Barrick Niugini, the majority owner and operator of the Porgera gold mine, has announced that it will be retrenching most of its workforce over the coming weeks. Meanwhile, Papua New Guinea’s government seems intent of finding a new operator for the mine.
River sampling. Credit: Porgera Joint Venture
Barrick Niugini said that, despite the government’s 24 April decision not to extend the company’s special mining lease, it had maintained its Porgera workforce ‘on a temporary basis in the hope that the dispute over this decision could be resolved’.
But the President and Chief Executive of Barrick Gold Corporation, Mark Bristow, said this had led to a ‘financially untenable situation for the company’. He cited the PNG government’s alleged repeated refusal to ‘enter into meaningful discussions about the issue’.
Bristow said only essential services personnel required for the care and maintenance program would be retained.
‘We understand that the loss of employment will have a significant impact on workers, their families and the Porgera community, as well as on the economy of Enga Province and the nation,’ he said. ‘We sympathise with them and we share their frustration at the situation the government has created. We will continue diligently to seek a resolution to this issue.’
‘The government intends to reopen the mine under a new arrangement with a new operator as soon as the court issues are settled with Barrick.’
According to Barrick, most of the 116 expatriate employees have already been retrenched, while 2650 PNG nationals will have their employment terminated prior to the end of July at a projected cost to the company of K180 million (US$52 million).
The PM responds
In a letter responding to concerns expressed by the PNG Road Transport Association, Acting Chief of Staff in the Prime Minister’s office, Lamech Palaso, said that the government had ‘anticipated a smooth transition to a new operator’, and that this would have occurred ‘without interruption to the mine operations and business flow’.
‘The government strategy is based on a philosophy that privately owned mining companies, whether multinational mining corporations or locally owned, have nothing special to offer PNG.’
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‘The government intends to reopen the mine under a new arrangement with a new operator as soon as the court issues are settled with Barrick,’ the letter said. It claimed that the government would be considering freight subsidies and SME loan facilities to support the transport sector once the ‘court action is settled.’
The disputing parties are due back in PNG’s National Court in July.
Earlier this month, Parliament amended PNG’s Mining Act in a move that looks likely to make it easier for the State to play a more active role in mining sector.
Industry concerns
Meanwhile, Gerea Aopi, President of the Chamber of Mines and Petroleum, has reportedly said that recent amendments to the Mining Act ‘diminish the role of foreign and local private sector investors with privileges accorded to Kumul Minerals or other state-owned entities.’
He said the changes ‘increase tenure risk for existing exploration tenement holders,’ noting that ‘many’ are Papua New Guinean explorers, who may have to offload development rights to a state entity.
‘The government strategy is based on a philosophy that privately owned mining companies, whether multinational mining corporations or locally owned, have nothing special to offer PNG and that exploration and mining can be more profitably conducted by state-owned companies,’ Aopi added.
Gold prospects
Porgera gold mine. Credit: Barrick
In spite of Porgera situation, gold miner Barrick Gold appears to be in a strong position financially. The company’s share price has increased from $US12 in May 2019 to $US25.73.
According to Forbes, the company’s merger with mining giant Randgold Resources in early 2019 has sharply increased the company’s gold revenues. The spread of the coronavirus is ‘proving to be a boon for major gold miners like Barrick Gold,’ said Forbes.
According to Fitch Ratings, China’s Zijin Mining, the other joint venture partner in the Porgera mine, plans to ‘ramp up gold production from its other assets to make up the shortfall from the potential loss of Porgera.’
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