Tag Archives: PNG development

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.”

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Wafi-Golpu To Be Delivered Under Marape-Led Govt

FORGET ‘TAKE BACK PNG’ – IT IS BUSINESS AS USUAL UNDER THE MARAPE GOVT

Gorethy Kenneth | Post Courier | September 4, 2019

Prime Minister James Marape announced that the government wants to get the Wafi-Golpu gold mine operational at the soonest.

And the government is already in serious discussions with the Morobe provincial government to resolve issues while it prepares to finalise discussions with developers, Harmony and Newcrest.

Mr Marape told a press conference in Port Moresby yesterday that they want this project to be their legacy as they look at other projects like the Porgera lease that has expired.

He said as the country is going through tough economic times, this project will help boost the country’s economy including others that they are now serious about addressing.

Mr Marape also revealed that the government has given the green light to Total to proceed with the implementation of the Papua gas project, claiming that additional gains have been negotiated for the country under the project agreement.

“As a government, we are finishing this one,” he said, adding: “It is signed by the (former) O’Neill government, (and) we allowing it to go.

“Our government will enter into discussion with Wafi -Golpu and we are bringing to conclusion our issues with the Morobe provincial government.

“Those issues will be brought to conclusion and as whole of government, we will sit in one and we will go into discussion with both Harmony and Newcrest so that is one other project that is looming on the horizon.”

Mr Marape also told the press that the government “is not considering” any more concessions to be given to resource project developers.

“…and as I stated, the existing laws we have in place will not consider anymore concession (to give), but where we will win, as provided for by law, we will win, and where they (developers) win they will win,” he said.

“We are also looking into the Porgera lease that has expired.

“So those announcements will come in due course, as the nation has some big projects on the horizon.

“Not all is looking gloom, although our economy is stressed a little at the moment and our treasurer is going through the numbers and hopefully tomorrow (today) or Thursday he will announce the numbers (as) he has seen (the) possibility of a supplementary budget that we have been talking about all along.

“And that will come in due course but let me inform the country that all is not bad as it seems…we are working on the three or four projects that we have on the horizon and that will bring some economic activity and life into economy and hopefully going 2020 and beyond, we will gain some traction in the economy, and we have started with Wafi-Golpu.”

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Papua New Guinea sticks to gas deal with Total for $13 billion project

GOVERNMENT SURRENDERS

Sonali Paul | Reuters | September 3, 2019

Papua New Guinea said on Tuesday it will honor a gas deal that Total SA signed with a previous government for a $13 billion plan to expand gas exports, after securing minor concessions from the French company.

The decision removes uncertainty over the plan to double liquefied natural gas (LNG) exports from the Pacific nation that arose after new Prime Minister James Marape came to power in May promising to win more benefits for the impoverished country.

The Papua LNG gas agreement is one of two agreements needed for Total and its partners, Exxon Mobil Corp and Oil Search Ltd, to go ahead with the LNG expansion plan.

“The government has now cleared Total to proceed full steam ahead with the implementation of the Papua Gas Project,” Petroleum Minister Kerenga Kua said in a statement.

Doubts about the gas deal escalated in August, when the government suddenly called for talks to revise the agreement.

Kua said Total had made some concessions, promising to prepare a detailed plan outlining how much local equipment and services would be used in the project and to negotiate with any third party wanting access to the project’s petroleum pipelines.

It would also be willing to negotiate for Papua New Guinea to take a stake in the pipelines after the state has repaid all its loans and costs on the project, and would consider buying LNG carriers in a joint venture with the state.

“Most of these are substantial new concessions on potential future benefits,” Kua said.

The companies had insisted that the Papua LNG gas agreement that Total signed in April should be honored, and Oil Search warned in August that costs on the project could rise if it was delayed by prolonged talks.

An analyst said the government had capitulated to Total, winning only non-committal offers to consider future steps that might benefit the country.

“This is a big win for the industry, but they can’t say that, because they need to let the prime minister and Kua save a little political face,” said the analyst, who declined to be named due to the sensitivity of the issue.

The three companies welcomed the government’s decision.

“We are looking forward to working with the Government of PNG to conclude the required gas agreement for the P’nyang project,” Exxon Mobil said in an emailed comment, referring to the second of the two agreements needed.

Oil Search’s Managing Director Peter Botten said the project would “help deliver billions of kina in value to the PNG economy, support local businesses and provide greater employment opportunities for thousands of Papua New Guineans,” referring to the PNG currency.

