Wafi-Golpu Negotiations Have Not Recommenced – Newcrest

Matthew Vari| Post Courier | March 16, 2020

NEGOTIATIONS into Morobe’s Wafi-Golpu project is still pending according to project joint venture partner Newcrest Mining Limited.

Newcrest Mining PNG country manager Mr Stanley Komunt said this in response this paper queries in relation to comments made by Mining Minister Johnson Tuke last month on government’s intention to resumes negotiation following the dismissal of the memorandum of understanding in court case relating to the project.

Mr Komunt said the main reason for uncertainty was the relays [sic] in the proposed revised mining act, which is still yet to be passed by government and  how concerns raised may be factored into the amended act.

“We from the JV’s point of view have not made a commitment as yet to progress any discussions.

“There is a couple of reasons why and number one is more to do with the current discussions on the revised mining bill.

“We really don’t know where that is going to end. Whilst the Prime Minister has given us, the industry and SNT (State Negotiating Team) team to go and back and since our meeting in January 17 in Brisbane.

“He has given us two months and we have been meeting last month now and we are slowly getting there but there is still some major, not so much disagreement, but misalignment I would say,” Mr Komunt pointed out.

Komunt pointed out other particulars also in the air such as benefit sharing, royalty and contracts have all been relayed to the minister responsible for mining.

“Whilst we appreciate, the company, not only us but the industry appreciates that country needs to get a better share and we want to make sure that is realized through the negotiations that we will have.

“We are not quite there yet to start the negotiations for Wafi. We have relayed that to the minister.

“Because if the revised mining act changes it will have an impact on the project economics and how we have done our planning and that is a major concern and we can’t do anything.

Prime Minister Marape has indicated his government is set on delivering the project, a point Komunt added the PM is well aware and supportive of an understanding going forward.

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PNG production issues plague Newcrest

The Lihir gold mine in Papua New Guinea

Derek Rose | Australian Associated Press | March 11, 2020

Australia’s largest listed goldminer says it expects to produce around 10 per cent less gold than previously forecast due to underperformance of its mines in Papua New Guinea and Western Australia.

Newcrest Mining now only expects to produce 2.1 to 2.2 billion ounces of gold this financial year, down from a forecast of 2.38 to 2.54 billion ounces it made on January 30.

The goldminer said increased production at its Cadia mine in central-west NSW and Red Chris mine in British Columbia, Canada won’t be enough to outweigh shortfalls from its Telfer mine in WA and Lihir mine in PNG.

Lihir, located on an extinct but geothermically active volcanic crater on Aniolam Island 900km northeast from Port Moresby, is proving to be particularly difficult, Newcrest said.

“Lihir has been challenged by difficult mining and geothermal conditions, leading to a sub-optimal blend of ore feed to the plant,” Newcrest managing director and chief executive Sandeep Biswas said.

That lower grade material ore proved problematic to the mine’s material handling systems and flotation recovery, Newcrest said.

“Operating improvements planned at Lihir for the remainder of FY20 will be insufficient to address its shortfall in production.”

Newcrest also announced it had found a “pod” of high-grade mineralisation at its Havieron Project, 45km from its Telfer mine in WA.

Mr Biswas called the mineralisation “amongst the most impressive seen in recent memory” and said Newcrest was excited about mining it.

Newcrest said it would study the potential of Havieron into commercial production in about three or four years.

Concern over Wafi-Golpu marine waste dumping

Landowners protest against marine waste dumping plans for the Ramu mine in 2010

Concern over proposed deep sea tailings outfall

The National aka The Loggers Times | February 12, 2020

MINISTER for Fisheries and Marine Resources Dr Lino Tom is unsure about the proposed deep sea tailing pipeline outfall (DSTPO) from the Wafi-Golpu project likely to go out at Wagang, few kilometres east from Lae city.

Wagang, in the Ahi local level government, is at the centre of the proposed construction of new fishery wharf project undertaken by the National Fisheries Authority (NFA) and the Wafi-Golpu project DSTPO.

Tom earlier said much of the revenue from fishery sector was generated from tuna. But he was uncertain about the DSTPO.

NFA managing director John Kasu said discussions were still underway.

“The NFA is aware of the proposed DSTPO and discussions are underway to find a common understanding” Kasu said.

