PM Marape creating uncertainty and Scaring Investors , says PNG Opposition Leader Namah
Papua New Guinea Leader of the Opposition, Belden Namah today said Prime Minister James Marape is creating uncertainty and scaring both foreign investors and local businesses with his government's decision to nationalize the Porgera Gold mine. Mr Namah challenged Marape to immediately name the next operator to replace Barrick Niugini Limited at Porgera Gold mine.
Mr Namah said: "Mr Marape must name the new operator of this world class gold mine to allow for continuity and to assure workers, contractors and landowners that it will be business as usual and they have nothing to fear.
"The Government's refusal to extend Barrick's application for a 20 year lease on its Special Mining Lease is ill-timed and is expropriation and nationalization of the worst sort that will harm PNG in the long term.
"This decision is the height of stupidity especially at a time like now," Mr Namah said. "That is inviting the onset of another crisis while we are already in the middle of one. He is digging the economic hole deeper while his Treasurer announces at the same time that PNG is in a recession.
"Marape is again wrong. The signals he sends to the investment community is wrong. The fundamentals to sustain the mine are missing.
"I see no long line of companies lining up to take up where Barrick Niugini Ltd leaves off. I see no facts and figures on how the mine is going to be run in the immediate to medium term while the Prime Minister and his cabinet cobble together a new operator.
"Marape has put out a very vague hope that there will be an exit plan to value the assets, future management and operations of the mine as well as resettlement, environmental issues and tax liabilities. He has dispensed the indispensable Chief Secretary, Isaac Lupari to negotiate a transitional arrangement with Barrick but the company has announced publicly that it has no wish to discuss any transitional arrangement.
"The company has met with the Prime Minister four times. It has put up its proposals including to increase benefits to stakeholders by up to 50 per cent. It reports that there has been no response from the government.
"Barrick has announced that it views the government action as being 'tantamount to nationalization without due process and in violation of the Government's legal obligations' and it is set on pursuing all legal avenues to challenge the Government decision and sue for damages.
"Those are the issues the Prime Minister ought to have discussed carefully before he rushed to the decision.
"It would appear to me that the horse has bolted already and the good Prime Minister is only now trying to bolt the stable door.
"Overseas the view is mostly negative with headlines such as: 'Papua New Guinea takes control of Barrick Gold mine (Reuters), `PNG snatches Barrick Gold's Porgera mine' and `PNG forces Barrick out of Porgera'.
"After the botched affair with P'ngyang gas which has put the United State's Exxonmobil's nose out of joint and placing in question the viability of the Papua LNG project operated by another global giant, France's Total, Mr Marape has decided to take on the world's second largest miner. Canada's Barrick Gold.
"Mr Marape had better have an explanation for the mine's 3,600 workers now that the mine has suspended operation. It will have to explain to the highly volatile landowners who have recently signed an agreement with Barrick to lift benefits to it.
Marape will have to explain to the many local contractors. both from Enga and other parts of PNG, who have been paid some K5.9 billion since the mine went into operation in 1990. Many have come to the Opposition to lodge their bitter complaints that this announcement by government is a total surprise and places their contracts in jeopardy.
The company has paid K4.039 billion in taxes and K224 million in tax credit schemes and half a billion kina in royalties.
"These are a significant lot of benefits and with plans to lift the mine to tier one type operations it could only mean more. More importantly, the government must demonstrate that it has the capacity to do much more than Barrick as done.
"The Prime Minister will have to itemize the legacy issues he has named as reasons for refusing the renewal of the SML. He cannot go on hiding behind ambiguity. If there are legacy issues, would it not be proper and just to push the company to address them rather than take over the issues? That would be taking over the liabilities of Barrick and allow it to go off scott-free. This is plain stupid. If there are tax liabilities will the government pay them or ask a new operator to pay up? Hardly likely.
"What guarantee is there that the government or a future developer which the government is yet to name will do better than Barrick Niugini Limited?
"This is a world class mine operated by a world class operator. This government decision will reverberate around the world in investment communities. With a number of important resources projects awaiting approval such as Wafi-Golpu and Frieda River mines, this decision will send shivers up the spine of investors.
"In addition, the Government needs to demonstrate what kind of reserves remain to be mined at Porgera to make future operations profitable. This mine has been in operation for 29 years already. It has mined out the heart of the rich gold deposit in early underground mining operations. It was just settling to mine the low grade stock-piled ore. It will be good when the gold prices are high but if the price were to dip, this mine might not have the shine it now has.
"Finally and most importantly, if the government is to go it alone, where is it going to get the finances if required? There is already a K4.6 billion budget deficit in 2020 alone and the government has just announced a further K1 billion to be introduced in a stimulus package for Covid-19 which has to be financed.
"The debt-to GDP ratio is already at its legal barrier of 40 per cent as per the Fiscal Responsibility Act. Where will money come from to fund this or the State's future options in any other of the mining and hydrocarbon projects in the pipeline?"
Mr Namah said the Government has made another hasty decision in the middle of a national state of emergency.
