President Calls For A Fair Share Of Lihir Gold Mine Benefits

Post Courier | August 12, 2019

Newly elected president of Nimamar local level government (LLG) Stanley Tunut has called on the national government to allocate its share of service delivery funds owing over the years.

Mr Tunut, a National Alliance party member unseated deputy governor and incumbent president Ambrose Silul of the People’s Progress Party (PPP).

His election was witnessed by locals who gathered in numbers at the Tumbawinlam House last week Thursday.

He said Lihir island has been deprived of government services despite having the third largest gold mine in the world.

“Over the years, the people of Lihir have not felt the impact of the funds from the national government’s service improvement programs directed to the provincial, district and the local level government,” Mr Tunut said.

But he said that the royalties worth millions paid into the Nimamar local level government have made no impact in the livelihood of the people.

“The first thing I will do is to overhaul how the budget of the Nimamar local level government will revolve to the people of Lihir with the royalties that is directed into the administration.”

He said the budget of the LLG will be well structured to benefit the people rather than the administration consuming the entire internal revenue.

“I intend to make some changes in the administration the budget was delivered in past and make a fresh start,” he said.

“If you visit the entire island on the western and to the eastern tip, you will notice the run down state of infrastructures and road conditions. To get to the western tip of the island will only require four-wheel vehicles to manoeuvre through. School and health infrastructures are wearing to and drug supplies in the aid posts and clinics are inadequate,” Mr Tunut said.

He said only a fraction of the population that reside within the perimeters of the mine site receive benefits from the mining company Newcrest Mine Limited.

Mr Tunut said to look after the affairs of the people of Lihir, there has to be an audit made on the works of the previous administration in order to make a fresh start.

“The people of Lihir do not want any political affiliation but want services to be delivered.”

He said the Nimamar local level government under his leadership will support and work alongside Namatanai member Walter Schnaubelt to deliver projects for his local level government.

He urged all stakeholders, churches and the entire population including the landowners of Lihir Gold Mine to unite because the future of Lihir will depend entirely on them.

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PNG turbulence dampens Newcrest’s bumper gold harvest

Peter Ker | Australian Financial Review |  25 July 2019

Newcrest Mining’s most important growth project is facing indefinite delays on the back of political turbulence, with the miner redeploying staff in the expectation its US$2.8 billion ($4.01 billion) Wafi-Golpu project will be delayed.

The scaling back of work on Wafi-Golpu came as Newcrest’s gold production in the year to 30 June rose to the highest level since fiscal 2011.

 Political unrest in Papua New Guinea has prompted Newcrest to scale back its work on the project, which is located in the highlands of Australia’s northern neighbour.

 Development schedules for the project had always been uncertain, with Newcrest for years telling investors that construction would take 4.75 years beyond the awarding of a special mining lease.

 That special mining lease has continued to be elusive, even after Newcrest dramatically updated its plans for the project in February 2018.

 On Thursday, Newcrest was pessimistic about the chances of progress at Wafi-Golpu any time soon.

 “Recent developments in PNG have resulted in a delay to permitting,” said Newcrest.

 “These developments include a period of internal political contest culminating in the parliament’s election of a new Prime Minister as well as the delay associated with the legal proceedings between the national government and the Morobe provincial government regarding the internal distribution of PNG’s economic interests in the project.”

 Newcrest said those developments had convinced it to “defer and revise” the work program it had planned for the coming year.

 “The project team in Brisbane has been redeployed and reduced in order to mitigate the costs of the delay,” said Newcrest.

 “It is difficult to estimate the duration of this delay.”

 The rise of James Marape to become PNG’s new Prime Minister has raised concerns for some resources companies operating in the nation, with Marape vowing to “take back the economy”.

 “Who says one conglomerate from outside can come and tell me I can’t change the laws for my country,” he said in May.

 “I have every right to tweak and turn resource laws. We are all about maximising resources for our country.”

 Newcrest already operates the Lihir gold mine in PNG, while gold miner St Barbara also operates there.

 Oil Search, Santos and ExxonMobil have gas interests in the country.

 Aside from royalties and taxes, PNG may become an equity investor in Wafi-Golpu, given it has an option to buy up to 30 per cent of the project at a price determined in reference to sunk costs on development of the mine.

 If PNG takes up that option, the respective 50 per cent stakes held by Newcrest and its partner Harmony Gold would fall to 35 per cent.

