Papua New Guinea to take control of Barrick Gold mine (updated)

Aion-Tech Solutions

24/04/2020 10:15

* Govt refuses 20-year extension to lease that expired in
August
    * PNG plans to operate the high-margin mine itself
    * Local groups say they have no regular access to clean
water
    * Barrick says refusal of new lease tantamount to
nationalisation

 (Adds Barrick JV comment)
    By Tom Westbrook and Melanie Burton
    SINGAPORE/MELBOURNE, April 24 (Reuters) - Papua New Guinea's
government will take control of the Porgera gold mine after
refusing to extend Barrick Gold Corp's  ABX.TO   GOLD.N  lease
over the facility, citing environmental concerns, Prime Minister
James Marape said on Friday.
    The decision ends months of uncertainty since the lease over
the troubled project 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) Ltd, which manages Porgera as a joint
venture with China's Zijin Mining  601899.SS  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 said the government decision was "tantamount to
nationalisation without due process and in violation of the
government's legal obligations to BNL."
    It also said it would "pursue all legal avenues" to
challenge the government's decision and to recover any damages.
    Marape gave no timeframe for assuming control of the mine,
nor any financial details over whether or what the state might
pay for it.
    
    NO CLEAN WATER
    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. 
    BNL said last month at least nine people, including women
and children, were killed during an outbreak of violence in the
area, where locals with little other form of income often
informally look for gold. It also said it complies with the
government's environmental regulation.
    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.  urn:newsml:reuters.com:*:nL4N29L4PQ
    Groups representing local landowners could not be
immediately reached for comment.
    Porgera is just one of several large and lucrative
extractive projects on the drawing board in Papua New Guinea
when Marape took charge.  urn:newsml:reuters.com:*:nL4N2362DT
    His government has since talked a hard line and in February
walked away from negotiations with Exxon Mobil Corp  XOM.N  over
a large gas field deal.  urn:newsml:reuters.com:*:nL4N2A20ZX
    Marape said Exxon's project, called P'nyang, a related gas
project led by France's Total  TOTF.PA , called Papua LNG, and
Newcrest Mining's Wafi Golpu gold and copper project would be
advanced "within the ambit of present legislation".
    Australia's Newcrest  NCM.AX  said his mention of Golpu as a
priority project was reassuring. Exxon declined to comment,
beyond saying it was "hopeful that we can continue to work
toward an outcome that benefits all stakeholders". A Total
spokesman in Papua New Guinea declined to comment.

 (Reporting by Melanie Burton in Melbourne and Tom Westbrook in
Singapore; Editing by Susan Fenton, David Evans and Louise
Heavens)
 ((melanie.burton@thomsonreuters.com Twitter: @MelanieMetals;
+613 9286 1421; Reuters Messaging:
melanie.burton.thomsonreuters.com@reuters.net))