Shares in Oil Search, which have dropped over the past three months amid uncertainty over the gas agreements, closed 2.1% higher shortly after the government’s announcement in a flat broader market.

“There should be a handsome re-rating,” Adrian Prendergast, an analyst at Morgans, said a day ahead of the announcement.

“In the time the political developments have been happening it (Oil Search) has really derated more than the total value that we place on this expansion.”

At Monday’s close, Oil Search shares were down about 14 percent since the previous prime minster stepped down.

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Rai Coast MP Calls for closure of PNG’s Ramu Nickel Mine

NBC News / PNG Facts | August 28, 2019

Member for Rai-Coast in Madang Province Peter Sapia is calling for the immediate closure of the Ramu Nickel Mine’s Basamuk refinery.

Mr. Sapia’s calls follow several images which went viral on social media Facebook, showing the sea’s color turning a different shade of red, brown and orange.

He says this is clearly a breach of the company’s environmental permit and therefore they shouldn’t be allowed to operate there anymore.

Mr. Sapia who directed his question to Minister for Environment of Conservation Geoffrey Kama today in Parliament says as local MP, he wants the Government to go back to the table and negotiate the future of the mine.

“Mr. Speaker according to the Ramu Nickel environment plan, the tailings waste will be processed properly before being discharged into the sea and that there will be zero leakage or spillage.

“I have already engaged an independent mining expert to be on site to conduct a quick inspection which I will present next week.

“Mr. Speaker environmental plans are presented to the Conservation Environment and Protection Authority before any environmental permit is granted to any mine to operate.

“Ramu Nickel has now breached the environmental permit and therefore cannot operate anymore – profit must not be prioritized at the expense of the environment,” Mr. Sapia said.

Meantime Environment and Conservation Minister Geoffrey Kama in response, says he has engaged specialists working in the Department of Mining and they are in the area currently assessing the situation.

Mr. Kama says the suspected spill occurred on Saturday 24th August.

“Em spill tasol, long graun na wara mix I kam em spill na igo insait.”

“Nau ol lain i wok long em I stap.

“They will give me back the report and I am scheduled to go there next Monday.

Mi go long hap na taim mipla i lukim situation em i bagarap, yes bai umi pasim displa main.

“Tasol bai umi lukim ripot na bai umi toktok, mi hamamas olsem man I gat pawa long pasim – Chief Mine Inspector em I stap pinis long hap wantaim olgeta staff blong mi.

“So I kam bek na I go olsem wanem, bai mi kambek na toksave gen,” Kama i tok.

In November 2018, the landowners petitioned the National Government to ‘stop the K5 billion project extension-‘ it is unclear what has become of that petition.

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PNG puts Barrick, Zijin on notice over Porgera gold mine negotiations

Communities living around Papua New Guinea’s Porgera gold mine lack enough access to clean water to meet their basic needs. Photo: Columbia University

Government stake in Porgera mine won’t solve the appalling human rights and environmental abuses.

Jonathan Barrett and Mell Chun | Reuters | August 19, 2019

Papua New Guinea plans to take a larger share of the Porgera gold mine as part of lease-renewal talks, diluting the ownership of joint venture partners Barrick Gold Corp and Zijin Mining Group, the country’s commerce minister told Reuters on Monday.

The planned changes are part of a push by the South Pacific archipelago to transform its economy under new government leadership amid a perceived lack of benefits flowing from resources projects back to communities.

Porgera, located in PNG’s northern highlands region, is expected to produce 240,000 to 260,000 ounces of gold this year. Barrick and Zijin each own 47.5% of the mine, with the remaining 5% held by landowner group, Mineral Resources Enga.

PNG’s Minister for Commerce and Industry, Wera Mori, said a portion of Barrick and Zijin’s stakes would be given to the national and provincial governments and to landowners.

“We would like to see the mine to continue, but this time to be structured in such a way with a lot more national interest in it,” Mori told Reuters in an interview in Sydney.

The final figure to be held by Barrick and Zijin would be determined during on-going negotiations over a requested 20-year extension to the lease, he said.

“It will decrease correspondingly, like if the state picks up say 30% or 40%,” said Mori.

Barrick and Zijin were not immediately available for comment. In early August, Barrick Chief Executive Mark Bristow said in a statement that there needed to be a “partnership approach” over the future of the mine.

The Porgera lease recently expired, although the operators are allowed to keep producing during lease-renewal negotiations.

Papua New Guinea land-owners have raised concerns over what they say are negative social, environmental and economic impacts from the mine. Negotiations with the project operators have been complicated by a split among the landowners.