 The continuing delays in PNG will raise doubts over whether it can be Newcrest’s next major growth project, particularly with the miner close to completing the acquisition of a controlling stake in Imperial Metals Red Chris mine.

 Newcrest produced 2.48 million ounces of gold in the year to 30 June, a 6 per cent improvement on last year.

 It was also Newcrest’s biggest production result since it produced 2.7 million ounces of gold in 2011; the last year before the Mt Rawdon and Cracow mines were divested into what would become Evolution Mining.

 Prices for gold in Australian dollar terms reached a record high of $2049 per ounce in the past month.

 Gold was fetching $2040 per ounce on Thursday, having been bolstered by sliding interest rates and geopolitical tensions between the US, China and Iran.

 UBS had expected Newcrest to produce 2.47 million ounces of gold in the year at an all in sustaining cost of $US740 per ounce.

Total’s PNG Gas Plan Faces Fresh Test as Deal Changes Proposed

Logo at French oil and gas company Total gas station in Marseille, February 11, 2015. REUTERS/Jean-Paul Pelissier

Stephen Stapczynski | Bloomberg | July 26, 2019

Papua New Guinea’s petroleum minister said he’s completed his review of a recent natural gas agreement with Total SA and will recommend changes, creating a potential hurdle for the delayed $13 billion effort to double the nation’s exports of the fuel.

The potential changes cover both regulatory and commercial terms of the so-called Papua LNG agreement and must be approved by the National Executive Council before submitting them to venture partners, which include Exxon Mobil Corp. and Oil Search Ltd., Kerenga Kua said in an interview Thursday.

Kua said he’ll send his findings as soon as Monday to the council, a top policy making body, and expects a revised agreement with the companies completed within six weeks. In response, Total’s Chief Executive Officer Patrick Pouyanne pushed back against any potential overhaul.

“All issues are capable of discussion and compromise,” Kua said. “Even though we may have our wish list and they may have their wish list, finding the middle ground where all of us can benefit is an important principle.”

Oil Search shares added 0.6% to A$7.09 as of 10:43 a.m. in Sydney and are headed for a 6.3% rise this week. The Australia-based producer declined to comment. Exxon didn’t respond to requests for comment.

“We are confident that it’s in the best interest of PNG to respect the agreement that has been signed in order to move forward with the project,” Pouyanne said on a conference call Thursday. “We expect the new government to respect” the deal signed by its predecessor, and Total has “many” LNG projects in its portfolio.

Political Flash-Point

Separately, Newcrest Mining Ltd., Australia’s top gold producer, and Harmony Gold Mining Co. said they are facing a hurdle with the development of the $5.4 billion Wafi-Golpu gold-copper project in PNG amid heightened political uncertainty. The delay in permitting is associated in part with legal proceedings between national and provincial authorities and the PNG government continues to signal support for the project, Newcrest said in a statement Thursday.

Liquefied natural gas exports have developed into a political flash-point for the country as its existing venture, the Exxon-led PNG LNG project, has been criticized as not benefiting the domestic economy as much as expected. The nation’s new prime minister, James Marape, swept to power in May amid a wave of criticism of the Papua LNG deal signed by his predecessor. He tasked Kua with reviewing the agreement after appointing him petroleum minister in June.

“For too long we have allowed external forces to dictate the direction we take,” Marape said Thursday at the Lowy Institute in Sydney. The government must work with its partners “to ensure a fair and equitable distribution of our resources.”

In the interview, Kua described the suggested changes as a “short list,” but declined to provide specifics. He said he’s been in communication with the partner companies.

“We haven’t rejected the signed agreement,” he said.

The review has delayed plans to double gas exports from Papua New Guinea, which involves a $13 billion expansion across separate but interlinked projects. Talks on the second gas agreement, for the Exxon-led P’nyang venture, won’t begin until the Papua LNG deal is revised, Kua said.

Oil Search said last week that it expects front-end engineering and design work on new LNG production units to be pushed back pending those agreements. That may move a final investment decision until as late as 2021, which puts the expansion projects at risk of greater competition for building resources and customers, according to analysts at Sanford C. Bernstein.

Marape said his government assembled a group of advisers to assess the country’s resource laws to find the right balance between encouraging foreign investment and boosting local involvement in the sector.

