MRDC CLARIFIES ON QUESTIONS BY NORTH FLY MP

The Mineral Resources Development Company (MRDC) issues this statement in direct response to recent Parliamentary remarks made by the Member for North Fly, concerning MRDC’s management of Western province’s derived investments.

MRCD stated that while robust public discourse is vital, it must be underpinned by facts and not political rhetoric.

“MRDC has consistently managed the Mineral Resources Ok Tedi 2 (MROT2) portfolio with strategic intent and a supportive board comprising Chairman and Governor of Western Province, the Provincial Administrator, the three District Development Authority Representatives, the Secretary for Mineral Policy & Geohazard Management, and the MRDC Managing Director.

It is important that the public, especially the people of Western province, understand the broader picture. MRDC is not merely a custodian of resource funds – it is a long-term investment partner, mandated to create enduring wealth for the landowners and provincial government beyond the life of the Ok Tedi mine.

OTML Dividend distribution

The restructure of the shareholding of Ok Tedi Mine resulted in the Ok Tedi landowners and the Fly River Provincial Government owning 33% of the Ok Tedi Mine.

Mineral Resources Ok Tedi 2 (MROT2) is owned by the Fly River Provincial Government and holds 12% in OTML. Since the shareholding restructure, MROT received a total dividend of K339 million from 2016 to 2023.

Of this amount, investment was K122 million, tax to IRC was K40.7 million, School Fee Subsidies was K13.5 million, Provincial Government was K81.4 million, and DDA’s for three districts was K122 million, of which North Fly DDA got K40.6 million.

MROT2 Investments under MRDC

MRDC’s mandate to manage the interest of MROT2 in the Ok Tedi Mine is through the OK Tedi Agreement.

The Provincial Executive Council of the Fly River Provincial Government authorizes MRDC to invest 40% of the OTML dividends on investments, while 60% is distributed to the Provincial Government and the DDAs.

The K122 million (40% dividend) was used to grow the assets and generate sustainable income.

Under MRDC management, the total MROT2 investment portfolio has grown by 97% to a value of K974 million over the 16 years. This excludes the value of its 12% interest in the mine.

This growth was achieved by building a balanced and resilient portfolio.

The investments questioned raised by North Fly MP in Parliament are integral to our diversification strategy. These are not made at the expense of Western Province, they are made for Western Province. They include shares in high-performing national and international assets,” MRDC stated.

They include:

Hospitality: Hilton Port Moresby, and Pearl Resort, Fiji.

Property: portfolio include Fly River Haus, Prestige Apartments, and other commercial properties.

Petroleum & Energy: Dirio Gas & Power Plant, and Pasca gas project.

Banking: BSP shares.

Healthcare: Pacific International Hospital.

Stocks: ASX and POMSOX listed stocks.

Aviation: PNG Air

MRDC said all investments provide reasonable returns and long-term asset growth for the company.

“Dividends from other investments are reinvested to grow the value of the assets rather than be paid as cash dividends to beneficiaries.

This is a wise decision by the MROT2 Board. No money is lost or stolen. They are reinvested for the future generation.

The North Fly DDA is represented on the board of MROT2, so one would expect that the North Fly MP would be fully briefed on the operations of the company,” MRDC said.

Audited Accounts of MRDC and MROT2

“The MRDC financials have been audited up to 2023. The audit has been carried out by Ernst & Young, one of the big fours, and they have given an unqualified opinion of the accounts. The 2024 audited accounts will be presented to the Trustee-Shareholder in July, 2025.

The financial accounts for MROT and the other Ok Tedi subsidiaries (MRSM and MRCMCA) have been audited up to 2023, with an unqualified opinion on the accounts. The audits were done by KPMG. The 2024 audited accounts of the three companies will also be presented to their beneficiaries in July this year.

Direct Financial Distribution to North Fly District

Contrary to claims of no development support, MRDC has consistently made direct payments from the MROT2 dividends to the District Development Authorities (DDAs), including the North Fly DDA under the chairmanship of the North Fly MP.

These funds, representing a share of the annual District Authority (DA) allocation, are provided for the express purpose of funding local development projects at the district level. From 2016 to 2023, the North Fly DDA has received the following payments:

2016: K2.16 million

2017: K2.52 million

2018: K1.44 million

2019: K5.76 million

2020: K7.92 million

2021: K6.48 million

2022: K7.92 million

2023: K6.48 million

The total direct payment to the North Fly DDA from 2016 to 2023, managed by the MP, amounts to K40.68 million. These distributions demonstrate a clear and consistent record of direct financial support intended for local-level development.

As Chairman of the North Fly DDA, the MP should account for the expenditure of these funds.

His constituents have the right to know where these monies have gone. He must be transparent and accountable to his people, just like MRDC is accountable to the MROT2 Board, chaired by the Western province Governor, in the management of the MROT2 assets,” MRDC said.