Economic Boost on the Horizon: Examining the Newmont-Newcrest Deal's Impact on Papua New Guinea

by Edison Mating - May 24, 2023

Photo: Lihir Gold Mine. Photo Credit: Newcrest Mining Limited Website

The recently announced acquisition deal between Newmont (NYSE: NEM, TSX NGT) and Newcrest Mining Limited (ASX, TSX, PNGX: NCM) on May 14, 2023, is set to have a significant impact on Papua New Guinea (PNG). The deal involves Newmont acquiring 100% of the issued shares in Newcrest by way of an Australian Scheme of Arrangement. Newcrest shareholders will receive 0.400 Newmont shares for each Newcrest share and a special dividend of up to $1.10 per share paid by Newcrest. This represents a 30.4% premium. The deal is worth A$ 28.8 billion creating the largest-ever gold M&A transaction and solidifying Newmont as the largest global gold producer. Newcrest initially rejected a A$19bn offer from Newmont in February 2023. What does this mean for Newcrest's assets in Papua New Guinea (PNG)?

Strengthening the Mining Sector: Newcrest's assets in PNG have a long-standing presence, with established mining operations and infrastructure in place. Their experience in operating in the country provides them with a deep understanding of the local business environment, regulatory frameworks, and cultural dynamics. This familiarity can be a significant advantage in ensuring smooth operations and stakeholder engagement. The acquisition of Newcrest by Newmont reinforces the position of both companies as leading gold producers and consolidates their presence in PNG. The combined portfolio of assets offers substantial opportunities for optimisation, paving the way for enhanced operational efficiency and increased production.

Lihir Gold Mine: Located on Lihir Island in the New Ireland Province, the Lihir Gold Mine is one of the largest gold mines in the world. It began production in 1997 and has since yielded significant gold reserves. The mine utilizes both open-pit and underground mining methods, and it has substantial processing facilities on-site, including a large-scale autoclave for processing refractory ore. Newcrest creates economic value for PNG and local communities including direct revenues from operations, investments in public infrastructure and services, support of local suppliers and a range of indirect economic benefits. It employs approximately 4,500 people of which around 90% are Papua New Guineans.

Wafi-Golpu Project: The Wafi-Golpu Project is a significant joint venture between Newcrest Mining (50%) and Harmony Gold (50%) in the highly prospective Morobe Province through the Wafi-Golpu Joint Venture (WGJV). It encompasses the exploration and development of a world-class gold-copper deposit. Deep drilling has identified a world-class copper-gold porphyry deposit at Wafi-Golpu (the Golpu deposit) suited to bulk underground mining techniques, similar to Newcrest’s Cadia operations in Australia. 

Photo: The Wafi-Golpu Joint Venture (WGJV) hosts one of the highest-grade porphyry copper systems in Southeast Asia.

Economic Growth and Employment Opportunities: Through the acquisition, Newcrest can leverage its existing assets and expand its operations to tap into additional mineral deposits since it now has a bigger market capitalisation. This could lead to increased production, improved economies of scale, and a more diversified portfolio of mining projects thus bringing an economic boost for PNG. Optimised operations, coupled with the expansion of mining activities, can lead to increased job opportunities, both directly and indirectly. This infusion of employment opportunities has the potential to contribute to poverty reduction and overall economic growth in the country.

Synergies and Cost Efficiencies: The consolidation of operations between Newmont and Newcrest creates synergies and cost efficiencies. It is estimated that the deal could generate annual pre-tax synergies of $500 million within the first 24 months. These cost savings can be reinvested into further development, exploration, and sustainable mining practices, benefiting the companies and the local communities.

Sustainability and Environmental Practices: Both Newcrest’s and Newmont's track record as a leader in sustainability and responsible mining practices can bring positive changes to Newcrest's assets in PNG.

Social and Community Development: Both the companies’ expertise and experience in community engagement and social development initiatives will further the development of the community.

The acquisition of Newcrest by Newmont holds promising prospects for PNG's mining industry and economy. The deal's potential to drive economic growth, create employment opportunities, enhance sustainability practices, and optimise operations brings an economic boost to the country's mining sector. However, it is important for all parties involved to navigate the regulatory and stakeholder considerations diligently to ensure a successful and mutually beneficial outcome.



Newcrest Mining Limited. (2023). Wafi-Golpu. Retrieved from Retrieved on 19 May 2023.

Newcrest Mining Limited. (2023). Lihir. Retrieved from Retrieved on 19 May 2023.