Wafi-Golpu Delays Exploration

Nancy Kalimda | Post Courier | July 18, 2019

Wafi-Golpu Joint Venture is delaying its advanced exploration activities over uncertainty in attaining a mining permit.

As the exploration activities are being delayed, the number of employees is also being reduced in a redundancy exercise.

This comes amid the current legal challenge over the signing of the memorandum of understanding (MoU) between WGJV and the State.

As per the project permitting timeline WGJV expected to get a Special Mining Lease (SML) in June as planned and agreed to by WGJV and the State.

“Due to the failure to achieve the targeted milestones for permitting the project, and uncertainty related to the project permitting timeline, WGJV has delayed its planned advanced exploration activities until after the grant of the SML, when these activities were originally scheduled.

“Currently, there are 57 WGJV employees that have been identified for reduction in July, August and September 2019,” WGJV said.

WGJV said normal activities at the site, including general operation of the site, community programs, environmental monitoring and engineering activity are continuing.

WGJV was responding to questions regarding the progress of the project and the court injunction over the signing of the MoU.

“As the matter is before the courts, we note the national government has lodged an appeal against the stay order.

While waiting for the case to be heard, the WGJV is complying with the stay order and will not undertake activities or work (including meetings with government agencies and other stakeholders) which will alter the status quo in relation to the MoU,” WGJV said.

WGJV emphasised that the MoU is between the WGJV and the State.

The company said under PNG law, all matters relating to Morobe Province and the landowners are dealt with via separate negotiation and consultation process, including the Development Forum and memorandum of agreement process.

It said the MoU does not replace that process or any of the usual agreements that will need to be negotiated before any SML is granted. These include:

• The Mining Development Contract (which outlines the fiscal and regulatory arrangements for the project);
• The MoA (which is an outcome of the Development Forum and deals with the distribution of benefits from the project);
• State Equity Acquisition Agreement (which is the purchase agreement for the equity to be acquired under the State’s option); and
• Fiscal Stability Agreement (which is an agreement providing long term fiscal stability for the project).

Harmony admits PNG political instability raises risk of MoU change on Wafi-Golpu

Wafi-Golpu mine site

David McKay | Mining MX | May 30, 2019

HARMONY Gold acknowledged the risk that political changes in Papua New Guinea (PNG) could create a situation where a memorandum of understanding (MoU) regarding its Wafi-Golpu copper/gold mining project would have to be changed.

“At this stage we are waiting to see what happens,” said Lauren Fourie, investor relations manager for Harmony on the matter of PNG politics. “The potential election of a new prime minister could potentially impact the memorandum of understanding (MoU) we signed with the government in December 2018,” said Fourie on May 28.

On May 30, PNG unveiled its new prime minister, James Marape, a former finance minister, who then said he intended to “tweak and turn” laws governing how natural resources are extracted from the South Pacific island.

“At the moment our resource laws are outdated … we will look into maximising gain from what God has given this country from our natural resources,” Marape was quoted by Reuters to have said in his first address to parliament as prime minister.

“I have every right to tweak and turn resource laws for my country, then it will empower my citizens as well,” Marape told the chamber to cheers and applause. “I truly want this country to be the richest black Christian nation on the planet,” he added.

The thrust of the discontent in PNG regarding the exploitation of natural resources is a gas drilling project involving French group, Total, and Chevron.

Granting of a Special Mining Permit for Wafi-Golpu have been a long-standing feature of getting the project on the road. Fourie said up until recent events various joint venture workstreams were tackling requirements of the permit which range from environmental authorisations through to the stake the PNG state will eventually hold.

The Wafi-Golpu copper-gold mine could cost Harmony Gold $2.82bn in initial capital expenditure to build to commercial levels of production as per a 2018 feasibility study. Of this, Harmony will shoulder about 50% with Newcrest Mining Limited, an Australian firm, carrying the balance. Average annual gold production was put at some 266,000 ounces.

Marape became prime minister after receiving 101 votes to eight in parliament, a day after Peter O’Neill resigned having lost the support of the house after almost eight years in power, said Reuters. Political instability is not unusual in PNG, but Marape’s resignation from cabinet in April tapped into growing concern over governance and resource benefits not reaching the poor, it said.

