Tag Archives: Wafi-Golpu

Citigroup limits financing for mines that dump tailings at sea

Jim Tan | Mongabay | 12 June 2018

  • Following pressure from advocates, Citigroup said last month that it will not fund any future mining projects over $50 million that dispose of mine waste in the oceans.
  • Tailings, a fine-grained, often toxic slurry left over after the processing of mined ore, are still disposed of in oceans, lakes and rivers in several countries.
  • Mines in Papua New Guinea, Norway and Chile are proposing to dispose of tailings in the ocean.
  • Local communities are often most affected by pollution from mines and have vocally opposed tailings disposal in the ocean in Norway and Papua New Guinea.

Several mines around the world dispose of potentially toxic mine waste directly into the ocean. Environmentalists have criticized the practice, arguing that the waste smothers ocean habitat and leaches harmful chemicals and heavy metals that can poison marine life. Last month Citigroup, a major shareholder in four mining companies that either actively dispose of mine waste into the ocean or propose to do so, agreed not to finance any new operations that pipe mine waste into the sea.

Citigroup’s move comes after pressure from an international coalition of NGOs that launched a campaign this year to end the disposal of mine waste in natural water bodies. The coalition, led by the Washington, D.C.-based environmental NGO Earthworks, is calling for a global ban on the practice and pressuring financial institutions to stop funding mining operations that engage in it. Earthworks announced Citigroup’s move in a May 2 press release.

“Citi’s decision says loud and clear: ocean dumping is dirty, unnecessary and wrong,” Ellen Moore, who coordinates the Ditch Ocean Dumping campaign for Earthworks, told Mongabay.

There are few signs of life on the bottom of Jøssingfjord in southern Norway 35 years after dumping ceased at the Tellnes titanium mine. Scientists believe it may never recover. Image by Erling Svensen.

Toxic tailings

One of the key problems miners face is how to safely dispose of the huge quantities of waste rock and tailings produced in the mining process. The tailings, a fine-particle slurry left over after the target metal has been extracted from the mined ore, are particularly tricky to handle. Tailings often contain potentially harmful chemicals used to process the ore, like cyanide and petroleum, as well as by-products like sulphuric acid and heavy metals like lead.

Nowadays, the vast majority of the world’s 2,500 industrial-scale mines dispose of their waste on land. But several mines still dump into water bodies, including at least seven into the ocean, in Papua New Guinea (PNG), Indonesia, Turkey and Norway; at least three into rivers, in PNG and Indonesia; and at least five into lakes in the U.S. and Canada, according to a non-exhaustive list from Earthworks. The group calculated that mines dispose of more than 220 million metric tons of waste in water bodies every year — enough, the group says, to fill 55 sports stadiums.

“Although mine waste dumping in water has been phased out in many parts of the world, mining companies still use it, governments still allow it, and the world’s largest banks and investment firms still profit from it,” Moore told Mongabay.

This is partly the result of geography. In Norway, suitable and stable terrestrial locations to store mine tailings are hard to find because of the mountainous terrain. In PNG, mines face a similar problem and must also contend with frequent earthquakes and flooding during the rainy season that can destabilize tailings dams.

Tailings pipes from the Marcopper mine in Marinduque, the Philippines, enter the sea at Calancan Bay. Image by Catherine Coumans/MiningWatch Canada

It is now widely accepted that tailings disposal can have a catastrophic impact on rivers and the creatures that live there. But the effect of tailings disposal in the ocean is somewhat more contentious.

Companies including Oslo-based Nordic Mining, which proposes to pump tailings from a rutile mine into Førdefjord, a fjord in southwestern Norway, suggest that deep-sea tailings disposal can be safe. They argue that, due to the layered nature of the ocean, so long as tailings are piped deep enough, ocean currents will not spread them, and their impact on marine life will be minimal and localized.

