Paupa New Guinea Prime Minister James Marape said the government will take control of Barrick Gold Corp’s Porgera mine in the Enga province after refusing to extend its mining lease, citing environmental concerns, reported Reuters.
Barrick and its joint venture partner, China-based Zijin Mining Group, each own 47.5 per cent of the operation, with the remaining 5 per cent interest held by Mineral Resources Enga. The mine is operated by Barrick Niugini Limited (BNL) on behalf of the JV partners. BNL applied in June 2017 for a 20-year renewal of the mine lease, which expired in August 2019.
The decision ends months of uncertainty for the project and may end Barrick’s hopes of boosting output from a mine it said held potential as a long-life and high-margin asset.
Mr 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.
The prime minister said his government accepted a recommendation from the country’s Mining Advisory Committee to refuse the 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,” he 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.”
BNL said it had “no interest in discussing transitional arrangements for the management of the mine,” since it believed the country’s High Court had awarded it a right to extension in August 2019. It believed the government decision was “tantamount to nationalisation without due process and in violation of the government’s legal obligations to BNL.”
The company said it would “pursue all legal avenues to challenge the government’s decision and to recover any damages that BNL may suffer as a result of the government’s decision.”
BNL also noted in a release that the environmental management practices at Porgera were studied and approved by the government: “The PNG Conservation and Environmental Protection Authority (CEPA) has carried out regular audits of the mine and has always found it to be in compliance with its permits. In fact, BNL’s environmental management system exceeds the requirements of its permits. As far as resettlement is concerned, BNL has compensated and relocated more than 1,400 households impacted by the mine’s operations, and at no stage has the government indicated that the mine had not complied with its obligations in this regard.”
Mr Marape gave no timeframe for assuming control of the mine, nor any financial details over whether or what the state might pay for it.