Managing director and chief executive officer Peter Graham in a memorandum to staff last Friday said the company was taking the step to “address the urgent need to improve our financial performance to ensure long term-term business viability in a low-price environment, and our response to the immediate impacts of dry weather”.
He said copper and gold prices “are at the lowest point for many years”.
“The recent failure of the chasm which has prevented access to higher grade ore has compounded the situation,” Graham said.
He said the dry weather had placed further stress on the company, “preventing shipment of copper concentrate and the generation of revenue, and the limited re-supply of critical stocks of diesel and food”.
The company expects the dry weather to continue for around six months, similar to that experienced in 1997/98 when operations were shut down.
The number of expatriates will be reduced by 30 per cent and nationals by 15 per cent, with some work performed by OTML “may be outsourced”.
“We must prepare for a temporary and orderly shutdown of operations over the next week or so.
“We will continue operations for as long as we can, but the time horizon is short,” he said.
The company has been the largest employer in Western for over 32 years. It did not say yesterday how many workers it had but the 2013 figure indicated it employed 2310 people and 5147 contractors. Most (95 per cent) are PNG nationals and 37.3 per cent from Western.
More than 2000 students attend the three schools in the mining lease area – Diwai International, Tabubil Secondary and Tabubil Primary.
Diwai International School will be closed on Friday.
Principal Kevin McCrae told The National that they were following the information on Graham’s memorandum. The school has 260 students.
“We have only two classes in Grade 9. The Grade 8 students will need to transfer to other schools so that they can sit for the national exam,” he said.
“All students at Diwai International have been given certificates to help them enrol elsewhere. Currently the class is running as normal, but we understand most people will be leaving town next week.
“It is obviously a traumatic experience for students, teachers and parents.
“We are working to make the school closure as smooth and unsettling as possible.”
Tabubil Secondary School has about 1000 students and 29 teachers.
Tabubil Primary School head teacher, identified only as Mrs Na’awi, said she would comment on the situation later this week.
A teacher in Kiunga said four schools which depended on the shipments of fuel from OK Tedi might be forced to close down too.
They are St Gabriel Technical Secondary, Kiunga Secondary, Ningrum High School and Aiambak High School.
The company in a statement said it was coordinating with the Western provincial administration on emergency response planning.
“OTML management is focused on sensitively handling the changes that will impact the workforce and communities and ensuring the mine is positioned for an efficient restart when weather conditions allow, and for long-term business viability.” The National