Vele clarifies PNG's Porgera Gold Mine Commencement Agreement

 The Papua New Guinea Government  has clarified its stance on the re-opening of Porgera Gold Mine through the signing of the Commencement Agreement on 15 October 2021 with representatives of Barrick (Niugini) Limited and Kumul Minerals Holdings Limited. 

Mr Dairi Vele
Mr Dairi Vele

Chairman of the State Negotiating Team and Secretary for Treasury, Mr Dairi Vele thanked all former and current public servants who have been involved in bringing the re-opening of the Porgera Gold Mine one step closer. 

Mr Vele said Porgera has presented the state with some unique challenges and opportunities and the current outcome is an example of this Government’s commitment to protecting the rights of its people as well as furthering the opportunities for all stakeholders.” 

Secretary Vele confirmed that the Government had to take a tough stance on the matter of Porgera continuing in its previous form so that the State could achieve a rebalancing of economic benefit sharing such that PNG Parties collectively achieve 53% of the economic benefits over the 20 year life of the mine, tax up-front for the State, a 51% equity stake for the PNG stakeholders ( including 10% for the Landowners), a preferential 15% dividend for the Landowners and Provincial Government, an expanded social contribution package on day one, and stronger than ever commitments on resettlement and mine closure and rehabilitation. The government has also committed to improving the law and order in the valley. Secretary Vele reiterated that Barrick Gold Corporation’s willingness to allow for a better deal for Papua New Guinea should also not be underestimated with the President and CEO, Mr Mark Bristow flying into Port Moresby no less than 13 times to lead negotiations between Barrick and the State Negotiating Team and the Prime Minister. 

It is acknowledged that the history of Porgera Gold Mine has been a mixed picture, with responsibility shared by all stakeholders. However, Secretary Vele emphasised that with the PNG entities collectively holding 51% of the shares they will have strong oversight powers through board representation and greater visibility on performance than over the last 30 years. Furthermore, Barrick Niugini the National Government, the Provincial and Local Level Government and Landowners have set themselves higher standards for community investment and community interaction so that the people of Enga Province are not left behind.

 In relation to the issue of the Special Mining Lease, Secretary Vele said that both the Government and Barrick are working constructively as partners to reopen the mine under a legally sound Special Mining Lease and ensuring that all legal and administrative prerequisites are complied with so the new partnership can commence on a sound footing. Secretary Vele added that there is a misunderstanding of Barrick Niugini ’s tax liability issue with the IRC.

 It is the State Negotiating Team’s view that Barrick is committed to the New Porgera Gold Mine, however there is a legacy tax liability that needs to be dealt with and Barrick Niugini is working constructively with the Internal Revenue Commission to resolve the matter in accordance with the law and consistent with treatment received by the entire industry.

 “The settlement of this liability is a matter for Barrick and the IRC, not the State Negotiating Team, but the outcome of these discussions will also have an effect on the economics of the new Porgera Gold Mine as well so all parties are eagerly awaiting the outcome of those discussions.

 In relation to environmental liabilities, Secretary Vele stated that this is a complex issue but structures were negotiated to ensure that any Old Porgera liabilities that subsequently comes to light remain with the Porgera Joint Venture comprising Barrick Niugini Limited and Mineral Resources Enga. 

“ If a dispute on certain environmental liabilities was to arise, then a panel of Independent Experts will be convened to work through the issue with Barrick and the State to ensure accountability is established and assigned to the correct party. “We are also very proud that there will be provisioning for mine closure and rehabilitation above and beyond what is provided for in PNG legislation.

 Now for the first time, we have contracted for the New Porgera Gold Mine partners to fund mine closure and rehabilitation commencing not later than 11 years or after 47 / 53% economic split is achieved. “All in all, this is a far superior deal than we had envisaged when this journey started out in April last year. Commercially, there is an easier, less costly and less risky path to re-opening the New Porgera Gold Mine and legally and administratively, the partnership will be more transparent and accountable.” 

Secretary Vele thanked Prime Minister, James Marape, MP for his skilful leadership throughout the negotiations with the support of his Cabinet and the also the strong commitment of the Enga Governor and the Engan political leadership and the Landowners and the people of Enga in general. In this time of economic hardship, the New Porgera Gold Mine will contribute to the economic growth opportunities for Papua New Guinea.

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