Papua New Guinea government and Barrick Gold outline competing visions for Porgera

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Prime Minister James Marape and Barrick Gold have offered two competing visions for the reopening of the Porgera gold mine. With the mine closed and court cases ongoing, the latter is also highlighting the impact on business and the community.

Porgera mine Barrick

Porgera gold mine. Credit: Barrick

Papua New Guinea’s Prime Minister James Marape has said the government ‘is doing everything within its mandate to reopen Porgera Gold mine’, notwithstanding the ongoing case before the country’s National Court, which he said was delaying the reopening.

The case is being pursed by the partners in the Porgera Joint Venture, Barrick Gold and Zijin Mining, who are appealing the government’s decision not to renew the JV’s special mining lease for the Porgera mine. The partners have also initiated conciliation proceedings with the International Centre for Settlement of Investment Disputes.

‘We have been ready to run the mine but the recent past lease holder in Barrick Ltd and their court cases has been the impediment,’ Marape said in a statement late last week. ‘If they (Barrick) withdraw the court cases, we can talk commercial with them.’

‘”The solution sits right in front of us,” Bristow told Marape.’

‘When [the] Mining Advisory Council (MAC) refused the lease application by Barrick, the State in compliance to Mining Act has given notice, to procure Barrick’s asset with a view to reopen and operate the mine at the earliest. That notice was given to BNL within the 30 days required yet Barrick Ltd chose to go to court,’ he elaborated.

However, he warned the government would be seeking a dramatically different resource-sharing arrangement when the mine reopens:

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‘Look at Ok Tedi mine’s [sic] ownership structure, the one-third, two-thirds equity/ownership principle is the starting base in which National Government will talk with the Province and Landowners.’

Barrick’s offer

The government’s vision for Porgera is a long way from the deal proposed by Barrick, which was outlined by Mark Bristow, President and Chief Executive Officer of Barrick in a widely circulated letter to the Prime Minister last week.

As I have said previously, the solution sits right in front of us,’ Bristow told Marape. ‘It is the current proposal that would deliver 58 per cent of overall economic benefits to PNG, totalling some US$4.5 billion over 20 years, representing the best deal by far that PNG has ever negotiated with a foreign investor.’

‘At the national level, the PNG Treasury is forfeiting K2.3 million per day and K68 million per month in lost tax revenues, levies and other duties and fees’

Bristow reminded the Prime Minister that Barrick has submitted this offer at his invitation last year.

‘We honoured this request and, in two meetings with the State Negotiating Team the following month, presented a 20-year plan that would have delivered 52 per cent of overall benefits to PNG stakeholders,’ says Bristow in the letter. ‘For the following ten months, we waited patiently for the start of the formal negotiations that you [James Marape] promised on multiple occasions both verbally and in writing, but which never occurred.

‘Then, without the slightest forewarning to us or to the legitimate Porgera landowners, you announced on 24 April that BNL’s application had been rejected.’

Impact of closure

The end of the special mining lease has resulted in the cessation of gold exports from the mine, mass lay-offs, significant losses to local businesses and disruption to the local community.

‘Without revenue, the company was forced to lay off 2,650 valued Papua New Guinean employees,’ said a Porgera Joint Venture media statement released last Friday. ‘Over 200 Porgera enterprises have been forced to close, and contracting companies lost K140 million in the first two months of the shutdown alone.

‘Landowners and the Enga Provincial Government are losing K179,000 each day (K5.4 million each month) that would have flowed from royalty payments and dividends. At the national level, the PNG Treasury is forfeiting K2.3 million per day and K68 million per month in lost tax revenues, levies and other duties and fees, adding up to more than K140 million since PM Marape’s decision forced mining operations to cease.’

Barrick has also announced power cuts to nearby Porgera townships ‘due to necessary cost reductions’. Since 17 June, the communities are only being supplied energy between 6.00 pm and 6.00 am, and the company has stated that more cuts are to be expected in the coming months.

Barrick has acknowledged this as a major inconvenience to the community, but has said it has ‘no other option than to continue to reduce costs in light of the Government decision not to extend the Porgera special mining lease’.

Comments

  1. Emp Pai says

    The PNG Government should have the upper in this scenario as the SML has expired and nobody should dictate to the government. Anyone who wants to come in and mine should do so under the terms and conditions set out in the new SML Agreement.

  2. Bob Siape says

    DISCLOSURE ISSUES OF BARRICK NIUGINI LTD.

    The Lagaip Strickland River Pollution Issues is the biggest and most imminent hurdles that has been on going for the last. 32 or so years with the operator of the Pogera Gold Mine.

    Placer Dome, Barrick Niugini Limited and now Jinjin Gold corporation of China has been continuously purported to sell transfer shares, despite the Pogera Gold Mine was very economical and appetising Gold mine.