Charles Roche, executive director of the Mineral Policy Institute, an Australian NGO that assists communities affected by mining and is a signatory to the campaign, is less convinced. He points to the very limited peer-reviewed literature as evidence of the impact of submarine tailings. Two studies conducted around the Lihir gold mine in PNG found fewer deep-water fish and reduced marine life on the sea floor compared to the surrounding areas.

Part of the problem is that there is very little independent research into the effect of submarine tailings disposal, Roche told Mongabay.

“Research into submarine tailings is generally done by or for proponents [of submarine tailings disposal],” he said.

Many of the studies are environmental impact assessments conducted on behalf of mining corporations applying for a licence to operate and are rarely publicly available, according to a 2015 article in Oceanography magazine.

The lack of peer-reviewed research on the topic is a problem for Lisa Levin, an oceanographer with the Scripps Institution of Oceanography in California. A 2015 review she co-authored in Marine Pollution Bulletin suggests that a major reason is the high cost of conducting research in the deep sea.

Despite the limited research, Levin is also convinced tailings disposal has a negative impact on the ocean. “It will never be good for marine ecosystems,” she told Mongabay.

Citigroup acts

Citigroup, a multinational investment bank and financial services corporation based in New York, is among the top 20 largest financial institutions in the world, with total assets of $1.84 trillion in 2017.

Citigroup’s business is split into two divisions: consumer banking under the Citibank brand, and investment banking. It was Citigroup’s investments that attracted Earthworks’ attention. Citigroup is the third-largest shareholder in the Australian mining companies Highlands Pacific and St. Barbara Limited, which Earthworks says have together disposed of 54 million tons of toxic tailings in the ocean around PNG. Citigroup also holds shares in Norway-based Nussir ASA and Nordic Mining, which have both proposed disposing of tailings at sea in Norway.

Fishing boat on Repparfjord, Norway, where Norwegian mining company Nussir ASA proposes to dispose of tailings from a copper mine. Image by Kjerstin Uhre.

The campaign wrote an open letter to Michael Corbat, Citigroup’s CEO, in January 2018 asking the bank to sever ties with companies that dispose of waste at sea.

“Citi was immediately responsive after we launched the public campaign,” Moore told Mongabay. “It was clear that the bank did not want to be associated with the harmful and outdated practice.”

Following negotiations, Citigroup revised its Environmental and Social Policy Framework to state:

“Citi will not directly finance new mining projects … that utilize submarine waste disposal.”

The policy will only apply to future projects requiring corporate loans over $50 million, and does not apply to the bank’s brokerage business, which holds shares on behalf of clients.

When asked about the company’s new policy, Citigroup spokesperson Laura London responded:

“Citi has a comprehensive Environmental and Social Risk Management Policy that covers our business with a range of sectors, including the mining sector, and we carefully review any sensitive environmental and social impacts of activities we finance, in line with our global standards and good industry practice.”

London declined to respond to detailed questions, and the bank has not publicly announced the move itself.

Roche welcomed Citigroup’s policy change, but he recommended the bank “extend the policy and prohibit any involvement, including company or nominee shareholdings, of riverine and [marine tailing disposal projects].”

Nevertheless, Moore believes this quick win for her campaign is the first step in the right direction. She said Citigroup also agreed to add companies that dispose of mine waste in lakes, rivers or the ocean to the bank’s internal watchlist and subject them to tighter scrutiny.

Levin agrees that Citigroup’s move is significant.

”[Citigroup’s] policy certainly helps to raise awareness of the negative effects of submarine tailings disposal,” she said. “Because the economic sector drives so much of human behavior I believe it is an important first step to engender change.”

The campaign is also targeting the multinational financial institutions Bank of America, Credit Suisse and J.P. Morgan, contending that they also “have ties” to mines that dispose of waste into water bodies.

Local communities pay the price

View of the Ramu Nickel mine refinery where mine waste is disposed of into the ocean in Papua New Guinea. Image by Christopher McLeod/Sacred Land Film Project.

