Harmony’s Senior Executives Affirm Company’s Commitment to PNG

by PNG Business News - May 02, 2022

Photo: Harmony representatives present at meeting in Port Moresby with Prime Minister, Honourable James Marape MP (L-R) Mr. J. Van Heerden, Ms. B. Lekubo, Prime Minister, Honourable James Marape MP, Mrs. M van der Walt and Mr. K. Wali.

Senior executives from Harmony’s offices in South Africa, toured company assets in PNG this week. They met with Prime Minister James Marape to emphasise the company’s continued commitment to invest and grow in PNG.

Harmony’s Financial Director, Boipelo Lekubo, and Senior Group Executive: Enterprise Risk and Investor Relations, Marian van der Walt, spoke of Harmony’s investment in PNG since 2004 and the company’s pursuit of multiple opportunities in the Morobe Province, of which the Wafi-Golpu Project is one.

“Harmony, through its subsidiary companies, owns the Hidden Valley Mine and 50% of the Wafi-Golpu Project, as well as extensive exploration interests in and around the Morobe Province,” Ms. Lekubo said.

“Significant capital works associated with the Hidden Valley Mine life extension are presently underway, and Harmony continues to assess further investment opportunities in PNG”, Ms. Lekubo added.

As of 31 December 2021, the Hidden Valley Mine had paid an aggregate PGK 179.4 million in royalties. However, as many industries are experiencing, “Our stakeholders increasingly wish to understand what Harmony is doing environmentally, socially and in terms of governance,” Ms. Lekubo said.

“‘Responsible Stewardship’ is a key pillar underpinning Harmony’s operating philosophy, which is mining with purpose. The principles of sustainable development are embedded in our business. For example, we recognise, both in South Africa and PNG, that preferential procurement is a national imperative, and we are proud to be supporting PNG businesses, including landowner businesses. During the previous financial year, Harmony’s total procurement spend in PNG was PGK 517 million, including PGK 152 million spend with landowner companies.”

“Investment in a country’s people is also key. More than 96% of the Hidden Valley Mine’s 1,600-person permanent workforce are Papua New Guineans, including 29% of senior management and 76% of superintendents. This is continuing to increase through our Superintendent and Leadership development programs. We also recently announced our 2022 scholarship recipients, awarding full scholarships to four Morobeans’ to pursue university studies in mining related fields.”

“That 15% of our Hidden Valley Mine workforce is female, including over 24% of truck operators—many who have been recruited from our landowner communities—is also a source of pride.”

Harmony is also committed to responding to climate change and has announced its plans to achieve Net Zero carbon emissions by 2045. Ms Lekubo explained, “This commitment will influence our energy choices and Harmony’s approach to developments going forward. “There is no doubt about the importance of the Hidden Valley Mine, and—in the future—the Wafi-Golpu Project, to Harmony.

Ms. Lekubo said that The Hidden Valley Mine proved to be critical to the Harmony Group when all of Harmony’s South African mines were shut down due to Covid-19 restrictions. “Thank you to each of our stakeholders for ensuring that the mine remains responsible and viable through particularly challenging times. A special thanks also goes to the PNG Government for partnering with us in keeping Harmonites safe and healthy”.

With respect to the Wafi-Golpu Project, Harmony has been encouraged by the recent progress of discussions with the PNG Government.

“We look forward to concluding the permitting of the Wafi-Golpu project, enabling us to continue creating shared value for all our stakeholders in PNG”, Ms. Lekubo concluded.


