Government and Barrick Sign Agreement

by PNG Business News - October 25, 2021

Photo credit: Papua New Guinea Today - PNG Government, Barrick Niugini sign Agreement to reopen Porgera Mine

The Porgera Project Commencement Agreement was signed by the State and Barrick Niugini Limited, paving the way for the commencement of mining activities at the Porgera Mine.

Prime Minister James Marape confirmed the government's commitment to reopening Porgera Mine as soon as possible, with BNL as an equity partner and operator, and vowed to provide BNL the certainty it needed to go from care and maintenance to mine reopening.

He said that the commencement agreement is the master agreement that details the parameters agreed to in the historic Project Porgera Framework Agreement signed in April, while the Shareholders Agreement, Operatorship Agreement, and MDC are still being finalized.

The following are some of these terms:

  • On a 53/47 basis, PNG stakeholders and BNL will share the economic advantages achieved during the mine's lifetime.
  • BNL will provide the necessary funds to reopen the mine.
  • A large number of landowners who are the customary owners of the land where Porgera is located will get an increase in equity; and
  • After ten years, the State will have the option to purchase the remaining 49% of the mine from BNL at fair market value.

“The commencement agreement provides a framework for their negotiation and will help accelerate progress on the remaining steps so that Porgera can be reopened,” Marape said.

He urged all parties, particularly the Porgera landowners and community, to band together and work with the government and BNL to establish the proper conditions for the mine to resume, including addressing the Porgera valley's peace and order situation.

“We look forward to the setting up of the New Porgera Project Company and for work to begin in preparation for the processing of gold ore at the soonest possible date.

Porgera’s restart helps PNG get back more for our people, creating local jobs and contracts in partnership with one of the world’s leading mining companies,” Marape said.

On behalf of BNL shareholders Barrick and Zijin Mining, Barrick chief executive officer Dr Mark Bristow urged all parties to redouble their efforts and complete the remaining agreements as soon as feasible.

“As we move toward starting up mining operations, our common task is to negotiate expediently and in good faith so that Porgera, a mine with enormous potential, can resume production and take its place as an engine of the PNG economy and contributor of foreign exchange once again,” Dr Bristow said

Dr. Bristow and Marape agreed that their negotiating teams will continue to work closely together in the coming weeks to ensure that all remaining criteria for the resumption of operations at the Porgera Mine are satisfied as soon as feasible.

 

Reference: Post-Courier (18 October 2021). “Govt, Barrick Sign Porgera Mine Commencement Agreement”.



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PNG Business News - April 12, 2021

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The reopening of the Porgera Gold Mine at the earliest, according to the Porgera Mining and Allied Workers Union (PMAWU), is good news. This comes after the PNG government announced that Barrick Niugini Limited would ink a new deal for the reopening of the Porgera Gold Mine. The PMAWU Executives said in a statement that those directly affected have suffered since the mine's closure. “The mine workers, who have been directly impacted since last April, have been struggling to make ends meet,” they said. “Those who were not able to secure an alternative job have been depleting their superannuation savings. They have the necessary skills and experiences to operate the mine when it resumes. Any news to reopen the mine, at the earliest is welcome news for the Union and its impacted employees.” They expressed their delight at the news that the state is ready to ink a Porgera Mine Reopening Framework Agreement with Barrick. Following the mine's closing, the PMAWU Executives said that the Prime Minister made many promises to them. Employees who have been affected will get financial assistance. “The PMJM has made several commitments, on media and also during our meeting with him on the 25th July 2020 at the Airways Hotel, that his government will consider a monetary solace for those impacted employees, as such the union, with the help of our mother body being PNGTUC, have been following up with PM & NEC Department by way of an NEC Submission but to this date, our welfares have not been looked into yet. The trucking contractors were fairly compensated for their losses but not us.” Another assurance was to include a clause in the framework arrangement ensuring that all affected workers are immediately reinstated to their previous positions prior to the redundancies. The PMAWU Executives have already presented a briefing paper on improved terms and conditions, and they expect their complaints to be heard and properly addressed in the proposed Framework Agreement.  “The union also submitted a Position Paper concerning same to all relevant stakeholders in the negotiation tables. If the country is heading for better deals for its citizens, then the workers who will spin the wheels to run the production must be fairly remunerated as well.” “The Union has an option to refuse to resume operations if the above considerations are not met in the final Framework Agreement once settled. Consideration of this option may or may not happen subject to sighting of the final Framework Agreement.” Following a settlement in talks between the State and Barrick, Prime Minister Marape announced on April 5 that PNG would get a "far superior offer" than the previous agreement, which lasted from 1989 to 2021. “I can assure our country that this is a far superior and better deal, meaning our landowners and Enga Provincial Government will get more, and the balance of equity through Kumul Minerals will mean we hold a majority in equity.  “Other benefits include securing an increased and upfront tax with no concession as is the case with other resource projects, an increase in royalties as well as a better handle on environment and resettlement issues at Porgera and a Barrick exit option. Prime Minister Marape added that “If the last round of negotiation is good, then I intend to meet Enga Provincial Government and all SML and LMP plus impact area landowners at the earliest to discuss the benefits sharing.” Marape has reported that Barrick and has settled a 10-year withdrawal clause in the current Porgera deal. The Prime Minister's statement made no mention of affected mine employees.

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Prime Minister James Marape said in a statement that the government is willing to sign an agreement with Barrick Gold to reopen the Porgera Gold Mine in Enga, which has been closed for a year. The mine was abandoned after the State declined to extend Barrick Niugini Limited's mining contract (BNL). PM Marape said there was a breakthrough after dealing with BNL, with Papua New Guinea seeing a “far better deal” than in the first 31 years of service, from 1989 to 2020. “I’m announcing to our country that within the principles of my Government, which includes getting more from our natural resources, we are in a better position now to sign an agreement with Barrick for what will be a new Porgera,” the Prime Minister said. He added, “I can assure our country that this is a far superior and better deal, meaning our landowners and Enga Provincial Government will get more, and the balance of equity through Kumul Minerals will mean we hold a majority in equity. Other benefits include securing an increased and upfront tax with no concession as is the case with other resource projects, an increase in royalties as well as a better handle on environment and resettlement issues at Porgera and a Barrick exit option.” He noted, “Kumul Minerals Holdings, since being granted the Special Mining Lease (SML) over Porgera, could have started but many court cases Barrick had filed caused delays to reopen Porgera, hence we entered into these negotiations. We are almost at the point of signing an agreement with Barrick. If the last round of negotiation is good, then I intend to meet Enga Provincial Government and all SML and LMP plus impact area landowners at the earliest to discuss the benefits sharing.” "To those who questioned Government and Kumul Minerals Holdings on why this turn in Porgera, I inform all that we have every capacity to operate Porgera like we are doing in Ok Tedi right now,” he added. "But with Barrack’s court cases, we had to go down this path. Barrick has agreed with us on an exit option in the new Porgera agreement 10 years from now."


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