When mine tailings cause environmental damage, it is often local communities and indigenous groups that pay the highest price. Moore is critical of brokerage businesses, such as Citigroup’s, that hold so-called nominee shares for clients, which can be used to shield the clients’ identities. She said that if affected community groups could identify shareholders and then communicate their concerns directly to them, it would make a difference.

In PNG, tailings from the Tolukuma gold mine resulted in elevated levels of arsenic, lead and mercury in the drinking water and flooded croplands for communities downstream, according to a 2013 report prepared for the International Maritime Organization and the United Nations Environment Programme. The report also notes anecdotal reports from local communities of increased illness and deaths after drinking and bathing in the river where the mine disposed of its tailings.

In both PNG and Norway, local community groups have been vocal in their opposition to the disposal of tailings at sea. Landowners in PNG attempted to prevent the Ramu Nickel mine, majority owned by the Metallurgical Corporation of China, from dumping its tailings in the sea through a class action lawsuit, but were unsuccessful. In Norway, Saami indigenous people have frequently voiced their opposition to proposals by Nordic Mining and Nussir ASA to dispose of tailings in Førdefjord and in Repparfjord, in the northern part of the country.

“It is illogical and immoral to sacrifice our traditional, sustainable and profitable fisheries for an uncertain mine project that relies on outdated practices to turn a profit,” said Silje Karine Muotka, a member of the Saami parliament, in Earthworks’ press release.

Nevertheless, both projects appear to be moving forward.

Citations

Brewer, D.T., Milton, D.A., Fry, G.C., Dennis, D.M., Heales, D.S., & Venables, W.N. (2007). Impacts of gold mine waste disposal on deepwater fish in a pristine tropical marine systemMarine Pollution Bulletin 54(3): 309-321.

Hughes, D.J., Shimmield, T.M., Black, K.D., & Howe, J.A. (2015). Ecological impacts of large-scale disposal of mining waste in the deep seaScientific Reports 5:9985.

Ramirez-Llodra, E., et al. (2015). Submarine and deep-sea mine tailing placements: a review of current practices, environmental issues, natural analogs and knowledge gaps in Norway and internationallyMarine Pollution Bulletin 97(1-2):13-35.

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Mining industry scrambling to find new ways to spin its benefits

Wafi Golpu’s Craig Jones. Source: BAI

“Papua New Guinea currently receives more income tax from resource company employees than it does from the companies themselves”

Wafi Golpu mine would be good for the wider Papua New Guinea economy, says executive

 David James | Business Advantage | 22 May 2018

The proposed Wafi Golpu mine will contribute to the diversification of Papua New Guinea’s economy, according to Craig Jones, Executive General Manager Wafi Golpu at Newcrest Mining. He told the Australia Papua New Guinea Business Forum in Brisbane that, if the project gets the go-ahead, it will help local agriculture.

Jones’ comments reflect a growing inclination among resources companies to present their operations as being good for the overall economy, not just good business.

‘There are many opportunities for the mining industry to contribute to the diversification of the Papua New Guinea economy through smart and sustainable development,’ Jones said.

‘Wafi Golpu is a case in point, as the development of the mine’s infrastructure paves the way for a substantial agricultural industry.’

Jones pointed to proposed new roads that will ‘open up’ the region, from the Highlands Highway to the Bulolo Highway.

New infrastructure for the Wafi Golpu mine, a joint venture project between Newcrest and Harmony Gold, could create the opportunity for up to 10,000 hectares of land in the Watut River valley to be used for agricultural purposes.

‘The joint venture has a strong focus on unlocking Morobe’s agribusiness potential.’

Diversification

Jones’ emphasis on stimulating local, non-resource industry benefits may be designed to counter critics within PNG who argue that extractive companies do not pay sufficient tax and that the tax laws should be changed.

As the Executive Director of the Institute of National Affairs, Paul Barker, noted in the forum, according to the Extractive Industries Transparency Initiative, the State currently receives more income tax from resource company employees than it does from the companies themselves.

The emphasis on economic diversification also appears to be a response to statements by PNG leaders, including Prime Minister Peter O’Neill and central bank Governor Loi Bakani, that PNG urgently needs to diversify its economic base to withstand the boom and bust cycles that routinely occur with resource industry projects.

