Jonathan Barrett | Reuters | September 13, 2019
- Papua New Guinea to offer duties, taxes concessions in exchange
- *PNG govt wants to extract more wealth from its resources
Papua New Guinea wants to keep 40% of gold produced from the proposed Wafi-Golpu project, the country’s commerce minister said, creating a potential hurdle to an agreement with co-owners Newcrest Mining and Harmony Gold.
The miners had been hoping to secure a mining lease over the major gold and copper deposit earlier this year, before a change in PNG’s leadership and a shift in minerals policy led to delays.
“We’d like to see Newcrest come to the negotiating table on this,” PNG’s Minister for Commerce and Industry Wera Mori told Reuters in a phone interview late on Thursday.
“They get 60% of the production, we get 40%. If they don’t like it we’ll mine it ourselves – we own the resources.”
Mori said that the government could offer concessions on duties and taxes as part of the negotiations and he said he was confident a deal would be struck.
Newcrest and Harmony each own 50% of Wafi-Golpu, while the PNG government has the right to purchase an equity interest.
The companies were not immediately available to comment. Attempts to reach PNG’s mining minister were unsuccessful.
Located near the port city of Lae, the project is forecast to hit an annual production peak in 2025 of 320,000 ounces of gold and 150,000 tonnes of copper, according to the project website.
The proposed policy changes are part of a push by the South Pacific archipelago to transform its mineral-rich economy amid a perceived lack of benefits flowing from resources projects back to communities.
PNG is also negotiating to take a bigger share of the Porgera gold mine as part of lease-renewal talks with joint venture partners Barrick Gold Corp and Zijin Mining Group.
It has also sought concessions from French giant Total SA over a $13 billion plan to expand gas exports.
The Wafi-Golpu gold would be processed in-country, creating a downstream industry for PNG, Mori said.
Mori told Reuters that PNG wanted to build up its gold bullion reserves, acting as a peg for its kina currency.
PNG’s central bank currently fixes its currency to a narrow U.S. dollar band, propping up the kina’s value while creating a shortage of dollars available in the Pacific nation.
“When the stock market crashes we lose value,” he said.
“But if the stock market crashes and we have gold, the gold price goes up.”