Newmont Corporation. (2023). Newmont Enters into Definitive Agreement to Acquire Newcrest. Retrieved from []. Retrieved on 19 May 2023.

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PNG Business News - February 28, 2022

Newcrest Mining Limited reaffirms commitment to PNG

Newcrest Mining, whose interests in PNG include the Lihir Gold mine and a 50% share in the proposed WafiGolpu project with Harmony Gold Mining Company Limited, has a long-standing partnership with PNG. Newcrest MD and CEO, Sandeep Biswas, travelled to Port Moresby this week and met with Prime Minister James Marape, during which he reaffirmed the company’s deep commitment to PNG through its operations. “Newcrest is pleased that it has been able to continue to make a significant contribution to the PNG economy throughout the challenges of the global pandemic. To date, we have had no material disruptions to production, and I would like to take this opportunity to thank the PNG Government for its support throughout a very challenging time”, said Mr Biswas following his meeting. “I would also like to thank our employees, contractors and business partners for their resilience and flexibility, with extended rosters and time away from their families to support our Lihir operations’. Newcrest employs approximately 4,500 people at its Lihir operations, with about 90% of those being from Papua New Guinea. Newcrest’s investment in PNG continued despite COVID19 challenges. In the last financial year, K180 million was added to operational costs to mitigate the impact of the pandemic on our Lihir operations and employees. In addition, over K1bn was spent with PNG suppliers, with more than K400m going to Lihirian vendors alone. Newcrest also contributed K284m in taxes, K99m in royalties and contributed USD450 million to the national account through the acquisition of K1.574bn in foreign exchange. Newcrest established our Community Support Fund in April 2020, to support the Government and communities’ preparedness and response to COVID-19 across the jurisdictions we work in. Since it's inception, 22 projects in PNG have been approved to the value of over K17m, and have been implemented primarily in response the priorities of the communities we work in, focusing on delivery of health care supplies and equipment. We have worked provincially in partnership with the New Ireland, East New Britain, Morobe and NCD PHAs, and nationally in partnership with donors such as UNICEF. “Most recently we have turned our attention to supporting the roll-out of the COVID-19 vaccine in New Ireland. Our implementation partner Australian Doctors International are working very closely with the Provincial Health Authority to overcome vaccine hesitancy and give the people of New Ireland the opportunity to understand the benefits of getting vaccinated”, said Mr Biswas. Mr Biswas thanked the PM for his ongoing support for Lihir and commitment to progressing the discussions on the permitting of the Wafi-Golpu project. “Newcrest looks forward to a long partnership with Papua New Guinea, which will deliver benefits to both the people and the Government of this country for many years to come,” he said. Lihir Gold Limited is very well positioned for the future, with an aspiration of a million ounces a year in the coming years.


PNG Business News - September 06, 2021

Newcrest Posts K4.07B Profit

Newcrest Mining, Papua New Guinea's largest gold miner, has posted a profit of K4.07 billion (US$1.164 billion) for the 12 months ending 30 June, a new high. Due to greater gold and copper prices as well as decreased operating costs, this is 55 per cent higher than the previous financial year. Newcrest's gold revenue increased by 9% despite somewhat lower gold production, while its copper revenue increased by 46% and its silver revenue increased by 63%. However, its operating costs decreased by 11%. “Newcrest has delivered a strong operational and financial performance for the 2021 financial year, producing 2.1 million ounces of gold at an AISC [All-In Sustaining Cost] of US$911 per ounce. “Together with the benefit of higher gold and copper prices, this translated into a record statutory and underlying profit of US$1.2 billion and a record free cash flow of US$1.1 billion,’ said Newcrest’s Managing Director and Chief Executive Officer, Sandeep Biswas.  The company's shareholders will benefit from the windfall, with a payout per share of US$0.40 (K1.40) — a 129 per cent increase over last year's dividend. During this time, Newcrest's gold mine on Lihir Island in New Ireland Province produced 737,000 ounces of gold and 38,000 ounces of silver, accounting for about 35% of the PNGX and ASX-listed company's global production for the year. The mine brought in US$1.425 billion (K5.02 billion) in sales, accounting for around 31% of the company's total revenue for the year. While the firm claims incidences of COVID-19 on Lihir Island are at "low levels," it is maintaining "extensive contact tracing and isolation protocols," and charter flights to the island are limited.   Reference: Pacific Mining Watch (31 August 2021). “Newcrest Records K4.07 Billion in Profit”.

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