Nautilus takes harder line with PNG gov’t over Solwara 1 dispute
February 14, 2014
The dispute between Nautilus Minerals and Papua New Guinea over the Solwara 1 project continues, with Nautilus terminating PNG’s ownership rights and seeking damages.
Turning more combative in a long-running dispute, Nautilus Minerals said Wednesday it terminated the Papua New Guinea government’s right to a 30-percent interest in the Solwara 1 underwater mining project – over failure to meet payment despite a binding judgement it was to do so – and that it would seek undisclosed damages.
Responding to emailed questions, Nautilus spokesperson John Elias reiterated Nautilus’ desire to find compromise: “It is our intention to complete the project and the company is still in discussions with the State.”
The move to go after damages against the PNG government comes after a binding arbitration judgement went against the island nation last year. The dispute, at its most basic level, is over government ownership of Solwara 1, an underwater mining project that a few years back looked well on its way to construction. Indeed the PNG government excercised its legal right to buy a 30-percent interest in the project in 2011.
Soon after it excercised the option, however, the government contended Nautilus was in breach of contract and – with the state having refused to pay – the spate headed to international arbitration.
The case finally went to judgement in early October 2013 and an arbitrator ruled the PNG government had until the 23rd that same month to meet its contractual obligations; that is to pay a bill that Nautilus pegged to the tune of $118 million.
Now 113 days later, and counting, after the arbitration-set deadline, payment has yet to come and Nautilus is resorting to more legal recourse to recoup damages.
“Nautilus will work with its lawyers in preparing for a damages hearing,” Elias said in an email, later clarifying the hearing is to be overseen by the same international arbitrator.
Elias, referring to the PNG’s option agreement, also added: “The purpose of the damages claim is to put Nautilus into the position it would have been in financially had the State performed its obligations under the SEOA.”
A possible outcome Nautilus might hope for is to pressure the PNG government to reconsider its position on the project were it to seem a greater financial risk to continue to fight a legal battle with Nautilus. It is not clear, however, what was the PNG government’s position on the dispute, or the 2013 arbitration decision. An emailed request for a statement was sent to the PNG government’s Washington-based embassy mid-Wednesday PST (early morning in Papua New Guinea).
Looking at Nautilus’ decision against PNG optimistically, Elias also highlighted potential benefits of not having the government as partner. He noted that with full ownership of Solwara 1 Nautilus had more options to strike joint ventures or other partnerships over the intellectual property rights it owns in having developed unique underwater mining systems to mine seafloor VMS deposits and in seeking funds to build equipment it needs to develop Solwara 1.