Kasu, however, did not explain which Government agencies and private entities were trying to find a common ground for mitigation, should any consequences arise from the impact of the DSTPO if constructed.

Last Aug 20, Tom signed a memorandum of understanding with Morobe Governor Ginson Saonu to ensure that the NFA completed its geo-tech feasibility and land investigations to allow the start of the project construction.

Saonu wants to see the construction of the Wagang fisheries wharf start less than three years from now.

Australia’s Newcrest says PNG gold project back on track as stay lifted

Reuters | 11 February 2020

Australia’s Newcrest Mining Ltd said on Tuesday Papua New Guinea’s national court dismissed a stay order on work relating to the Wafi-Golpu gold-copper project, paving the way for talks to resume on it with the Pacific country’s government.

The deal by Wafi-Golpu co-owners Newcrest Mining and South Africa’s Harmony Gold hit a bump when the Papua New Guinea government said in September it wanted to keep 40% of gold produced from the project.

The government then withdrew support for the memorandum of understanding in January due to delays caused by legal proceedings.

Newcrest shares have fallen more than 20% since September. They rose 0.6% on Tuesday, compared to a marginally lower Australian gold shares index.

The miners had been hoping to secure a mining lease over the major gold and copper deposit early last year, before a change in PNG’s leadership and a shift in minerals policy led to delays.

Newcrest and Harmony look forward to re-engaging with PNG and progressing on discussions about the special mining license, Australia’s largest listed gold miner said in a statement.

Wafi-Golpu MOU to be eliminated

So Newcrest and Harmony signed a deal with the O’Neill government that stitched up the landowners and the country – but nobody gets held accountable once again. Not the bureaucrats, not the politicians and certainly not the mining company executives and their lawyers! 

Cedric Patjole | Loop PNG | January 31, 2020

The Memorandum of Understanding between the former O’Neill-led coalition government and the Wafi -Golpu Joint Venture will be eliminated.

Prime Minister James Marape revealed this at the Back to Business Breakfast event in Port Moresby.

The MOU signed in December 2018 established the framework for the parties to progress the permitting of the Wafi-Golpu Project ‘as quickly as practicable’ with a view to achieving a Special Mining Lease by 30 June 2019.

However, the Morobe Provincial Government rejected the move, taking the matter to court and stalling the Wafi-Golpu Mine from maturing.

Prime Minister Marape revealed to the business community that the MoU would be eliminated.

“Some of you might be interested on what is happening with Wafi-Gopu, one of our lowest hanging fruits, and let me thank Harmony and Newcrest for their patience,” said Marape.

“But they also know that the MOU that they signed with the previous government was a show stopper. That MOU was signed outside of the normal protocols of Government.

“And so we are in the businesses of now eliminating that MOU, and they have agreed to eliminate that MOU, and so, we’re now having discussions with our provincial government and our landowners and very soon, Wafi-Golpu will be a project that is moving towards maturity.”

Since the move by the Morobe Provincial Government and the ongoing permitting delays, WGJV has reduced its planned work program and manpower.

PNG police MOU with mining company concerning – academic

Radio New Zealand | 23 January 2019

A Papua New Guinean academic and lawyer says a new memorandum of agreement signed by police and an Australian miner sends the wrong message to the public.

PNG police commissioner David Manning this week announced that police would work together with Morobe Consolidated Goldfields to address law and order issues in the Wau/Bulolo area of Morobe Province.

“In doing so the [Royal Papua New Guinea Constabulary] acknowledges the importance of maintaining and preserving good order for a harmonious relationship between the mine and the affected community,” Mr Manning said.

The company is owned by Harmony Gold, which operates the Hidden Valley gold mine located about 150km south of Morobe’s provincial capital Lae.

The Hidden Valley mine operations have previously encountered problems with the death of a worker in relation to a landowner compensation bid.

An Australian National University PhD candidate and practicising PNG lawyer, Bal Kama, said that given a long history of conflicts between landowners and miners in PNG the newly-announced arrangement raised questions about the impartiality and objectivity of police.

Mr Kama said there were hardworking, honest police officers out there who were doing their best to uphold police values, but that such initiatives under the new agreement could undermine their good work.

“If the mining firm is willing to support bringing law and order and peace and harmony in the community then let them do it as part of their social responsibility.

“By funding community peace projects, funding NGOs that are engaged in making sure that there is harmony and law and order maintained in the community. They don’t have to go into a partnership with police.”