Jones said, however that the extractive industries are ‘likely to remain critical to the future’ while such economic diversification is being undertaken.

He said the extractive industries account for 84 per cent of the total exports of PNG, with 45 per cent from oil and gas, and 39 per cent from mining in 2016.

Exports

Jones said Newcrest’s Lihir gold mine contributed about K3.5 billion in export revenue in 2016.

‘If it proceeds, the potential annual revenue from Wafi Golpu is expected to exceed even Lihir when it reaches peak production, with average free cash flows projected to be around US$900 (K2.92 billion) per annum.

‘This goes on for about the first 10 years after the beginning of commercial production.

‘It would make Harmony and Newcrest very significant contributors to the growth of the Papua New Guinean economy.’

Policy

Jones noted that the Wafi Golpu project requires very significant upfront investment and has very long lead times for its return on investment.

He said there will be K16.7 billion (US$5.14 billion) invested over the life of the mine if it gets the go-ahead.

‘This is why a stable investment and legislative environment is so crucial for the development of Wafi Golpu and other mineral projects.

‘There are currently policy issues that remain a concern for our industry.

‘Apart from the highly debated contributions made by resource companies in company tax there are many other contributions that resource companies make and many of them are voluntary.

‘These benefits have a direct impact on the lives of Papua New Guineans.’

Multiplier effect

Jones pointed to Lihir’s investment in infrastructure, including schools, roads, bridges, Lihir airport, Lihir medical centre, water and sanitation projects.

He said K23 million was channeled through the PNG government’s tax credit scheme ‘which has been an effective vehicle’ for delivering rural value in New Ireland Province.

‘On top of royalties we paid K82 million to landowners and local and provincial governments, PNG employees earn K189 million in wages and one of the most substantial economic flows from the mine is the almost K1 billion paid to local businesses and suppliers to support the mine’s operation.

‘These are the economic drivers that have a multiplier effect on the economy.’

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Harmony adamant that can find funding for Wafi-Golpu project

Picture: PHILL MAGAKOE

Allan Seccombe | Business Day | 19 March 2018

Harmony Gold will have to find $1.41bn to fund its stake in the Wafi-Golpu copper and gold project in Papua New Guinea over five years once it secures a mining right, but management said it would keep the mine and that it was fundable.

Harmony CEO Peter Steenkamp has since last year spoken of exploring options to realise value from the project, with deep scepticism from shareholders and analysts about Harmony’s ability to financially participate in the project. The project has not been reflected in Harmony’s share price.

The options Harmony was exploring included an outright sale of its 50% stake in the undeveloped Wafi-Golpu deposit, bringing in a partner to share the costs and rewards, or keeping its share, with the potential decrease in capital expenditure if the Papua New Guinea government exercised its right to a 30% stake in the venture.

On Monday, Steenkamp said it was a project Harmony wanted to keep and that the new feasibility study showed it to be one that Harmony could fund along with Australia’s Newcrest Mining.

“We are delighted with the results of the feasibility study,” Steenkamp said.

The cost of building the mine and all associated infrastructure like on-mine power generation, pipelines to the coast and processing plants rose to $2.825bn from $2.67bn in the 2016 study, but the overall cost of the project, including sustaining capital gave a total life of project capital bill of $5.38bn, down from $6.38bn before.

Harmony FD Frank Abbott said during a media briefing that Harmony would fund the first three years of construction off its balance sheet, using cash flows from its mines in SA and the restarted Hidden Valley gold and silver mine in Papua New Guinea.

For the next two years Harmony would need funding and plans for that expenditure would be finalised in the next 12-18 months waiting for the Papua New Guinea government to grant the project a special mining lease.

The projections are for the project to start positive cash flows from the seventh year and for it to generate $1bn for the partners from year eight, which for Harmony means $500m if the Papua New Guinea government doesn’t take up its option, said Abbott.

