Papua New Guinea Prime Minister James Marape says the National Gold Refinery & Mint Project Agreement signed today is a landmark agreement for the country and a major achievement in the implementation of his Government’s ‘Take Back PNG’ policy.
“The project starts today and will establish, for the first time in Papua New Guinea, a downstream processing and value-adding industry for gold, one of the country’s most-valuable natural resource exports,” he said.
“The project will put Papua Guinea on the world gold map, so it is rightfully recognised in both gold mining and gold refining industries, and in global precious metals and financial markets, as one of the world’s most-important gold-producing countries.”
PM Marape said downstream processing of natural resources in PNG, including gold, forestry and fisheries, is the key to our economic future and employment opportunities for citizens and is a key policy of his government.
“This has been talked about for decades, but it is my leadership peers in present Government who are now pushing for this major in-country downstream processing project,” he said.
“It is the first of many to come.
“Until now, all the economic and social benefits from refining and value-adding to Papua New Guinea’s gold, have been exported to foreign refineries and for the benefit of foreign countries.
“The project will ensure that we account for all gold produced in PNG and export out finished products for companies and individuals who are in the gold industry.”
PM Marape said for the first time all the profits, taxes, new US dollar foreign exchange inflows, employment and related benefits from the refining of gold and precious metals will stay in PNG.
“For the first time, PNG will be recognised on the world stage, including by international refined gold regulatory bodies, such as the London Bullion Market Association (LBMA),” he said.
“PNG will become known and recognised as a producer of international standard:
gold and precious metal investment bullion bars,
gold and precious metal legal tender investment coins; and
other refined gold products.
PM Marape said the project will establish four new world-class businesses in the State:
National Gold Refinery – which will refine all of PNG’s gold and precious metals and produce international standard gold and silver bullion bars;
National Mint – to mint our own currency and the new National Bird of Paradise legal tender and investment grade gold and precious metal currency coins;
National Gold Bank – to provide dedicated gold and precious metal banking and trading services to the PNG gold mining industry; and
National Gold – to market PNG gold and precious metals, and our value-added bullion bars, investment coins and other products global investors.
“This is a high-end value-adding business and for a gold producing nation, we want to move into this space,” PM Marape said.
“No one has dared to dream this dream, but as a Government fighting to earn more from our resources, this low-hanging economic opportunity is now harnessed .”
PM Marape said the State is an equal 50:50 joint venture equity partner in the project from commencement where 30 per cent of State Interest will be passed to our local alluvial miners and landowner companies.
“The State also has the right to buy majority or total control of the project at a time into the future as defined in the project agreement with Refinery Holdings who are partners in this project,” he said.
“Refinery Holdings will be the project manager, operator and financier of the project until the State decides to buy control.”
PM Marape said the National Gold Corporation will pay full corporate taxes (currently 30 per cent) on its profits from commencement.
“Refinery Holdings will pay full dividend withholding tax on its dividends received from National Gold Corporation, “ he said.
“The project will generate substantial new dividends and corporate taxes paid to the State – currently projected at approximately US$800 million over the first 15 years of operation.”
PM Marape said there would be many jobs and opportunities created by the project.
“Up to 200 new jobs will be created during the construction phase of the refining and minting facilities on land leased within the LNG and Petroleum Park, and at Jackson International Airport,” he said.
“There will be up 350 new tertiary level jobs in the operational phase and there will be significant training and skills transfer to local employees for decades to come.
“And there will be the creation of many local ancillary industries, including gold tourism facilities, and long-term supply requirements from local contractors and suppliers.”
PM Marape said small-scale, local alluvial gold miners (i.e., landowners) will benefit from the new world-class dedicated gold refinery in PNG.
“Landowners can expect to receive better pricing for their gold from the National Gold Refinery and will avoid having to deal with ‘industry middlemen’ or having to accept the discounted gold price offered by middlemen for their gold,” he said.
PM Marape said PNG miners and the economy will benefit from new and substantial foreign currency inflows.
“The project and its gold products are priced in US Dollars,” he said.
“The National Gold Refinery will have an estimated initial US$4 billion per annum gold throughput, and more as gold production increases, every year for many decades to come.
“The PNG gold mining industry will benefit from having a world-class, professionally-managed, gold and precious metals refinery in-country and dedicated to servicing all their refining and gold trading requirements.
“A local world-class gold refinery means that the time gap between gold production and sale is significantly reduced as unrefined gold does not need to be shipped from PNG to foreign refineries.
“This may mean some PNG mining opportunities will now become economic, and it may increase the profitability of existing mines through a reduction in processing cost.
“The project also includes arrangements by which current and future PNG gold miners will transition from foreign gold smelting and refining arrangements to refining of all PNG gold and precious metals through the National Gold Refinery.
“The State will provide a statutory guarantee of the gold delivery and related obligations of the National Gold Corporation Group to assure PNG gold miners and international banks, investors and gold industry counterparties that their gold and dealings with the Group are safe and secure at all times.
“The National Gold Refinery will, by law, provide globally-competitive refining costs, outcomes and benefits for PNG gold miners now and into the future.”
“The project, and the significant long-term foreign investment in the project by the private sector, demonstrates regionally, and internationally, that my Government’s foreign investment policy is effective and that PNG is a mature, stable, and safe investment destination for exploration, mining, and production of gold, and refined gold.”
“I look forward to work with the investors, our local SME and alluvial gold miners and landowners, as well as those in the big mines to ensure that this refinery and mint is beneficial to all parties in the mining and gold business.
Statement