    The reasons behind these scenarios is only known to people involved in the inner cycle chamber of these corporations.

    One very important Case scenario is that, this giant gold mine do not provide public information on its closure plans for the mine, it’s estimated reclamation costs, or the amounts of the bond or security in place at this mine.

    Barrick Niugini Limited has persistently ignored our ENVIRONMENTAL damages responsibility and ignored our plight to date.

    Its come to our Riverine system Landowners that, the operators of the giant Pogera Gold Mine shifting, selling and transferring it’s shares to its prearranged arms length corporations, are only shifting the eminent Legal proceedings against the environmental responsibility.

    The operation of the Pogera Gold Mine has been under different management for reasons only known to the inner core cycles of these international corporations, needs thorough scientific auditing.

    This will ensure, Barrick Gold Corporation has operation all over the world is not doing the same precedences on its environmental responsibility.

    We the Lagaip Strickland Riverine people now calling on the Papua New Guinea Government to sit down with Barrick Niugini Limited to find a best way forward to compensate the Riverine people on the Environmental Damages.

    We the Riverine people requests that our claims for the environmental Damages Pollution must be the most important recipe on the table on these ongoing PNG Government and Barrick Niugini Limited negotiation..

    Bob Siape
    Secretary Kulini Strickland Riverine people

  3. Jerry Kama says

    This is an issue that has more to it than meets the eye. Question is whether or not Barrick complied with the terms and conditions of its previous lease terms. If it has not, there is no way it should be in a position to demand extension of the expired lease. The duty is on Barrick to make good its failed terms and conditions. There are land owner compensation issues unattended to and further infrastructure developments that have not been put in place (correct me if I am wrong) but that is only a few points to content for the Government. A full review of the previous lease and compliance aspect would clarify, whether Barrick does have a right to challenge the Marape/Steven Government decision.

  4. Bill Toraso says

    Please do urselves a favour.PACK UP & LEAVE that’s the most honourable thing to do BNL.No amount sugar flavoured incentives will reverse the Govts decision.otherwise humble urselves & negotiate with the owner you don’t have any muscles anymore..$5billion in 20 years that’s the JOKE OF THE CENTURY.We are no longer headhunters running around in cloth in leaves in the jungles.Stop manipulating that HUNGRY faction of illiterate LOs who will stop at nothing if offered candies.. Times up game is over.just leave or you will be assisted to leave.

  5. Mek Kamongmenan says

    Follow the Prime Minister and his Government’s decision. The Special Mining Lease has expired therefore, it is only the Government who decides the next course of action, nor company or any other parties by virtue of laws of the land of Papua New Guinea. Any minerals resources within the SML of Porgera belongs to the State which is the custodian off people of PNG and none other, after the expiration of the SML.

  6. Howard Iorere says

    I dont see an issue with this, the lease expired our government didnt extended it, Bristow made an offer, our government declined it. Thats by law and business, if Bristow thinks there is a better offer provide it. It makes no sense stopping what to provide to the people and now you are reducing it. If Bristow thinks Porgera is not economical why fight, why go to court, why stop the services around thd area. At this time of covid19 and for some time we know the price of gold will still be going up. Why make it difficult Bristow? Come on

  7. Leslie Tikil says

    Gold under the earth is just another stone until someone adds value to that stone. Likewise oil beneath the earth is just another thick liquid until someone puts value to that liquid and call it LNG.

    Royalties to landowners and governments have been flowing since the beginning of Porgera operations but what had happemed to those money? Had we invested those money properly then by now everyone should have enough. Greed for money and mismanagement of our share left us here so let PJV continue and this time let’s manage our share…not increase our share..

  8. Vailea Ora says

    If PNG would had formed a mining company long ago with the objective to claiming the mines after the mining leases expired such as the PJV scenario, then the above move to shut PJV mine would had being in order. I agree with the shut down, however, we lack knowledge of a plan B.

    • Kak Passad says

      Very simple advice to BNL would be that BNL to accept the the Government ‘s decision of refusal on the SML extension and come to a drawing table with the same Gov’t for negotiation. Offer to Gov’t a new proposal as to how you will manage the mine that would be go by 40/60 on equity participation principle. BNL would propose for 40% equity where’s Gov’t would take 60% equity which will be shared with LOs and the Provincial Government.

      Take note that BNL does not have grounds to fight as SML expired on the 16/08/19 and State refused extension for non compliance on social issues at all fronts. Though BNL is giant but State pulled the giant by its horn and you have no guts and stand against.

      Hence accept the decision and withdraw your court case and get to the round table discussion/negotiation with the State for a best deal.

      Over to you.

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