GOLD RUSH

PNG was the world’s 14th largest gold producer in 2018, according to the World Gold Council.

Mori, who was standing in for PNG’s new prime minister, James Marape, at an investor forum in Sydney, said the resources-rich nation was developing policies to keep more of the commodities it produces to improve its economy.

“We are in the process of developing the framework to retain at least 30% of our gold that we export every year,” Mori told the forum early on Monday.

Proposed changes to the country’s mining laws are expected to be presented to PNG’s parliament in the coming weeks, capturing all new projects.

Mori said that PNG would also consider pegging its currency, the kina, to gold, rather than the U.S. dollar.

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.

Marape, the former finance minister who became PNG’s new leader in May after winning a vote in parliament, has put some of the world’s biggest resources companies on notice over how profits are shared from the country’s resource riches.

He said he wanted to turn PNG into the “richest black nation” on earth over the next decade.

This includes sending a team to renegotiate its Papua LNG agreement with French oil major Total SA.

Gerea Aopi, PNG country director at Papua LNG partner Oil Search, told the forum that the sector required certainty.

“I think the industries both in oil and gas and mining have indicated that we don’t object to the changes that are going to take place as long as there’s proper consultation,” Aopi said.

The Total-led Papua LNG, which also includes Exxon Mobil Corp, is part of a $13 billion project set to double the country’s exports of LNG.

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PNG aims to retain 30% of exported gold, may change currency pegs

Jonathan Barrett | Reuters | 19 August 2019

Papua New Guinea wants to retain at least 30% of the gold it currently exports as it transforms its economy under a new government leadership, the country’s commerce minister said on Monday.

PNG was the world’s 14th largest gold producer in 2018, according to the World Gold Council. Its assets include the Porgera gold mine, majority controlled by a joint venture between Barrick Gold Corp and Zijin Mining Group , which has a lease currently up for renewal.

PNG’s Minister for Commerce and Industry Wera Mori told an investor forum in Sydney that the resources-rich nation was developing policies to keep more of the commodities it produces in the country to improve its economy.

“We are in the process of developing the framework to retain at least 30% of our gold that we export every year,” Mori told an investment forum in Sydney.

Mori said that PNG would also consider pegging its currency, the kina, to gold, rather than the U.S. dollar.

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.

James Marape, the former finance minister who became PNG’s new leader in May after winning a vote in parliament, has put some of the world’s biggest resources companies on notice over a perceived lack of wealth flowing from their projects back to communities.

This includes sending a team to renegotiate its Papua LNG agreement with French oil major Total SA.

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$14bn PNG LNG expansion hangs by a thread

Esmarie Iannucci | Mining Weekly | 15 August 2019

The share price of ASX-listed Oil Search stumbled on Thursday after the government of Papua New Guinea (PNG) sent a delegation to Singapore seeking to renegotiate the terms of the PNG liquefied natural gas (LNG) agreement, signed in April this year.

Minister for Petroleum Kerenga Kua said on Thursday that the agreement was signed by the previous PNG government, in a period when “serious moves” were being made to remove and replace said government.

He added that the new government took office in May with a firm view that the PNG gas agreement was disadvantageous to the state, and was seeking to renegotiate the deal.

Kua warned that the negotiations could work out “disastrously” but said that the people of PNG had to be ready to accept the outcome.

The efforts to renegotiate the PNG LNG agreement come despite the PNG government’s earlier assurances that it would, in principle, stand behind the signed agreements in the best interest of the State.

At the time, however, the government reserved the right to discuss “a shortlist of matters” with the project proponents.

Oil Search MD Peter Botten on Thursday said that the company was looking forward to gaining further clarity on the PNG government’s position regarding the agreement, which was inked in April this year, and the ways forward for the project.

The April agreement between the PNG government, Oil Search and ExxonMobil, and operator Total SA defined the fiscal framework for the PNG LNG project, and included a domestic market obligation, a deferred payment mechanism for the State’s payment of past costs, and a national content clause to support local workforce development and the involvement of local businesses.

The agreement gave the project proponents the confidence to start the initial work on a $14-billion plan to double the expansion of LNG in PNG to around 16-million tonnes a year.

The expansion plans include three new 2.7-million-tonne-a-year trains at the PNG LNG project, two of which will be operated by Total on its own acreage, while the third will be operated by ExxonMobil and fed from its existing and new gasfield P’nyang.

A final investment decision on the expansion is targeted for 2020. 

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