Prime Minister James Marape moves to allay concerns among Papua New Guinea’s mining companies following the decision not to renew the special mining lease for the Porgera gold mine. Meanwhile, the mine’s temporary closure is already affecting local business.

PNGs Prime Minister during the announcement on Porgera. Credit: Office of the Prime Minister NEC/Facebook

The Prime Minister, James Marape, has moved to reassure mining companies after the shock decision last week not to renew the special mining lease for the Porgera gold and silver mine in Enga Province. Following the decision, the mine’s operator, Barrick Niugini, has closed the mine, in a move that will have immediate economic consequences.

This week, Marape addressed ‘all PNG miners’ in a social media post, saying that his government will ‘not change the goal posts’ for the sector.

‘PNG is a robust democracy that honours all agreements to the text and spirit, congruent to our Mining Act,’ he wrote.

‘Major amendments to the resource law regimes will be effected post-2025 and will not affect agreements secured under present regimes. You can have that comfort.’

Marape said that Porgera is a ‘special case and an exception’ because the lease expired on 18 August, 2019.

‘Don’t fight me (I am in my country and I lose nothing). Work with me for your ease of business during this transition and exit phase.’

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He said that he has ‘to look after’ the country’s eight million shareholders, including the people of Ipili, Porgera, Enga and the mine workers. He called for Barrick to maintain the operation of the mine until ‘an agreed exit time’ when ‘mutual obligations are retired’.

Marape added that if Barrick sabotaged or closed the mine, the government would take it over ‘for the sake of land owners and provincial government who should be getting bigger equities, – plus the employees and contractors who are presently working with the mine’.

Combative

Porgera gold mine. Credit: Barrick

Marape adopted a direct tone. ‘Don’t fight me (I am in my country and I lose nothing). Work with me for your ease of business during this transition and exit phase.’

Local media is reporting that a hundred Papua New Guinea Defence Force personnel are to be sent to Enga Province ‘to protect the mine from vandalism, theft, threat and intimidation.’

The Porgera Joint Venture (PJV) is not taking the decision lying down. In a statement, it said the decision presents ‘enormous financial and reputational risks for local communities, local businesses, the regional economy of the Highlands and the country as a whole.’

The company said that the transition process proposed by the PNG Government ‘may not be possible under PNG law’, adding that the suspension will ‘compound PNG’s national debt challenges’ and may result in the permanent loss of the mine.

The PJV statement said the mine has contributed about 3.8 per cent of PNG’s GDP, 10 per cent of its average export income, K4 billion in direct taxes and K656 million in royalties. It has spent K5.1 billion in supplies and contractors.

‘Barrick Niugini is one of the nation’s largest employers and corporate tax payers, with more than 300 employees and around 1500 contractor employees and suppliers, who together contribute more than K200 million in salary and wages taxes each year.’

The Chairman of Barrick Gold’s joint venture partner in the mine, China’s Zijin Mining, has also written directly to Prime Minister Marape, seeking a reversal of the decision and a resumption of negotiations with the State Negotiation Team.

Local impact

The Porgera Chamber of Commerce and Industry said the decision has already had a profound impact on private sector groups and the local community’s economy.

‘The Barrick JV is the only major cash flow generating avenue here in west Enga Province,’ a Chamber statement said. ‘All businesses from Lae, all the way to Porgera, have come to a stand still.’

‘I am happy that the government has made this decision.’

The statement acknowledged that the ‘state’s decision’ meant looking at the interests of the whole country, but said the decision ‘was not timely’. The Chamber called for the government to provide ‘alternatives’ so that ‘cash flow could be maintained.’

The Governor of Enga Province, Peter Ipatas, reportedly said that he hoped the province would increase its equity above the current five per cent.

‘I am happy that the government has made this decision.’ He described the move as ‘bold’ and expressed the hope that the Marape government would give ‘greater participation to the landowners and the provincial government’ in the new arrangements.

Business Advantage PNG has reached out to the PNG Chamber of Mines and Petroleum for comment.