Harmony operates the Hidden Valley mine in PNG after taking the operation out of mothballs and buying Newcrest’s share in the business. It produced 100,000 oz at an 11% margin in the six months ended December, and was on track to achieve 200,000 oz for the full financial year, said Harmony in February.

Locals Claim Earthquake Poses Great Threat To Wafi-Golpu Mine

“Newcrest and Harmony have never mentioned anything about earthquakes during any awareness”

See also: Magnitude 7.5 quake alongside proposed Solwara 1 mining site

Jerry Sefe | Post Courier | May 17, 2019

THE people of Yanta, Hengambu and Babwaf are concerned about the safety of their relatives who will be working at the underground Wafi-Golpu mine when it begins operations.

Their concern follows the recent 7.2 magnitude earthquake that struck Bulolo district last Tuesday. They described the quake as a wakeup call for the Wafi-Golpu underground mine developer Newcrest and Harmony.

They said the quake was disturbing to them as such natural occurrences may be hazardous in future for the Wafi-Golpu underground mine if it comes into full operation.

They said they are not representing any individual person nor its respective landowner presidents who were supposed to represent them to speak on behalf of them. “We are concerned about the lives of thousands of people including our children who will be working underground when the mine begins operation,” they said.

Provincial chairman of mines and petroleum and president of Mumeng local level government Okam Paton said he believes the resilience of these natural disasters would be captured in the mining environment impact statement.

However, he said it is in the best interest of the landowners that the responsible authorities respond to their concerns.

According to Wafi-Golpu project environmental impact statement chapter 21 of unplanned events, there is nothing mentioned about earthquakes.

“However, these events are often described as ‘low probability, high consequence’ events in reference to the position they occupy on a typical risk matrix.

“They can be broadly categorised as: natural events, significant seismic, weather or other natural events that occur infrequently but have the potential to cause significant damage.

“Accidental events, events originating from human activity that are considered unlikely due to the engineering design, operational controls and monitoring programs that are in place, but have the potential to cause significant damage if they do occur.

“Despite the low probability of occurrence of these events, the potential natural events considered most likely to affect the project are seismic events, tsunami, storm surge and flood events, bush fire and drought,” they said.

Knowing it would bring chaos to lives and properties, the landowners said they never thought of an earthquake at all, claiming the reason behind this was because they were not informed at all by the company.

“Newcrest and Harmony have never mentioned anything about earthquakes during any awareness or during the mining warden’s hearing over the years. “We were always limited to environmental destruction, compensation, royalty, and spinoff and so forth.

“Nothing was mentioned about earthquakes and its impacts on Wafi on both open cut and underground mine or how best the project can withstand the impacts during earthquakes,” they said.

Wafi Golpu SML Grant In June, Highly Unlikely

Frankiy Kapin | Post Courier | May 14, 2019

Wafi-Golpu Joint Venture is unlikely to be granted a special mining lease (SML) by end of June. This timeline was agreed to by the WGJV mine developer and the PNG Government.

WGJV head of external a airs David Wissink said recent developments in PNG render the possibility of a SML being granted by 30 June not viable. Mr Wissink said this as a main hindrance to the developer achieving set goals that contribute to the achievement of the project.

Wissink said WGJV is aware of the recent issuance of a stay order in the matter of Morobe Governor Ginson Saonu and others against Minister for Mining and others.

“The matter is a judicial review application made by the Governor concerning the actions of the Minister for Mining in regard to the execution of the Memorandum of Understanding entered into between the developers of the Wafi-Golpu project and the State of Papua New Guinea.

“The WGJV hopes that this matter is resolved soon, and stands ready to continue to participate constructively in all negotiations to take the project forward when it is appropriate to do so.”

Mr Wissink added that WGJV has been working constructively with the PNG Government; the Morobe provincial government; and the landowners to take forward the negotiation of various agreements necessary for the permitting of the project.

In relation to progressive proceedings including reaching the Memorandum of Agreement (MOA) by parties to the Wafi-Golpu project, Mr Wissink said the MOA is one of a number of agreements necessary to be finalized to enable the permitting of the project.

“The Mineral Resources Authority has convened a development forum, and is collecting position papers from all identified stakeholders.

The Morobe provincial government is an important participant in this process and we are very pleased that it has recently submitted its position paper,” Mr Wissink said. He said the WGJV is yet to be given a copy of the MPG position paper and looks forward to going through the paper at an appropriate time to progress the project.