HON PHILIP AJA UNDIALU MP
| Governor of Hela Province | Edited
TARI – There was no need for the Papua New Guinea government to have any advance negotiations with Barrick before the decision not to renew the Porgera Joint Venture lease.
Any negotiation held prior to the decision would have seen as preemptive of the decision and would have been in breach of the Mining Act, which would have attracted legal implications.
The fall in Barrick's share price is none of our concern. PNG is a sovereign nation and is not obliged to Barrick and its shareholders.
Under the Mining Development Contract, once the lease expires or is refused for renewal as in this case, Barrick has 12 months to close down the mine and decommission and repatriate its assets.
However, the contract also provides for an option to the State to acquire the mine assets at fair market value.
At present, Barrick owes the PNG government a huge sum of money in tax liabilities. The government is looking at the option of offsetting these tax liabilities using Barrick's own mine assets at fair market value.
The landowners have filed an international arbitration claim for US$13.27 billion (K46 billion) against the government on various bases, including environment damage and failure to resettle community members.
The Mining Development Contract provides that the government is indemnified by Barrick of all liabilities that lie against the State consequential to the operation of the mine by Barrick.
The current contractual arrangements are that the PNG government holds two separate agreements with the landowners and developer that allow the landowners to lease their land to the government to sublease to the developer for mining purpose and that allow a Mining Development Contract between the State and the developer to operate the mine.
Because of the principle of 'privy of contract', landowners are barred from making claims directly against Barrick. As such the landowners have sued the PNG government, which is then indemnified by Barrick.
The prime minister has asked Barrick to continue to operate the mine, to finalise a transition plan and slowly walk through it until such time Barrick is ultimately phased out of Porgera.
There is no nationalisation of Porgera mine. Barrick is misleading its shareholders if any such claim is made and can be reported to the Toronto Stock Exchange.
Barrick insists it doesn't want the PNG government to take over the mine. Instead it wants to shut down the mine and go to court on the basis that, as the present holder of the tenement, it somehow has a right of renewal.
This is a fabricated and misconstrued right they profess to have and is presumably to stop their share price from plunging.
They also foresaw that huge liabilities from the landowners claim that awaits them, and want to retain the lease to continue to manipulate the PNG government.
The point is that it is more prudent to wait for few months to get the mine up and running and increase our revenue portfolio than it is to allow Barrick to plunder our resources for another 20 years and giving us bones.
Regarding investor confidence, we must refrain from being manipulated by the twisted economics where the industry professes that ‘developers are the scarce resources that every nation must maximise to develop their deposits’.
The real economics in the resource sector is that in a world of depleting non-renewable natural resources, every nation must maximise the resource to improve the lives of its citizens.
The shutdown is part of a process under the Mining Development Contract and people should not panic. Barrick is simply making news to save its shares from dropping on the stock market, which is none of our government’s concern.
Every intellectual in PNG must seize this opportunity to test our knowledge and compete with the world. We must make our people proud and rally behind the government's decision to restart the mine.
The next step is for a 30-day notice to be served that sets out the reasons for refusing to issue a new licence.
These include environmental damage, community resettlement concerns, tax liabilities, denial of preemptive rights and the illegal sale of 45% of mine shares without notice to the minister as required by the Mining Act and Shareholders Agreement. And there is more.
A 12 months transition process is being set in motion subject to the Mining Development Contract and the Mining Act.
Barrick must within the 30-day notice and inform the PNG government and its own shareholders what it will do with the multi-billion dollar claim filed by landowners before crying for lease extension.
The PNG government must bring in international watch groups and non-government organisations to see for themselves what Barrick has done to the Porgera community and the Strickland River in a region covering the four provinces of Enga, Hela, Sandaun and Western.
The international community will soon know who is telling the truth. They should know the rationale behind refusal to grant extension of the lease.
Barrick should not mislead its shareholders, Toronto Stock Market nor the international community by claiming that PNG has nationalised the Porgera mine.
The mine assets remain the property of Barrick. All will be valued and fully settled within the 12 months period. Likewise, Barrick should pay what is due to PNG. All assets and liabilities will be assessed by professional groups.
Barrick must apologise to the PNG government and the nation for circulating the misleading press release now being read by the international community.
PNG remains an investor-friendly destination and our guests like Barrick, which has benefitted so much from Porgera and left so much damage to the community, should not try to tarnish our international reputation.