PNG: The ongoing struggle over the lease for Barrick's Porgera mine
Published by MAC on 2020-05-13Source: Guardian, statements, Mining.com
The government made the surprising announcement not to extend the mining lease
As noted previously on MAC the Papua New Guinean government has denied the renewed 20-year licence extension at Barrick's Porgera mine, pointing to environmental and legacy issues as factors. See: Papua New Guinea refuses lease extension for Barrick's Porgera mine
As MiningWatch Canada point out in the news release below: "While media focus has been on Barrick, the PNG government and the landowner agents, in order to understand the breadth and depth of disillusion with the mine one must turn to the Porgera grassroots organisations that have fought for human rights and environmental justice for Porgerans for over 15 years."
Those grassroots organizations note "As Barrick Gold and the Chinese government, on behalf of its corporate national Zijin Mining, threaten our Prime Minister as though they have some kind of right to the gold under our feet, and as our own 24 landowner agents argue amongst themselves about how to get the best financial deal out of the mine, we raise our voices on behalf of too many Porgerans who have suffered human rights abuses and very serious environmental impacts because of 30 years of reckless mining led by Canada’s Placer Dome and now Barrick Gold."
The company has responded by stopping work at the mine, effectively as a punishment and negotiating tactic, and threatened legal action.
As the Guardian article below notes of Barrick, that the longer they fight in the courts with the mine closed "the more its claims to a social licence to return to operations would be diminished."
Politics and Porgera: why Papua New Guinea cancelled the lease on one of its biggest mines
The announcement not to renew the goldmine lease is fraught but part of an attempt to ‘take back PNG’
Jonathan Pryke and Shane McLeod
12 May 2020
Late in April, in the middle of a global pandemic and slow-boiling domestic economic crisis, the government of Papua New Guinea made the surprising announcement not to extend the mining lease on a goldmine that contributes roughly 10% of the country’s total exports.
The announcement not to renew the special mining lease for the Porgera mine was a shock, not least to the mine’s operator, Barrick Gold, and their joint venture partner Zijin Mining.
Porgera is one of Papua New Guinea’s longest running goldmines. Operating for 30 years in the highlands province of Enga, this large mine was expected to produce around 250,000 ounces of gold in 2019.It employs more than 5,000 people and the 5% landowner and provincial equity stakehas helped to fast-track the efforts to bring services and education to one of the country’s most remote provinces.
While a significant economic contributor, the mine has also brought with it significant controversy, including concerns over human rights, environmental issues and conflicts over compensation.
While the government seems within its rights not to renew the lease, the blindsiding of the announcement has led Barrick to lash out, saying the move was “tantamount to nationalisation without due process”.
So why has the government taken this drastic action?
Prime Minister Marape was sworn into office in May 2019 and quickly set a narrative to “take back PNG”, arguing that the PNG people were not getting their fair share of the benefits of the formal economy and major natural resource projects. PNG’s ongoing economic crisis has been well documented and is only set to deepen in the fallout of Covid-19. As the tenth most natural resource-dependent economy in the world it is no surprise that the natural resource sector found itself in the government’s crosshairs.
The government is in the middle of negotiating a number of major natural resource deals – PNG LNG expansion, Papua LNG, P’nyang LNG, Frieda River copper and gold, and Wafi Golpu gold – that have the potential to transform PNG’s economic prospects for decades if properly negotiated. The 2020 oil price collapse has sent many of these projects back into the freezer and forced the government to narrow its sights. The decision on Porgera is an attempt from the government to both harvest more benefit from existing projects and to send a shot across the bow to projects still in negotiation that they mean business.
The government is walking a tightrope. It should, of course, be looking to extract every cent of benefit from these projects that it can. But if the government pushes too far, and acts too erratically, already weak investor sentiment will evaporate. While the people of Papua New Guinea own the resources under their feet, the PNG resource industry is not yet at a point where it can exploit them without foreign capital and expertise.
It’s no secret that pressure for a move on Porgera was a theme in local politics. The popular Enga governor, Peter Ipatas, was keen for the province to get a greater stake in the mine’s future. Ipatas is one of the country’s most successful politicians, and was among a group of influential governors whose moves last year swung the prime ministership to Marape.
Yet the limits of the government’s approach are already being tested. Marape had hoped Barrick would keep the mine operating while negotiating its exit. But the company’s firm refusal of that option and its immediate shutdown of the mine have demonstrated its bargaining power. Barrick’s Chinese joint venture partner, Zijin, has flagged international political ramifications, warning the lease dispute could damage bilateral relations between PNG and China.
PNG could find another operator to take over the mine and re-open it, but would likely find that tricky in the midst of a high-stakes legal dispute.