Mr Kama said operators in the extractive industries should also focus on paying their dues to the government and landowning communities on time in order to prevent conflict and ensure police received the resources they need in a timely fashion.

MRA Updates On Porgera Mine Lease Application and Wafi-Golpu

Melisha Yafoi | Post Courier | January 7, 2020

Application for a Special Mining Lease for the Porgera gold mine is still in progress.

Mineral Resources Authority managing director Jerry Garry told the Post-Courier that the state is progressing the determination of the application which expired on August 16, 2019.

Mr Garry said during that process there will be two major streams of activities including the negotiations of the Mining development contract and recommendations from the Mining Advisory Council.

He said for the Mining development contract, the State Negotiation Team, (SNT) will recommence negotiations with the mine operators Barrick & Zinjin upon receiving directives from the NEC.

“This process will principally discuss fiscal regimes and other stability agreements in terms of taxes, royalties, equity, national content and other benefits teams,” he said.

While for the recommendations, he said this will be administered by the MRA whereby the technical and financial capabilities of the operator and compensation agreement pertaining to the extension application will be presented before special MAC for its deliberations and recommendations, either for refusal or grant to the Mining Minister & ultimately to NEC.

“We anticipate conclusion of the permitting, if, all goes well without any disruptions to the process, within first or second quarter of 2020,” he said.

Mr Garry said the permitting of Wafi-Golpu project after being halted due to a court injunction order was relieved preventing everyone from doing any work.

He said the injunction remains on foot and will SML application be dealt with only when the court injunction is resolved.

“Whenever the court injunction is relived, the MRA will formalise the remaining landowner associations along the pipeline and tailings outfall, and continue to hold development forum to develop the memorandum of agreements and compensation agreements with landowner associations, LLG and provincial government.

Concurrently, the SNT will re-open Mining Development Contract negotiations with the project development proponents, Harmony and Newcrest,” he said.

“It is anticipated that SML permitting may take 4-6 months from the date when the court injunction order is lifted.”

Mr Garry said as for the Revised Mining Act, whenever the Revised Mining Act is passed by the Parliament, the MRA will re-align itself to meet the new changes.

He said the Prime Minister has urged another consultation with the industry during the December 2019 PNG Mining Conference and the Department of Mineral Policy & Geohazard Management will be coordinating this process.

Worrying sign for Harmony as Wafi-Golpu partner, Newcrest, scales back project activity

David McKay | MiningMX | October 24, 2019

AUSTRALIAN gold miner, Newcrest Mining, has scaled back its presence at Wafi-Golpu, a Papua New Guinea (PNG) project it holds in joint venture with Harmony Gold, after running into “continued delays”.

Sandeep Biswas, MD and CEO of Newcrest, said in the firm’s third quarter report today the project continued to be delayed “… by unresolved legal proceedings between the National Government and the Morobe Provincial Government” regarding how the economic benefits of the project would be distributed.

The PNG government was also running a separate review of the project in terms of broader economic participation and distribution policies.

As a result, the Wafi-Golpu Joint Venture (WGJC) has deferred the planned work programme whilst the company’s project team based in Brisbane and on site in PNG had been reduced. Other activities such as community and environmental programmes at the site would continue, however.

“It is difficult to estimate the duration of this delay and the market will be advised when discussions recommence,” said Biswas. He added that the PNG government had continued to “signal its support for the project”.

Harmony Gold said in May that following the appointment of PNG’s new prime minister, James Marape, there had been uncertainty about how quickly the project may progress. The PNG first focused its attention on natural gas projects against a backdrop of political unease in the country. Earlier this month, PNG authorities issued warrants for the arrest of the country’s former Prime Minister Peter O’Neill on suspicion of “official corruption”.

The O’Neill government signed a memorandum of understanding (MoU) regarding the development of Wafi-Golpu but it did not state the ownership that the PNG government may take in the project.

“Consequent delays in the work program will increase permitting costs,” said Morgan Stanley of Wafi-Golpu in July.

“We view PNG as a relatively high risk jurisdiction, and if permitting approvals are not forthcoming, development of the project could stall and exacerbate our concerns over Harmony’s long-term production decline,” said JP Morgan Cazenove in a note.

