Papua New Guinea refuses to extend Barrick Gold Corp’s lease of Porgera Mine

April 24, 2020

Papua New Guinea’s government has refused to extended Barrick Gold Corp’s lease of the Porgera gold mine and has threatened to take control of the mine.

Prime Minister James Marape said the lease was not renewed based on environmental concerns. Barrick Gold has vowed the fight the move and said it will pursue all legal avenues to prevent what it’s calling the “nationalization without due process” of the mine.

Reuters reported that Barrick’s lease expired last August, and may end Barrick’s hopes of boosting output from a mine it said held potential as a long-life and high-margin asset.

Marape took power a year ago on a platform of economic nationalism that would review more closely its mineral resource assets, and comes as pressure rises on miners globally to improve their social and environmental responsibilities.

Marape said his government accepted a recommendation from the country’s Mining Advisory Committee to refuse Barrick’s 20-year lease extension application owing to environmental and social problems connected to the mine.

“We are now going through transitional arrangements ... and once the transition phase has been completed, then the state will enter into owning and operating the mine,” Marape told reporters in the capital of Port Moresby.

“The state has every right to refuse the lease, or to extend the lease, and in this instance, because of the environmental issues, resettlement issues and many, many other legacy issues ... the state has now refused the lease to Porgera.”

Barrick Niugini Limited (BNL), majority owner and operator of the Porgera gold mine applied for the extension in June 2017 and has been engaging with the government on this matter since then. In 2019, in response to a request from Prime Minister Marape, the company proposed a benefit-sharing arrangement that would deliver more than half the economic benefits to PNG stakeholders including the government for 20 years.

Barrick President and Chief Executive Mark Bristow has met with Prime Minister Marape four times to discuss the extension issue and to re-affirm BNL’s commitment to a long-term partnership with PNG, Barrick said in a statement. After their first meeting in June last year, the Prime Minister wrote to Bristow stating that “the government values our continued partnership with Barrick and it is our intention to do everything possible to ensure that arrangements are in place to enable continued operations of the Porgera Gold Mine once the current SML expires in August 2019.” Marape gave no timeframe for assuming control of the mine, nor any financial details over whether or what the state might pay for it.

Porgera is located in Papua New Guinea’s remote highlands, and has been plagued by poor security and accusations that it has polluted the local water supply.

Porgera produced about 421,500 ounces of gold in 2018 and in January, Barrick was mulling elevating it to “tier one” status, which it reserves for mines capable of producing half a million ounces cheaply for a decade.


 

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