Barrick Gold again battles with PNG government

China's Zijin embroiled in fight

Porgera mine dispute escalates for Barrick, Zijin

By: Cecilia Jamasmie,

Mining.com

10 July, 2020

Barrick Gold (TSX: ABX; NYSE: GOLD) has served a dispute notice to the
Papua New Guinea (PNG) government over the country’s refusal to renew a
licence for the Porgera mine.

The world’s second-largest gold producer says that PNG’s decision to
reject the application for the lease extension violated a bilateral
investment treaty between the country and Australia, as well as
international law governing foreign investment.

Barrick and its Chinese partner, Zijin Mining, temporarily halted
operations at the mine in Enga province in late April. The move followed
Prime Minister James Marape’s refusal to renew Porgera’s permit on
environmental and social concerns.

The Toronto-based miner noted the rejection was publicly announced without
notifying the mine manager, Barrick Niugini Limited (BNL), or following
appropriate processes.

In May, the gold giant offered an extra 15% stake in the Porgera mine to
local landowners, in a fresh attempt to break the impasse with the
government over the mine’s future.

PNG later threatened Barrick with criminal proceedings, claiming the
company’s joint venture in the country was planning to illegally export
US$13 million in gold and silver to Australia. BNL refuted the
allegations.

The ongoing dispute has done to Barrick what the pandemic did not — dent
its expected output for the year. It now expects to produce between 4.6
million and 5 million oz. gold this year — 200,000 oz. lower than its
previous estimate.

Barrick revealed at the time that PNG was also asking the company and
Zijin to pay US$191-million in back taxes arising from tax audits
conducted between 2006 and 2015.

Mark Bristow, Barrick’s president and CEO, 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 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 northwest of Port Moresby.

Other mining companies operating in PNG, including Newcrest Mining (ASX:
NCM), have not been impacted by the decision regarding Porgera. The
Australian 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.