The immediate prospects are shaping up as a lose-lose outcome for both sides. PNG is taking the income hit right when it needs to stabilise its finances. But any compromise to allow Barrick to continue operating would dismantle the strong local support that Marape has won by being seen to “take back” the mine for the country.
Barrick is big and multinational enough to survive without the Porgera revenue, but the longer a legal dispute with the government goes on, the more its claims to a social licence to return to operations would be diminished.
Both sides might welcome a timely intervention by the courts that could give them space to step away from the high-stakes conflict and negotiate an appropriate face-saving compromise.
Barrick Gold AGM Faces Continued Failure on Human Rights
No social licence and no permit extension in Papua New Guinea; legal action, again, on behalf of victims in Tanzania
https://miningwatch.ca/news/2020/5/5/barrick-gold-agm-faces-continued-failure-human-rights
5 May 2020
As Barrick Gold executives once again face their shareholders, investors should be asking themselves why this company is continuously embroiled in conflict and legal action involving its deeply harmful relationships with the indigenous communities that surround its mines.
The callous disregard for the communities around Barrick mines has consequences. Once again, Barrick is facing legal action in the U.K. on behalf of victims of shootings and beatings by its mine security at the North Mara Gold Mine in Tanzania; the previous suit on the same issues was settled out of court just five years ago. In yearly visits since 2014, MiningWatch Canada has documented over 200 cases of excess use of force at this mine, and supports some of the victims through the current legal action by Cardiff-based firm Hugh James.
In Papua New Guinea (PNG), Barrick is on the verge of losing access to what CEO Mark Bristow calls a mine with “tier one potential.” The country’s Prime Minister, James Marape, has pointed to environmental and legacy issues as factors for denying Barrick’s subsidiary a renewed 20-year licence. As a leading partner in the Porgera Joint Venture mine for 14 years, Barrick has been at the helm as the environmental impacts have become overwhelming and the social “legacy issues,” including brutal human rights abuses committed by the mine's private and public security forces, have deeply angered the local indigenous landowners.
“You know something is wrong when Barrick has been negotiating to get its licence expansion approved since June 2017, with both the government of PNG’s negotiating team and with the Porgera Landowners Association (PLOA), only to see the licence lapse in August of last year without a deal and now be denied,” says Catherine Coumans of MiningWatch, who has visited the mine many times since 2006.
While Barrick and its subsidiary Barrick Niugini Limited touted a recent “deal” with the landowners, the April 14 letter announcing this deal to Prime Minster Marape was signed by only two of the 24 “agents” that represent the landowners and by Barrick CEO Bristow, but not by anyone representing partner Zijin Mining.
“This looks like a last ditch attempt to head off the Government of Papua New Guinea’s decision not to grant the licence extension – a decision that was made as far back as March 11 by the country’s National Executive Council.” says Coumans. “Anyone who has been paying attention knows that the 24 landowner agents are very much divided and definitely not, as Bristow says, overwhelmingly in favour of seeing Barrick continue to mine in Porgera.”
While media focus has been on Barrick, the PNG government and the landowner agents, in order to understand the breadth and depth of disillusion with the mine one must turn to the Porgera grassroots organizations that have fought for human rights and environmental justice for Porgerans for over 15 years. In a newly released statement from the leadership of six local organizations they say:
"As Barrick Gold and the Chinese government, on behalf of its corporate national Zijin Mining, threaten our Prime Minister as though they have some kind of right to the gold under our feet, and as our own 24 landowner agents argue amongst themselves about how to get the best financial deal out of the mine, we raise our voices on behalf of too many Porgerans who have suffered human rights abuses and very serious environmental impacts because of 30 years of reckless mining led by Canada’s Placer Dome and now Barrick Gold."
These organizations, and the human rights victims they represent, need to be included in the court ordered negotiations now underway and in any further discussions about the future of the mine.
For more information and for direct contact with the authors of the joint statement by Porgeran human rights groups contact Catherine Coumans, catherine@miningwatch.ca
Background – Porgera Lease Denial
Barrick Gold’s subsidiary, Barrick Niugini Limited (BNL) and Mineral Resources Enga Ltd., applied for a 20 year extension of the Porgera Joint Venture (Porgera) gold mine’s lease in June 2017. On August 2, 2019, with no mine lease extension in sight, the mine sought and received a declaration from a PNG National Court to continue mining lawfully on the original lease area until there would be a determination of the application lodged in 2017. On August 16, 2019, the Porgera mine’s 30-year lease, granted in 1989, expired.
Barrick’s CEO, Mark Bristow, made four visits to Papua New Guinea in an effort to secure a 20-year mine lease extension.
