Papua New Guinea Government moves to take over Porgera lease

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Papua New Guinea’s government has moved to effectively take over the Porgera gold mine in Enga Province by issuing a Special Mining Lease to state-owned mining company, Kumul Minerals Holdings. Legal challenges look likely.

A Special Mining Lease was issued to Kumul Minerals Holdings on 25 August.

On 25 August, a 20-year special mining lease was issued to Kumul Minerals Holdings Limited (KMHL) for the area covered by the Porgera mine in Enga Province.

The move follows the government’s decision in April not to renew the previous lease over the mine, which was with Barrick Niugini and Zijin Mining, known as the Porgera Joint Venture.

The joint venture partners are in the process appealing the previous decision, and have taken the matter both to PNG’s National Court and the International Centre for Settlement of Investment Disputes. The government had previously rejected a revised proposal which would have allowed the previous lease to be renewed.

Unlawful and invalid?

Barrick Niugini (BNL) has already responded to the new development by flagging further legal action, and suggesting that due process has not been followed in the issuing of a new lease.
‘BNL considers that any such grant of SML 11 to Kumul Minerals Holdings Limited is unlawful and invalid. BNL will take steps to challenge the purported grant of SML 11.
‘BNL notes that the Government conducted no consultations with the Porgera landowners prior to granting the SML, whether through a development forum or other consultative steps. Nor was a Warden’s hearing conducted. We are unaware of any representative of Kumul Minerals who has visited Porgera to meet with landowners and other community stakeholders to discuss the SML.’
Meanwhile, Chairman of the Porgera Landowners Association Negotiating team, Maso Mangape, has described the government’s move as a ‘state sponsored land grab’ – adding that it is becoming clear the Government is trying to disenfranchise the people of Porgera.
‘If you really care about landowners and contractors and PNG as you claim then reply to it and get on a plane and come to PNG.’
Mangape says the move to engage KMHL with zero consultation with landowners is ‘highly inflammatory in an already volatile situation.’
The Porgera mine has been closed since April and most workers were laid off in June and July. Landowner representatives had recently issued an open invitation to MPs to visit the site to see for themselves the impact of the mine’s closure.

Justification

Prime Minister Marape

Credit: Prime Minister James Marape/Facebook

In a statement defending the government’s move, Prime Minister James Marape said the new lease had been issued by the Mineral Resources Authority.

‘Our country is not a banana republic or dictatorship but run by dictates of public policy and regulations and laws. Hence, MRA in their independence and free will progressed new SML applications and on record both KMHL [Kumul Minerals Holdings] and BNL [Barrick Niugini Ltd] applied and decision was made in favor of KMHL.
‘If Barrick feels they want to be still at Porgera, then it is now up to them to meet KMHL to discuss how they could remain in Porgera under KMHL’s SML. As I have said equity plus operatorship option is on the table subject to negotiations.
‘KMHL will call the 24 clans and Enga Provincial Government on the structure of the joint venture for Porgera going forward. And we want to open the mine at the earliest.
‘To Barrick, a letter from KMHL is on its way to you. If you really care about landowners and contractors and PNG as you claim then reply to it and get on a plane and come to PNG,’ Marape said.

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Comments

  1. Benny MEK says

    PNG is the land of expect the unexpected.Who’s interest is this move? is it for the betterment of PNG economy? or KMHL? When the economy is hard hit with porgera not contributing for the last 4 months FOREX into country!! it may continue if landowners disputes continue in the wild west. PNG is the land of expect the unexpected.

  2. Tawi Agea says

    Thanks PNG government for the decision knocking off BNL of operations. No need for extended court battles by BNL, just pack-up and go to China and Canada. Social Indicators are really not improving as a result of the minings that are running. It is now the governments responsibility to set out things in a way that it benefits our citizens and we see at least some of our social indicators are improving.

  3. Kashian Tanda says

    Porgera LOs should stay put without swaying to any of the two factions, whether be BNL or KMHL. Moreover the understanding is that giant Porgera mining is operated in the land of the independent state of PNG thus any formalities done by the government of PNG has no objection after BNL terms of operation expired. Therefore why should LOs make noise on the issue in regard? Are they (LOs) PNGan or another investor on the race to squeeze the pie of Gold?..

  4. Mike Hombohori says

    Land owners where missed out on the negotiation, were their inputs into benefit sharing, spin of business, development benefits and employment opportunities has no clear focus. This things should be tabulated and presented to government and government should facilitate and negotiate with BNL and KMHL and see who can meet the criteria before issuing lease agreement. It’s for the good benefit sharing and going for highest bid so outcome can be fully maximise withing the province and country so the development outcome can be tangible for the next 20 years.

  5. Richard Lumbirindi says

    I Think this may be good move, however … Let’s wait to see d future

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