Mining a gold and copper mountain; US firms head $1 billion effort to dig riches in Papua New Guinea

Layered like a giant sundae with gold and copper ore, a 7,100-foot mountain deep in the rain-drenched jungle of Papua New Guinea is soon to yield its riches - but not before testing the ingenuity and know-how of 20th-century construction specialists.

Mt. Fubilan, in the mineral-rich Star Mountain chain on the huge island just north of Australia, also poses economic and social challenges that business and government will have to surmount in coming decades as resources become more dear and untutored populations are introduced to the ways of modern industry.

The gold-rich ore that is the topping on the Mt. Fubilan sundae and the 1 -billion-plus tons of copper ore in its lower layers are evidence that the Earth still has much mineral bounty to give up - and that those resources will be exploited when demand and price make the extraction process worthwhile.

Owners of what is being called the Ok Tedi project (Ok, pronounced roughly ''awk,'' is the Papuan word for river) are the government of Papua New Guinea ( 20 percent), Amoco Minerals Company (30 percent), BHP Australia (30 percent), and a German group led by Metallgesellschaft AG (20 percent). They have hired Bechtel Corporation of San Francisco and Morrison-Knudsen International (MKI) of Boise, Idaho, to set up the mining operation at what a Bechtel spokesman calls one of the most remote and difficult sites his experienced company has ever tackled. Yearly rainfall there is 300 to 500 inches.

Bechtel, says Sydney Ford, vice-president of the firm's mining and metals division, has constructed two mining operations in the area - Freeport Indonesia Copper's mine at Ertsberg in neighboring Irian Jaya and another Papuan project on the island of Bougainville. Both, however, are relatively close to seaports and in less-forbidding terrain than Mt. Fubilan.

All equipment and materials for the Ok Tedi project must be unloaded at Port Moresby, barged 250 miles across the Gulf of Papua to the mouth of the Fly River , transported 500 miles upriver to Kiunga, and eventually hauled by truck some 100 miles to the 6,000-foot level of the mining site. In late August, Bechtel-MKI began the construction project, which is expected to be completed in July 1989.

In 1984, the mine will begin to produce gold ore, which will be smelted at the site and flown out. Earnings from the 1 million ounces of bullion expected to be produced will go a long way toward paying the $1 billion-plus cost of construction.

Besides the winding, two-lane highway for heavy trucks, Bechtel-MKI will build housing for a work force that will peak at about 3,000 during construction , a hydroelectric facility, mine service facilities and roads, offices, warehouses, an airstrip, a cargo wharf, educational and government facilities, the gold smelter, and another facility to concentrate the copper ore into fine, sandlike pellets. In the process, a new town will emerge at Tabubil, 3,000 feet up on the mountain.

The copper concentrate will be produced at a rate of some 400,000 tons a year - and it will all have to make the tortuous trip down the 100-mile road, down 500 miles of river, across the gulf, and thence via ship to world markets.

Under the agreement with the Papuan government, says Mr. Ford, 70 percent of the 3,000-man construction work force will have to be Papuan. These will not be mere pick-and-shovel jobs - the local recruits will be trained in skills and trades. At least some of them will be hired for the mining operation.

Ford says that there are more mineral deposits to be developed in New Guinea - he knows specifically of three being tested now - and that the Papuans should be able to make use of their new skills. There is hope, too, that as the country's economy develops, these newly skilled workers can play a key role in orderly growth.

All of this - the massive construction project, the audacious mining operation, the involvement of the indigenous population - is owing to the economics of relative scarcity. Bechtel spokesmen point out that Australian geologists made the first surveys of the Star Mountains in the mid-1960s, when gold was priced at $35 an ounce. That figure is $400 now, but has topped $800 in recent times.

Mt. Fubilan's copper deposit may have more practical value in future decades, but one thing is clear: Without that gold topping, this is one sundae that no one would be digging into right now.

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