PNG locals shut down Newcrest Mining’s Lihir mine

“They manage landowner issues well, these incidents are infrequent but it is part of life up there.”

Landowners are seeking talks over the benefits package relating to the Lihir mine in Papua New Guinea.

Landowners are seeking talks over the benefits package relating to the Lihir mine in Papua New Guinea.

Peter Ker | Fairfax Media

Newcrest Mining’s fractious relationship with sections of the community in Papua New Guinea is continuing to cause headaches as the Lihir mine suffers another unplanned shutdown at the hands of angry locals.

Lihir, which ranks as Newcrest’s second most important asset, was shut for 36 hours over the long weekend after members of the local community entered the gold mining and processing areas to place ginger plants.

The ginger plants are a symbolic way of demonstrating a dispute and are effectively a call for talks over the benefits package that flows from the the mine to locals.

In its statement to the market, Newcrest said “local commercial interests” were involved in the incident, which the miner believes was illegal.

It is not the first time that members of the Lihir Islands community have interrupted operations at the mine: there was a similar interruption (which also involved the ginger plants) in August 2012.

Newcrest said on Tuesday it had recently agreed with the landowner groups in May for an audit to be conducted into the allocation of benefits from the mine, with the PNG Mineral Resources Authority to lead the audit.

It is believed the weekend’s incident, which saw police called to the mine, may be linked to that audit.

Some PNG businesses have also expressed concerns about being overlooked for lucrative contract work at the Lihir mine.

Like most miners, Newcrest has been reviewing contracts in a search for savings, and some Lihir locals were angry when a shipping contract was awarded to an international company earlier this year.

The PNG Mineral Resources Authority could not be reached on Tuesday.

Despite production of gold at the mine being interrupted by the weekend’s incident, Newcrest said production guidance for the year to June 30 would not be affected.

“The continued predictable and lawful operation of the Lihir gold mine and plant contributes to the long-term sustainable benefit of all stakeholders, including the host community. Newcrest is committed to working with landowners and all levels of government to create that outcome,” the company said.

Lihir has under-performed since being acquired by Newcrest in 2010, but in recent months it has finally shown signs of improvement.

Gold production at Lihir was 11 per cent higher in the March quarter than in the December quarter, while the costs of production were 12 per cent lower over the same period.

Morgans analyst James Wilson said the improvement program put in place by new Newcrest boss Sandeep Biswas was bringing results.

“Newcrest have posted some very strong quarters of late, the March quarter was exceptional at Lihir and has probably been an insulating factor for incidents like this,” he said in regard to the weekend’s incident.

“They manage landowner issues well, these incidents are infrequent but it is part of life up there.”

Newcrest shares closed 23 cents lower at $13.44.

2 Comments

Filed under Environmental impact, Financial returns, Papua New Guinea

2 responses to “PNG locals shut down Newcrest Mining’s Lihir mine

  1. Theckla Longai

    The businesses put off by NML happens to be owned by Lihir and are part of the sustainability plan after mine life. What will other PNG companies loose after the mine closure except Lihir with a open cut pit without any means of getting back their land?

  2. Fred Hela

    Lihirians are doing very well compared to other mining areas and should not complain. They have a sealed ring road I believe, international standard education for their children, supermarkets and probably a fishing business. Look at their companies operating in Australia and seems all over PNG. How many others are like them? They should be thankful for their gold mine which has brought them out into the modern world..

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