Barrick and BNL negotiated for over two years with the Porgera Landowners Association (PLOA) without reaching an agreement with the relevant landowners. The 24 landowner representatives, known as agents, are seriously divided over the future of the mine.
On March 11, 2020, the country’s National Executive Council decided to refuse the application for a mine lease renewal.
On April 24, 2020, Barrick’s Mark Bristow and Porgera Joint Venture announced that an agreement had been reached with the Porgera landowners on benefit sharing in case of a mine extension in line with “proposals BNL presented to the State Negotiating Team (SNT) last July” 2019, and declared the landowners to be in favour of the mine extension.
However, a letter of April 14, 2020, from the PLOA and BNL to Prime Minister James Marape, is signed by only two of the 24 landowner agents and by Barrick CEO Mark Bristow. There is no signature from Zijin Mining, Barrick’s joint venture partner.
On April 27, 2020, Governor General Sir Bob Dadae announced through National Gazette that effective April 24, the mine’s extension application was refused and that the existing mine development contract was terminated.
On April 28, 2020, Prime Minster Marape wrote to Barrick CEO, Mark Bristow, to confirm that the National Executive Council had decided to refuse the mine’s extension application, pursuant to provisions in the Mining Act of 1992, and urged Bristow to work with the State Negotiation Team to “frame an exit strategy,” while committing to “outstanding commitments and post-closure obligations.”
Barrick and BNL again sought recourse in the PNG National Court, resulting in court ordered discussions among the parties, to commence on May 1, 2020 to attempt to resolve differences.
Barrick Gold AGM 2020 – CEO Mark Bristow Responds to Questions about Porgera Mine
Catherine Coumans, Ph.D., Research Coordinator and Asia-Pacific regional program coordinator
5 May 2020
On May 5, 2020, Barrick Gold held its annual general meeting (AGM) online. I attended (as a proxy shareholder) along with McDiyan Robert Yapari of Akali Tange Association in Porgera, Papua New Guinea, and raised questions regarding human rights abuses at the company’s Porgera mine in Papua New Guinea.
For two years Barrick led its joint venture partners in negotiations with the government of PNG and the local Porgera Landowners Association (PLOA) before the expiration of the mine’s 30-year lease in August of 2019. Despite that long period of negotiations there was no agreement reached by August 2019 and the mine has operated on a court ordered extension since then.
In the week before the May 5th AGM, Prime Minister James Marape announced that the troubled mine would not be granted a lease extension citing environmental, resettlement and many legacy issues as reasons. By the time of the AGM, Barrick’s local subsidiary had taken the issue back to court and the court had ordered further negations between the mine and the government of PNG.
In the AGM, I said the mine clearly does not have a social licence to operate and has failed to address the nearly 1000 claims of human rights abuses that have been filed with the mine’s defunct grievance mechanism. I asked CEO Mark Bristow whether he would advocate to bring the Porgera human rights defenders groups into the discussion with the state so that their human rights concerns would be heard and she asked if Barrick would work with the local human rights groups to create a credible and equitable grievance mechanism along the guidance for such laid out in a BSR (Business for Social Responsibility™) report of September 2018. Porgera native McDiyan Robert Yapari put his question bluntly in asking whether Barrick had any plans to deal with the 940 human rights cases identified in the BSR report and “if so when, and if not why not?”
In his response, Bristow asserted that he had engaged and obtained the support for a mine extension from the Porgera Landowners Association (PLOA). This is at best misleading information. On April 14 Bristow co-signed a letter to Prime Minister Marape seeking an extension of the mine’s lease. Only two of the 24 agent representatives of the Porgera Landowners Association signed the letter (Barrick’s partner Zijin Mining also did not sign the letter). This poor result comes after more than two years of negotiations with the PLOA. Anyone who has paid attention to the realities in PNG will know that the 24 agent representatives are severely divided on the question of whether Barrick should continue to run the mine and that the two co-signers with Bristow represent the minority of landowners. The letter, which discusses hefty up-front payments to the landowners for their “social licence,” has all the hallmarks of a last ditch desperate attempt to sway the government’s decision regarding the permit extension.
Bristow’s response to both MiningWatch and McDiyan Yapari on the issue of at least 940 outstanding human rights claims that have been filed with the mine and recognized by the human rights consultancy BSR, was nothing short of bewildering. Bristow said he personally “monitors” the grievances and that he has himself “been through the BSR report” and taken note of its “recommendations and conclusions.” In that case he will be aware of the fact that none of the reports 10 key recommendations have been followed up on. The report finds that the mine does not have a UN Guiding Principles compatible grievance mechanism and recommends a detailed timeline to address this concern in concert with the Porgera based human rights groups, including Yapari’s Akali Tange Association. The first step was to have been concluded in November 2018. No progress has been made in this regard. In spite of this abject failure, Bristow went on to assert that “we have dealt with all the issues outstanding.” This will come as a major surprise to the many victims of human rights abuses and their families who have filed claims with the mine, and no doubt further discourage hundreds who have not yet filed claims with the mine in the absence of an equitable grievance mechanism.
