continues a trend this decade of strong growth from our southern markets. There was a decline in visitors travelling from northern markets of Europe, Japan and the USA, although visitors from Asia and Canada grew strongly,” Everitt says.

The figures do not include cruise visitors (because historically these have been reported separately) but Everitt estimates the cruise visitor arrivals to be 900,000.

“The industry’s target earnings of US$2 billion per annum by 2010 could be challenged by current external events, especially the price of oil, a possible US recession and a possible economic slowdown in our second largest market—New Zealand.

“Whilst we imagine that most airlines will have some forward cover on the price of oil which may protect them for a short period from current price spikes above US$100, if oil stays at this level for an extended period there could be further price increases for consumers.

“Therefore, tourism businesses need to work even harder to target consumers who are less price sensitive.

“As our third largest market, a US recession would also be a dampener. Businesses should right now be carefully looking at their market portfolios to see where they could get some relief.

“Emerging markets for example may provide an opportunity to partially offset any ongoing losses from the US.

“Some economists think Asia might be less affected by a global economic slowdown.

“It is encouraging to see strong growths in Asian visitors to the South Pacific in 2007, albeit off a small base.

“Cruise is another area we think may be less impacted by both economic conditions and oil costs. Cruise customers are mostly retired with freehold property, so are less affected by real estate market downturns and high interest rates.

“And obviously, cruising is a more fuel efficient form of transport.” Everitt said.

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Reviving interest in PNG mining

Mining, which continues to be a driving force in Papua New Guinea’s economy, is undergoing a resurgence aimed at reviving interest in undeveloped prospects to further boost investment in the sector.

The Minerals Resources Authority (MRA), a new body set up by the government, has been tasked to stimulate mineral exploration through its Geological Survey Division (GSD).

“We have to be thinking ahead trying to find now in 2008, the mines that will be developed in 10-20 years time.

“So it’s an ongoing game where you have exploration, discovery and a delay of at least 10 or 20 years usually before a mine is developed.

“If you don’t have exploration, then you are reducing the prospects of being able to continue as a successful mineral-based economy,” says GSD Executive Manager, Professor Hugh Davies.

Mines like Ramu Nickel and Hidden Valley projects which are currently on advance development stages were discovered more than 20 years ago.

To encourage exploration, the GSD is developing new information and ideas that would help exploration companies to explore in new areas and hopefully find minerals which could result in new mines.

This information includes geological maps and information on how rocks originated and how the earth’s crust has moved with time.

The division will re-write a lot of work that was done in the past which are at the moment in manuscript forms. This information will be digitised and published in the MRA website so investors can easily access without having to come to PNG.

Work which are in manuscript forms include reasonably detailed geological maps on the western part of the Central ranges, which the then PNG Geological Survey and the Australian government geologists prepared in 1971-1972.

“We are now improving those maps by digitising them. We can now print them in colour, we can now make the digital maps available on the web,” says Davies.

The maps from the past contain information including places where people have discovered minerals previously.

A map may contain a “dot” and “Au” meaning that gold was found in this point and in the information accompanying that map it will state whether this was just an occurrence of few flakes gold or whether there was an act of alluvial mining at that point.

This information can be used as a factor in determining the potential of gold in that particular area and hence a decision to explore the area which may lead to a new mine.

“Other reports that will be digitised include those that were submitted by mining companies and our own geologists and overseas researchers. New exploration companies may be interested in previous geological work including results of drilling and stream sediment sampling.

“If people don’t know about those reports, then they can’t use them in developing their own ideas,” said Professor Davies.

He said that exploration was an ideas game. Exploration companies must believe that they could improve what has been done previously, either by obtaining new data or by applying new concepts.

Under the MRA, the GSD aims to recruit the best geologists to effectively implement its goals. It is hoped this will result in lifting the profile of the industry and encourage further investment and exploration.

The GSD’s efforts to stimulate exploration are in line with the MRA’s mission which is to effectively promote a healthy and sustainable mineral industry.

Davies’ study of Papua New Guinea’s geology spans half a century—beginning in the 1950s.

He has seen the mining industry grow from alluvial mining to world class copper and gold mines and operated under all sorts of administration from the colonial administration in small teams right through to the fully-fledged Department of Mining before its replacement.

The GSD’s general function is to acquire and generate geoscience data, store it systemically and make it readily available to stakeholders including exploration companies, geoscience researchers and members of the public.

This data includes geological, geochemical and geophysical data.

Mining companies need these sorts of information to be able to further research and determine which rocks have mineral deposits and which do not.

Unless companies have this information on hand, they cannot advance further in their efforts to explore for minerals.

Other data collected are used for awareness of geological hazards and advice on such matters as prospectivity.

The economy of Papua New Guinea has enjoyed good returns from mineral export receipts in the last five years.
In the December quarter of 2005, the Bank of Papua New Guinea reported in its Quarterly Economic Bulletin (QEB) that the minerals sector contributed 52.9% of total merchandise exports receipts to the government.

In 2006, total mineral export receipts excluding crude oil were K7499.3 million. This represented 59% of the total value of merchandise export which was K12, 617 million.

Last September quarter, mineral export receipts excluding crude oil totaled K1832.3 million and represented 55.7% of total merchandise exports, which was K3289 million. —By Sam Vulum

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Trukai’s remarkable breakthrough

Low rice supply in the Australian market resulting from prolonged drought conditions provided an opportunity for a Papua New Guinea company, Trukai Rice Limited, to take what is seen as a historic move by any PNG firm in the manufacturing sector.

It is a remarkable breakthrough for Trukai which is now leading the way by milling and packing rice in Lae to supply the Australasian market.

Trukai has further upgraded its high-tech manufacturing facility to world-class food technology standard and is processing paddy rice from Thailand and other sources for direct placement into Australian and also New Zealand supermarkets.

Trukai made a multi-million Kina investment in the Lae rice mill, which now works 24 hours a day to meet the demand for its packaged products, boldly addressing the import-export balance between PNG and its largest neighbouring market.

Apart from the Australian drought conditions, the opportunity has also arisen partly because Papua New Guinea has demonstrated its ability to mill and pack to the highest standards, with some relative cost advantages.

Trukai has been supplying a major share of the PNG market as well as exporting to the Solomon Islands for several years.

The recognition of its competitive efficiency by the Australian import and supply industry is a very pleasing development for one of Papua New Guinea’s most determined and committed manufacturers.

“We have employed extra people, because we have increased our work pattern from 10 shifts a week to 21.

“In other words, we are now a 24/7 operation,” manufacturing manager Steven Olds said.

“This is the era of globalisation and with new equipment and capital investment, plus skills and determination of our staff, we are meeting the challenge of being a first-choice manufacturer.

“We meet the stringent quality standards of the Australian market because we were already producing a top quality product for our PNG customers.

“The new equipment, planning and training and the need to be globally competitive in our costs and productivity, are all driving the business to better performance levels.

“The news is good for PNG manufacturing, and it’s also a very tangible boost to the morale of our workforce,” Olds said.