The social environment around the Porgera mine has always been volatile and the deployment of just 10 soldiers to guard the mine will be insufficient if tension mounts over this decision.
Mr Namah noted also that the K92 mine in the Eastern Highlands, has been suspended as a result of local landowners storming the mine.
This will further impact government revenue and employment and contracts.
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"The Government's refusal to extend Barrick's application for a 20 year lease on its Special Mining Lease is ill-timed and is expropriation and nationalization of the worst sort that will harm PNG in the long term.
"This decision is the height of stupidity especially at a time like now," Mr Namah said. "That is inviting the onset of another crisis while we are already in the middle of one. He is digging the economic hole deeper while his Treasurer announces at the same time that PNG is in a recession.
"Marape is again wrong. The signals he sends to the investment community is wrong. The fundamentals to sustain the mine are missing.
"I see no long line of companies lining up to take up where Barrick Niugini Ltd leaves off. I see no facts and figures on how the mine is going to be run in the immediate to medium term while the Prime Minister and his cabinet cobble together a new operator.
"Marape has put out a very vague hope that there will be an exit plan to value the assets, future management and operations of the mine as well as resettlement, environmental issues and tax liabilities. He has dispensed the indispensable Chief Secretary, Isaac Lupari to negotiate a transitional arrangement with Barrick but the company has announced publicly that it has no wish to discuss any transitional arrangement.
"The company has met with the Prime Minister four times. It has put up its proposals including to increase benefits to stakeholders by up to 50 per cent. It reports that there has been no response from the government.
"Barrick has announced that it views the government action as being 'tantamount to nationalization without due process and in violation of the Government's legal obligations' and it is set on pursuing all legal avenues to challenge the Government decision and sue for damages.
"Those are the issues the Prime Minister ought to have discussed carefully before he rushed to the decision.
"It would appear to me that the horse has bolted already and the good Prime Minister is only now trying to bolt the stable door.
"Overseas the view is mostly negative with headlines such as: 'Papua New Guinea takes control of Barrick Gold mine (Reuters), `PNG snatches Barrick Gold's Porgera mine' and `PNG forces Barrick out of Porgera'.
"After the botched affair with P'ngyang gas which has put the United State's Exxonmobil's nose out of joint and placing in question the viability of the Papua LNG project operated by another global giant, France's Total, Mr Marape has decided to take on the world's second largest miner. Canada's Barrick Gold.
"Mr Marape had better have an explanation for the mine's 3,600 workers now that the mine has suspended operation. It will have to explain to the highly volatile landowners who have recently signed an agreement with Barrick to lift benefits to it.
Marape will have to explain to the many local contractors. both from Enga and other parts of PNG, who have been paid some K5.9 billion since the mine went into operation in 1990. Many have come to the Opposition to lodge their bitter complaints that this announcement by government is a total surprise and places their contracts in jeopardy.
The company has paid K4.039 billion in taxes and K224 million in tax credit schemes and half a billion kina in royalties.
"These are a significant lot of benefits and with plans to lift the mine to tier one type operations it could only mean more. More importantly, the government must demonstrate that it has the capacity to do much more than Barrick as done.
"The Prime Minister will have to itemize the legacy issues he has named as reasons for refusing the renewal of the SML. He cannot go on hiding behind ambiguity. If there are legacy issues, would it not be proper and just to push the company to address them rather than take over the issues? That would be taking over the liabilities of Barrick and allow it to go off scott-free. This is plain stupid. If there are tax liabilities will the government pay them or ask a new operator to pay up? Hardly likely.
"What guarantee is there that the government or a future developer which the government is yet to name will do better than Barrick Niugini Limited?
"This is a world class mine operated by a world class operator. This government decision will reverberate around the world in investment communities. With a number of important resources projects awaiting approval such as Wafi-Golpu and Frieda River mines, this decision will send shivers up the spine of investors.
"In addition, the Government needs to demonstrate what kind of reserves remain to be mined at Porgera to make future operations profitable. This mine has been in operation for 29 years already. It has mined out the heart of the rich gold deposit in early underground mining operations. It was just settling to mine the low grade stock-piled ore. It will be good when the gold prices are high but if the price were to dip, this mine might not have the shine it now has.
"Finally and most importantly, if the government is to go it alone, where is it going to get the finances if required? There is already a K4.6 billion budget deficit in 2020 alone and the government has just announced a further K1 billion to be introduced in a stimulus package for Covid-19 which has to be financed.
"The debt-to GDP ratio is already at its legal barrier of 40 per cent as per the Fiscal Responsibility Act. Where will money come from to fund this or the State's future options in any other of the mining and hydrocarbon projects in the pipeline?"
Mr Namah said the Government has made another hasty decision in the middle of a national state of emergency.
The social environment around the Porgera mine has always been volatile and the deployment of just 10 soldiers to guard the mine will be insufficient if tension mounts over this decision.
Mr Namah noted also that the K92 mine in the Eastern Highlands, has been suspended as a result of local landowners storming the mine.
This will further impact government revenue and employment and contracts.
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