Australia’s Newcrest Mining (ASX: NCM) and South Africa’s Harmony Gold (JSE: HAR) (NYSE: HMY) are facing fresh challenges in Papua New Guinea, as the administration is asking to keep 40% of gold extracted at the companies’ Wafi-Golpu project.
The joint venture partners had been hoping to secure a mining lease for the $5.4 billion gold-copper deposit this year. A new government, however, has brought delays in the permitting process as James Marape’s administration has vowed to “take back” PNG’s mineral resources.
Marape had quit as finance minister in April, questioning a major global gas development deal with France’s Total SA. He was elected by the parliament in May, after a 101-8 victory.
“They get 60% of the production, we get 40%. If they don’t like it, we’ll mine it ourselves – we own the resources”
Wera Mori, PNG’s minister for commerce and industry
“We’d like to see Newcrest come to the negotiating table on this,” Wera Mori, minister for commerce and industry 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.”
PNG is ready to offer concessions on duties and taxes in exchange for a special mining lease for Wafi-Golpu.
Newcrest and Harmony each own 50% of the project, with the PNG government having the right to buy an equity interest.
“The permitting, funding and building of Wafi-Golpu is important . . . especially on the permitting side,” Harmony Gold chief executive, Peter Steenkamp, said in August, while presenting results for the year ended in June.
He added that the “change of guard” in Papua New Guinea had contributed to the JV missing its initial permitting timelines.
“We need to give the new PM time to settle down,” Steenkamp said at the time.
Located near the port city of Lae, in the Morobe Province of PNG, Wafi-Golpu is expected to take about five years from the grant of the mining lease to the time it generates its first ore.
At peak production, the mine is forecast to churn out 320,000 ounces of gold and 150,000 tonnes of copper a year.
As part of ongoing lease-renewal talks with miners, the PNG government has also approached Barrick Gold and Zijin Mining for a larger share of their Porgera gold mine.
With files from Reuters.