Bristow’s lack of grasp of the realities in Porgera is evident when he speaks of the “complex social situation” in Porgera showing no recognition of the mine’s signature role in complicating and degrading people’s lives with overwhelming environmental impacts and brutal human rights abuses committed by the mine's private and public security forces. Given Bristow’s insulting and clueless remark that the mine’s operators are the “only real…responsible community organization in that region” it is no surprise that the mine and Barrick have lost the social licence of the indigenous peoples of Porgera, and of the local human rights organizations that continue to fight for justice for the mine’s victims.
Here's my actual question:
"With regard to the Porgera mine in Papua New Guinea, you have been negotiating with the PNG government and the Porgera Landowners Association for over two years and still your application for a mine lease renewal was recently turned down. This brings into question your social licence to operate. At the same time, in these two years you have failed to follow up on the recommendations of your own consultants BSR to work with the local human rights organizations to create a credible grievance mechanism for the nearly 1000 claims of human rights abuses that have been filed with the mine.
"My questions are – Will you agree to advocate for inclusion of the local human rights organizations in any further negotiations around the future of the mine? And, when will you start to work with the local human rights orga
Court orders PNG to negotiate Porgera permit with Barrick
Cecilia Jamasmie
https://www.mining.com/court-orders-png-to-negotiate-porgera-permit-with-barrick
1 May 2020
Barrick Gold welcomed on Friday a court ruling ordering the government of Papua New Guinea (PNG) to review a requested lease extension for the Porgera gold mine.
The world’s second-largest gold producer and its Chinese partner, Zijin Mining, temporarily halted operations at the mine in Enga Province last weekend, following Prime Minister James Marape’s decision not to renew Porgera’s long-sought lease.
The government hit back on Monday, saying it would be “forced” to take immediate control of the mine if it remains closed during the transition period.
State-owned Zijin followed suit. It said that if PNG didn’t conduct negotiations to extend the mining lease in good faith, the issue could impair the country’s relations with China.
The National Court order calls on PNG and Barrick to negotiate before returning to court in a week on May 8 to report on the progress of talks, local Post-Courier reported.
It also instructed Barrick Niugini Limited (BNL), the manager of Porgera, to maintain the mine infrastructure and assets during negotiations.
If talks fail, BNL said, the court would appoint an accredited mediator to facilitate dialogue between the parties.
Barrick and Zijin had applied in June 2017 for a 20-year renewal of the Porgera’s lease, which expired in August.
Since then, the company has faced backlash from landowners and residents over what they claim are negative social, environmental and economic impacts from the mine.
Negotiations with Porgera’s operators were complicated further by a split among the landowners.
Tier one potential
Barrick’s president and chief executive officer, Mark Bristow, said in March that Porgera had “tier one potential” but faced many challenges in the form of “legacy issues and an unruly neighbourhood.”
The gold mine, located in PNG’s northern highlands region, is a joint venture between Barrick and Zijin Mining. Each owns 47.5% of the mine, with the remaining 5% held by landowner group Mineral Resources Enga.
Porgera contributes to about 10% of the nation’s exports and employs over 3,300 Papua New Guinea nationals.
The open pit and underground gold mine sits at an altitude of 2,200-2,600 metres in Enga province, and is about 600 km (370 miles) northwest of Port Moresby.
“We don’t have many details on the implications of this decision yet, including the timing of the transition,” Jackie Przybylowski of BMO Capital Markets said in late April in a research note.
“Barrick has warned that it will pursue all legal avenues to challenge the government’s decision and to recover any damages. We expect that discretionary spending, such as development capex, will be minimized through the current period of uncertainty,” Przybylowski noted.
The mining analyst also said that “while removing Porgera from Barrick’s portfolio would have a negative financial impact, it would improve the ESG performance of the company’s portfolio going forward.”
“On its website, Barrick reports allegations of human rights violations in the region,” she pointed out, “including allegations of ‘extreme’ violence linked to local police forces or private security forces acting on behalf of the joint venture.”
Other mining companies operating in PNG, including Australia’s Newcrest (ASX: NCM), have not been impacted by the decision regarding Porgera. The miner has “welcomed” the Prime Minister’s support for its Wafi Golpu gold and copper asset, adding that its special mining lease at the Lihir operations remains in good standing with a renewal not expected until 2035.