African Rainbow Minerals, a 15% shareholder in Harmony, has been touted as a potential partner or buyer of Harmony’s stake, but Steenkamp declined to comment whether ARM, which is on the hunt for copper after pulling out of a Zambian mine, would be included.

One of the potentially controversial aspects of the proposed mine is the option to dump tailings in the sea rather than setting up tailings deposition sites on land, which the study showed to be fraught with problems and risk.

There are three mines in Papua New Guinea pumping their tailings in the sea, said Johannes van Heerden, the head of Harmony in South East Asia, arguing it was a viable and acceptable option that the partners had explored with local authorities.

The project, which will deliver on average 161,000 tonnes of copper and 266,000oz of gold a year, will be one of the lowest cost copper and gold mines in the world, Steenkamp said.

The boards of Harmony and Newcrest will finalise and approve the study once they have secured the special mining lease from the Papua New Guinea government.

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PNG gold and copper mine to cost JV partners an extra $1bn upfront

Newcrest managing director Sandeep Biswas. Philip Gostelow

Darren Gray | Sydney Morning Herald | 19 March 2018

Newcrest Mining will plough an an extra $US1 billion ($A1.3 billion) in upfront capital into developing a new gold and copper mine in Papua New Guinea.

Australia’s biggest gold miner released the estimate for the Wafi-Golpu project on Monday showing total capital expenditure for the life of mine,  situated about 65 kilometres south west of PNG’s second-biggest city Lae,  would fall by about the same amount to $US5.38 billion.

The cost of the project will be split between Newcrest and Harmony Gold Mining Company.

The Wafi-Golpu project is a key part of Newcrest’s future, and is considered the company’s top growth asset. It has an expected “life of mine” of about 28 years.The updated feasibility study estimates it would produce on average about 161,000 tonnes of copper per year, which is about double the group’s copper guidance for fiscal 2018. The study estimates it would produce about 266,000 ounces of gold per year.

Newcrest attributed the higher upfront capital cost, relative to earlier studies, to the “adoption of deep sea tailings storage” to deal with tailings from the mining operation, construction of an on-site power plant, a larger processing plant and a deeper and larger initial block cave.

In a statement the company said its latest feasibility research identified deep sea tailings storage as the preferred option for managing tailings, and came after examination of 45 possible sites considered for land-based tailings storage dams or dry-stacking sites.

Newcrest highlighted a number of disadvantages from using a land-based storage, determining that the amount of storage volumes required “would result in a large disturbance footprint over an area which can have high traditional heritage and economic value, high biodiversity, and/or displacement of communities and their livelihoods”.

The miner also cited the project area’s “high seismicity and complex geology, including active faulting, which could at some sites result in liquefiable soils. Complex design would be required to partly mitigate such factors, and that would carry high risk and high cost in both construction and ongoing operation.”

The area’s high rainfall was also mentioned, a factor requiring costly and significant management and treatment plans. “Any structure would contain very large amounts of water with commensurate risks.”

The Wafi-Golpu update comes less than two weeks after mining operations at Newcrest’s Cadia mine in NSW were suspended because of a slump in a tailings dam wall.

Executive project director Bryan Bailie told Fairfax Media in an interview from PNG that the selection of deep sea tailings placement as the preferred option for tailings management “had nothing to do” with the recent Cadia dam incident.

Mr Bailie said the PNG government recognised the potential of the project to make a significant economic and social contribution to PNG.

“If developed the project is expected to create economic benefits across Papua New Guinea and the Morobe province, including an estimated 2500 direct jobs during construction and about 850 during operations.

“The project will also contribute at a local, provincial and national level through the payment of royalties and taxes, through social investment programs etcetra,” he said.

“In all the time that I’ve certainly been involved in the project the PNG government has been very supportive of this project, the local communities are the same,” he said.

Newcrest managing director Sandeep Biswas said the company had a clear path forward for the project.

“The improved business case set out in the updated Feasibility Study clearly demonstrates the world-class nature of this multi-decade project,” he said.