Article courtesy of Harmony Gold

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Marape Announces the Launch of the National Gold Refinery and Mint Project

The National Gold Refinery and Mint Project Deal, signed recently by Papua New Guinea Prime Minister James Marape, is a milestone agreement for the country and a key success in the implementation of his government's "Take Back PNG" program, according to Marape. “The project has started and will establish, for the first time in Papua New Guinea, a downstream processing and value-adding industry for gold, one of the country’s most-valuable natural resource exports,” he said. “The project will put Papua Guinea on the world gold map, so it is rightfully recognised in both gold mining and gold refining industries, and in global precious metals and financial markets, as one of the world’s most-important gold-producing countries.” PM Marape stated that downstream processing of natural resources in PNG, such as gold, forests, and fisheries, is critical to the country's economic future and job creation, and that it is a core priority of his government. “This has been talked about for decades, but it is my leadership peers in present Government who are now pushing for this major in-country downstream processing project,” he said. “It is the first of many to come. “Until now, all the economic and social benefits from refining and value-adding to Papua New Guinea’s gold, have been exported to foreign refineries and for the benefit of foreign countries. “The project will ensure that we account for all gold produced in PNG and export out finished products for companies and individuals who are in the gold industry.” For the first time, all earnings, taxes, new US dollar foreign exchange inflows, employment, and related advantages from gold and precious metals refining will stay in PNG, according to PM Marape. “For the first time, PNG will be recognised on the world stage, including by international refined gold regulatory bodies, such as the London Bullion Market Association (LBMA),” he said. “PNG will become known and recognised as a producer of international standard: gold and precious metal investment bullion bars, gold and precious metal legal tender investment coins; and other refined gold products. The initiative, according to PM Marape, would create four new world-class firms in the state: National Gold Refinery – It will purify all of PNG's gold and precious metals and manufacture gold and silver bullion bars to international standards; National Mint – minting its own currency and the new National Bird of Paradise legal tender coin, as well as investment grade gold and precious metal currency coins; National Gold Bank – to offer the PNG gold mining sector with dedicated gold and precious metal banking and trading services; and National Gold – PNG gold and precious metals, as well as its value-added bullion bars, investment coins, and other goods, will be sold to worldwide investors. “This is a high-end value-adding business and for a gold producing nation, we want to move into this space,” PM Marape said. “No one has dared to dream this dream, but as a Government fighting to earn more from our resources, this low-hanging economic opportunity is now harnessed .” PM Marape stated that the state will be a 50:50 joint venture equity partner in the project from the start, with 30% of the State Interest going to local alluvial miners and landowners. “The State also has the right to buy majority or total control of the project at a time into the future as defined in the project agreement with Refinery Holdings who are partners in this project,” he said. “Refinery Holdings will be the project manager, operator and financier of the project until the State decides to buy control.” PM Marape stated that the National Gold Corporation will pay the full corporation tax rate (currently 30%) on profits from the start. “Refinery Holdings will pay full dividend withholding tax on its dividends received from National Gold Corporation, “ he said. “The project will generate substantial new dividends and corporate taxes paid to the State – currently projected at approximately US$800 million over the first 15 years of operation.” The initiative, according to PM Marape, would produce a lot of employment and possibilities. “Up to 200 new jobs will be created during the construction phase of the refining and minting facilities on land leased within the LNG and Petroleum Park, and at Jackson International Airport,” he said. “There will be up 350 new tertiary level jobs in the operational phase and there will be significant training and skills transfer to local employees for decades to come. “And there will be the creation of many local ancillary industries, including gold tourism facilities, and long-term supply requirements from local contractors and suppliers.” PM Marape stated that the new world-class specialized gold refinery in PNG will assist small-scale, local alluvial gold miners (i.e. landowners). “Landowners can expect to receive better pricing for their gold from the National Gold Refinery and will avoid having to deal with ‘industry middlemen’ or having to accept the discounted gold price offered by middlemen for their gold,” he said. PM Marape stated that fresh and considerable foreign money inflows will boost PNG miners and the economy. “The project and its gold products are priced in US Dollars,” he said. “The National Gold Refinery will have an estimated initial US$4 billion per annum gold throughput, and more as gold production increases, every year for many decades to come. “The PNG gold mining industry will benefit from having a world-class, professionally-managed, gold and precious metals refinery in-country and dedicated to servicing all their refining and gold trading requirements. “A local world-class gold refinery means that the time gap between gold production and sale is significantly reduced as unrefined gold does not need to be shipped from PNG to foreign refineries. “This may mean some PNG mining opportunities will now become economic, and it may increase the profitability of existing mines through a reduction in processing cost. “The project also includes arrangements by which current and future PNG gold miners will transition from foreign gold smelting and refining arrangements to refining of all PNG gold and precious metals through the National Gold Refinery. “The State will provide a statutory guarantee of the gold delivery and related obligations of the National Gold Corporation Group to assure PNG gold miners and international banks, investors and gold industry counterparties that their gold and dealings with the Group are safe and secure at all times. “The National Gold Refinery will, by law, provide globally-competitive refining costs, outcomes and benefits for PNG gold miners now and into the future.” “The project, and the significant long-term foreign investment in the project by the private sector, demonstrates regionally, and internationally, that my Government’s foreign investment policy is effective and that PNG is a mature, stable, and safe investment destination for exploration, mining, and production of gold, and refined gold.” “I look forward to work with the investors, our local SME and alluvial gold miners and landowners, as well as those in the big mines to ensure that this refinery and mint is beneficial to all parties in the mining and gold business.   Reference: Pacific Mining Watch (30 October 2021). “PNG PM Marape announces start of National Gold Refinery & Mint Project”.


