“Sounds a lot, huh? But average it out – over 20 years that averages to K33m per year. And what about total revenues from the mine? Over 20 years total revenues have been K33 BILLION, or an average of K1.65 billion per year.
“Countries around the world get 8%, 12%, even ( in Canadian provinces) 18% royalties. What do we get? 2%!
“Lot of money coming out of the ground. And it is all going overseas. All we will be left with is a big hole (just look at Misima).” Bruce Harris
Loop PNG | March 20, 2018
The people of New Ireland have received K660 million in total royalties from the Lihir Gold Limited (LGL) since 1997.
Of the total royalty payments made between 1997 and December 2017 (K660m);
- New Ireland Provincial Government (+ districts) had received K330,057,253
- Nimamar Local Level Government had received K198,034,351
- Special Mining Lease Block Owners had received K132,022,902
From January to December 2017, Lihir Gold Limited royalty payments to the people of New Ireland have added to a total of K75,065,077 as highlighted (in yellow) in the table below.
What are royalties?
The PNG Mining Act defines royalties as payments by a mining company to the State based on 2 percent of the value of all gold sold.
The Mining Act further states that it is up to the State to decide how it wants to redistribute the royalties.
For the Lihir operation, the State, in a Memorandum of Agreement (MOA) – signed with NIPG, NLLG and the Lihir Mining Area Landowner Association (LMALA) – agreed that the National Government shall ensure that all royalties be distributed in the following way;
- 50 percent be paid to NIPG
- 30 percent be paid to NLLG
- 20 percent be paid directly to the SML block owners.
The MOA further states that the 50 percent portion for the NIPG be divided as:
- 20 percent to the Namatanai District for infrastructure projects and programs pursuant to its district and provincial development plans. (Lihir comes under the jurisdiction of the Nimamar Local Level Government in the Namatanai district.)
- 20 percent to the Kavieng District for infrastructure projects and programs pursuant to its districts and provincial development plans.
- 10 percent for general administration as well as for the administration of the MOA obligations.
The MOA allocation of royalties for infrastructure projects and programs in both Namatanai and Kavieng fulfils Recital C of the MDC’s Social Impact Monitoring Plan for the Lihir operation. It therefore makes Lihir a business that is benefitting the whole of New Ireland Province.
For the 30 percent NLLG portion of total royalties, the MOA states that it be split further in the following way:
- 20 percent to be spent on community development and programs
- 10 percent to be spent on long term growth-driven investments
For the 20 percent royalty portion for SML block owners, an arrangement was made between the SML block executives and LMALA for Newcrest Lihir to deduct 20 percent and pay it directly to LMALA to put in a financial savings scheme for the landowners. The remaining 80 percent is paid to the SML block executive to distribute to the SML block owners.
In a statement, the mining rm said: “LGL as a corporate citizen and development partner for New Ireland and PNG honours the MOA and other agreements and complies with all laws of PNG.
“LGL pays royalties every month and reports to the Mineral Resource Authority (MRA), the Internal Revenue Commission and other stakeholder government agencies.”
Newcrest Mining Limited, owner of LGL, is a publically [sic] listed company on the PNG and Australian stock exchanges. As such it is required to regularly report its financial performance through various communications channels, including its website http://www.newcrest.com.au.