Shares in Newcrest rose two cents to close at $19.75.

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Wafi-Golpu to cost $US2.8b and will dump toxic tailings in the ocean

Newcrest managing director Sandeep Biswas believes Wafi-Golpu is the company’s best growth asset. Philip Gostelow

See also: New Campaign Seeks End to Ocean Mine Waste Dumping

Newcrest to spend more on $US2.8b Wafi-Golpu mine, chooses ocean tailings

Peter Ker | Australian Financial Review | 19 March 2018

Newcrest Mining’s top growth project Wafi-Golpu will cost $US200 million ($259 million) more to build under updated plans that envisage a larger mine being built and mine wastes being piped into the ocean.

Last estimated to cost $US2.6 billion, Newcrest said on Monday it would now cost $US2.8 billion to build a mine at the Wafi-Golpu site in Papua New Guinea, with the mine expected to last 28 years and offer an 18.2 per cent rate of return.

Capital spending over the life of the mine would rise to $US5.4 billion.

Wafi-Golpu will produce copper and gold, and is expected to be a cheaper producer of copper than 90 per cent of the world’s copper mines once gold credits are taken into account.

Monday’s updated study suggests each pound of copper produced at Wafi-Golpu will have a unit cost of US26¢, well below the $US3.11 per pound that copper was fetching on Monday morning.

One of the major decisions facing Newcrest and its joint venture partner Harmony Gold was how to manage the mine wastes or tailings from Wafi-Golpu, given the mine is located in hilly terrain, in an area known for its seismic activity and its heavy rainfall.

Newcrest confirmed on Monday that mine wastes would be piped into the ocean, under a method dubbed “deep sea tailings storage”.

Newcrest already pipes mine wastes into the ocean at its Lihir mine in Papua New Guinea, and said the method was chosen for Wafi-Golpu after a detailed study of 45 potential sites for the construction of tailings dam on land.

The company said an on-land tailings dam would disturb land that was valuable for biodiversity, heritage and economic reasons.

“The project area has high seismicity and complex geology including active faulting which could at some sites result in liquefiable soils. Complex design would be required to partly mitigate such factors and that would carry high risk and high cost,” the company said on Monday.

“Any (dam) structure would contain very large amounts of water with commensurate risks.”

On the contrary, Newcrest said the nearby Western Huon Gulf was a “highly suitable environment” for tailings storage.

“It hosts a deep canyon leading to a very deep oceanic basin with no evidence of upwelling,” the company said.

In February Newcrest boss Sandeep Biswas said deep sea tailing storage at Wafi-Golpu would probably cost more than building an on-land tailings dam initially, but would probably be a cheaper option over the life of the mine.

The decision to pipe wastes into the ocean comes barely a week after a tailings dam wall slipped at Newcrest’s flagship Cadia mine in New South Wales, leaving the operation suspended indefinitely.

Newcrest currently owns 50 per cent of Wafi-Golpu, but that stake could fall to 35 per cent if the PNG government takes up an option to buy 30 per cent of the mine.

Studies conducted in 2012 estimated a larger version of the mine would cost $US4.8 billion, with such a project producing 400,000 ounces of gold annually and 250,000 tonnes of copper.

But subsequent studies have considered smaller development options.

A 2016 study into the project envisaged a mine producing 202,000 ounces of gold and 130,000 tonnes of copper per year.

Monday’s updated study envisages a mine that produces 266,000 ounces of gold per year and 161,000 tonnes of copper per year.

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ARM may join Harmony in funding Wafi-Golpu gold project

Patrice Motsepe, executive chairman, ARM

Brendan Ryan | Mining Mx | March 16, 2018

AFRICAN Rainbow Minerals (ARM) may be considering getting involved with associate Harmony Gold over the development of the Wafi-Golpu copper/gold project in Papua New Guinea (PNG) which is a joint venture between Harmony and Newcrest Mining.