PNG Business News - September 24, 2021

Gold Output Remains Stable

Despite an increase in export and revenue, gold output in the alluvial mining industry has remained stable for the past 13 years, according to an official. Export income has increased from K100 million to over K600 million yearly in 2019 and 2020, according to Mineral Resource Authority managing director Jerry Garry. However, he stated that manufacturing maintained at approximately 100,000 units. Gary believed that if mechanised mining operations such as the usage of excavators, trammel, and other mechanised processing facilities were utilized, gold production might grow. Unfortunately, he added, the alluvial industry has not moved into specialized mechanised processing facilities because finance institutions were wary of the significant investment risks involved. Gary said that unlike hard rock mining, where the distribution of metals such as gold or copper could be predicted with a high degree of certainty, alluvial mining deposits could not. “There is no uniformity in the distribution of alluvial gold in an alluvial deposit,” he said. “So you cannot be sure exactly to ascertain the volume of sediment to come up with how much gold is in that deposit.” Gary stated that this will be discussed at the alluvial mining conference in Lae. “Once we get some understanding and if we can minimise the risk, then financial institutions will be comfortable in investing,” Gary said.   Reference: Bauai, Gloria. The National (23 September 2021). “Garry: Gold production stagnant”. 


PNG Business News - August 23, 2021

Hidden Valley Contributes K633.7M to the Economy

The Hidden Valley Mine contributes K633.7 million to the regional and national economies, indicating its importance in the development and growth of the country's economy. Monica Rau, the Harmony Gold PNG exploration's environment, social, and governance manager, revealed this in a PowerPoint presentation at the Chamber of Mines and Petroleum's community affairs and media workshop in Port Moresby. She also stated that Hidden Valley has paid the government K591.5 million in royalties and direct taxes over the last LOM. Hidden Valley, according to the report, has created over 2000 jobs, with 96 per cent of them located in Papua New Guinea. “From financial year FY 2009 to FY 2020, Hidden Valley has spent K4.9 billion on procurement in PNG, including K1.3 billion with local landowners, K 1.8 billion in Morobe Province, and K 1.7 billion on other procurement in PNG.” The mine has supported a variety of community activities through the memorandum of agreement (MoA), the benefit-sharing trust, and discretionary spending in the areas of community infrastructure, education and health support, law and order programs, gender development, integrated development, and donations, as well as assistance given to communities throughout the mine's life cycle. She also addressed the obstacles and solutions on the path to mine closure, stating that the mine has around seven years to run until more extension options are discovered, but landowners and communities are unwilling to discuss mine closure. Hidden Valley is a gold and silver open-pit mine that began operations in 2007 in the Morobe Province. Morobe Consolidated Goldfields Limited (MCG), a wholly-owned subsidiary of Harmony Gold (South Africa), owns and operates the mine.   Reference: Post-Courier (17 August 2021). “”Rau: Hidden Valley Contributes K633.7M To Economy”.

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