Significant delays in the development of Wafi-Golpu could also heighten risks about Harmony’s long-term production profile notwithstanding last year’s purchase of Moab Khotsong from AngloGold Ashanti.

Harmony is thought to be considering the possibility of making a bid for the Mponeng and Mine Waste Solutions assets in South Africa that AngloGold has put up for sale.

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.

How do miners dispose of their waste in the sea?

MCC’s Basamuk Refinery in Madang pumps waste from the Ramu mine directly into the ocean

Melanie Burton | Reuters | October 11, 2019

Sea disposal of mining waste could spread as Indonesia weighs adopting the technique for new nickel projects, as Papua New Guinea is doing for a gold mine proposed by Australia’s Newcrest Mining.

The management of mining waste has drawn attention since two dam disasters in Brazil, and after red mud spilled into Papua New Guinea’s Basamuk Bay from Ramu Nickel’s operations in August.

An expert in chemical contamination has called test results from the Ramu Nickel spill “alarming,” media said this week. That spill resulted from an operational failure, however, rather than an issue with tailings management.

Proponents say deep sea tailings placement, which pipes unwanted pulverized rock into the sea, is cheaper and less harmful, especially on tropical islands where earthquakes or heavy rain limit storage on land, near deep sea trenches.

Critics say the impact of such marine disposal is poorly understood.

Fewer than 20 of the world’s 2,500 mines use the method to dispose of tailings waste, comprising rock, microscopic unwanted metals and traces of processing agents, such as cyanide.

Here are answers to some common questions, drawn from two research papers by Australia’s science bureau, the CSIRO.

WHAT IS DEEP SEA TAILINGS PLACEMENT?

Mining waste goes down a pipe 100 m (328 ft) or more offshore designed to sink rapidly to even greater depths, such as those off the continental shelf. The waste settles on parts of the ocean floor believed to be home to few creatures.

That keeps the waste out of the ocean’s most productive surface layer, where sunlight drives photosynthesis, and sealife is most abundant.

After the mine has closed, advocates say the deposit area will gradually be recolonised by the marine life and bacteria that were there before, as they now move back from surrounding areas.

WHEN WAS IT FIRST USED?

The first commercial use of deep sea tailings placement was at the Island Copper mine on Canada’s Vancouver Island in 1971 to 1996. Industry regarded that as a success, though it was also found to have affected the lake’s biodiversity. Some other early mines, such as Greenland’s Black Angel lead and zinc mine, however, contaminated surrounding water bodies.

WHERE IS DSTP USED NOW?

• The Lihir gold mine in PNG run by Newcrest Mining. The Melbourne-based miner also proposed DSTP for its Wafi Golpu project with South Africa’s Harmony Gold.
• The Simberi gold mine operated by Australian miner St. Barbara in PNG’s New Ireland province.
• The Ramu nickel mine and plant run by Metallurgical Corporation of China in PNG’s Madang Province.
• Batu Hijau, Indonesia’s second largest copper mine, run by PT Amman Mineral Nusa Tenggara.
• Australia’s Kingston Resources is considering reopening PNG’s Misima gold mine and using DSTP.

WHAT ARE THE ISSUES?

ECOLOGICAL DIVERSITY: A quarter of the world’s coral reefs faced rising exposure to sediments and nutrients, boosting stress from climate change and ocean acidification, Australia’s science agency said in 2016. Greater sediment could smother coral or choke off sunlight or oxygen, it said.

SUSPENSION: Fine dust or metal particles remain suspended in the ocean instead of settling on the sea floor. They can “shear off” in plumes, widely dispersed by ocean currents, and travel between layers of varying salinity or temperature.

The impact on marine life is not fully understood, but coral near the Lihir tailings disposal site suffered a “substantial impact,” according to the paper.

Plankton could be trapped in suspended solids and fine particles could clog the gills of fish, it added.

MIGRATION: Marine animals could carry trace elements of mine waste into the food supply chain after ingesting them and then moving to shallow waters from the deep ocean.

DEEP SEA: Wider use of DTSP could affect deepwater canyons and abyssal or underwater plains that are high in biodiversity, according to the research.

RECOLONISATION: Ocean warming and acidification could hamper efforts to recolonise a DTSP area, it added. (Reporting by Melanie Burton; Editing by Darren Schuettler)

PNG demands Wafi-Golpu gold stays in-country, urges Newcrest, Harmony talks

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.”