That possibility was raised thanks to ARM chairman Patrice Motsepe’s rambling reply to an analyst’s pointed question at today’s presentation held in Johannesburg of ARM’s interim results for the six months to end-December.

Motsepe tap danced around the issue in his lengthy answer during which he – effectively – neither confirmed nor denied the suggestion of a joint venture over Wafi-Golpu.

“A very good question,” Motsepe commented when the question was put to him. He then went into the history of ARM’s relationship with Harmony going back to when ARMGold was merged with Harmony so giving ARM its current 14.3% stake.

Motsepe added: “There are on-going discussions between Harmony and ARM on a number of issues. We continue to be very excited and confident about the future of Harmony.

“The issue relating to copper is that we are looking at opportunities in different parts of the world and, of course, Harmony and ARM have their own on-going discussions in terms of how their partnership could work to the benefit of both parties.

“Very, very important – particularly for us because Harmony has been a critical part of our strategic future. There are opportunities in copper and we are looking at them and the plan is not to make the same mistake we made in Zambia.”

That mistake was the Lubambe mine which ARM finally got rid of in December at a huge loss realising net proceeds of just R492m after spending more than $400m on the development of the mine with partner Vale. Both Motsepe and ARM CEO, Mike Schmidt, have on several occasions stated that the group intended getting into another copper venture despite the setback at Lubambe.

The perennial criticism by analysts of Harmony’s involvement in Wafi-Golpu has been that the gold producer lacks the financial resources to fund its share of what would be a multi-billion dollar development.

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Newcrest woes bad news for Harmony Gold’s Wafi-Golpu project

Harmony Gold CEO Peter Steenkamp. Picture: FREDDY MAVUNDA © Business Day

Allan Seccombe | Business Day | 13 March 2018

The last thing the partners in the undeveloped Wafi-Golpu gold and copper prospect in Papua New Guinea want right now is for one of them to have difficulties with their flagship mine.

Harmony Gold and its Australian partner Newcrest Mining share the Wafi-Golpu deposit in Papua New Guinea and they are finalising an updated feasibility study on building a mine, processing plant and tailings facility. The study is due for completion at the end of March.

The bad news for the partnership is that Newcrest has shut its flagship Cadia mine in New South Wales, Australia, after an earthquake damaged one of its tailings facilities.

“Whilst it is too early in the evaluation and recovery process for Newcrest to provide an indication of the extent to which financial year 2018 production, capital and cost guidance will be  [affected], this event will adversely [affect] guidance for financial year 2018 given the contribution of Cadia to the overall outcomes of Newcrest,” the company said.

Harmony CEO Peter Steenkamp is talking openly about assessing options around realising value from Wafi-Golpu, either keeping it, selling it or bringing in a partner. That decision is likely to be made this year.

Asked whether there were concerns about developments at Newcrest for the project, Harmony spokeswoman Lauren Fourie said there was still some way to go.

“It would be premature to comment on any of these items before the release of the update. Further, the advancement of the project to development stage is still subject to obtaining the necessary permits from the PNG government and approvals from the respective boards of Harmony and Newcrest. This also applies to early works,” she said.

For Newcrest to think of starting a project costing hundreds of millions of dollars in Papua New Guinea when it is losing revenue and faces the bill for repairing its tailings dump is going to be difficult.

The study, which will be made public in coming months, will precede a decision from the Papua New Guinea government on whether to exercise its right to earn into a 30% stake in the project and subsequent mine, something that will leave Harmony and Newcrest with a 35% stake each in the mine and, consequently, a lower capital bill. A decision on whether to build a mine is some months away, but it is still unclear how long Cadia will be out of operation.

Cadia was the most important mine in Newcrest, said RBC Capital Markets analyst Paul Hissey. He calculated the mine accounted for A$12bn ($9.44bn) of the company’s A$17bn value.

“We believe that the value of this asset is such that the cost of any technical solutions/re-engineering will not be insurmountable, and as such we would assume at this point in time that the closure is only temporary, while further risks are assessed and the company satisfies any additional regulatory requirements,” he said in a note.

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