SAM JAY KAUPA
The unlawful extraction and export of gold is a scandal in both Papua New Guinea and Australia. Among the major beneficiaries, it seems from a recent investigation by the Australian Financial Review, even the respectable institution, the Perth Mint. Sam Jay Kaupa is an experienced mining engineer and manager with extensive domestic and international experience - KJ
PORT MORESBY - There is a question people need to ask. Why can’t the central bank of Papua New Guinea buy gold to curb smuggling and build reserves to stabilise the plummeting kina?
The mining sector accounts for about 9% of GDP and the overall resources sector contributes about 26% of GDP. This will continue to rise with the current demand for cobalt, a by-product of the precipitate from Ramu Nickel.
Copper and nickel are on the rebound and so is gold, now hovering above $US1,700/oz. According to analysts, the gold price will continue to go up.
Gold is stolen on a massive scale from PNG mines and gold production is under-reported, which is a massive scam.
For example, it has been estimated that, over the last 25 years, 20 million ounces salted away from the giant Porgera gold mine has been shipped by helicopter to Mt Hagen and private jet to Perth.
Who from Internal Revenue, Customs, Treasury or the mining regulator runs checks on this?
No one – I mean no one.
The Mineral Resources Authority is provided with a piece of paper, a Form 25, on which export minerals are recorded by the mine manager (who for all the big mines is an expatriate).
The information provided is minimal and it's negligent to accept what's there as gospel as it is an unverified sales record, especially for gold shipments.
The Treasury department relies on this record of sales to project future revenues and plug them into the national budget. The same information is shared with the central bank and other agencies.
Surely the government can get some of those lazy public servants at points of exit - like the helipad at Porgera - to physically weigh, record and sign off gold shipments.
I guess we caught the late bus. Tough luck. Twenty million ounces out the back door. A lazy $US34 billion at today’s prices.
Other mines such as Lihir and Ramu are doing the same thing. The PNG government does not have people on the ground like I used to see everywhere in Africa where I once worked.
They are everywhere because it's the mine sites where the money comes from. It’s not rocket science, you don’t collect government revenue by sitting in an air conditioned office and praying for God’s intervention. These public servants should get their fat bums out in the field and get their smooth fingers dirty.
So the bottom line is that gold is effectively stolen everywhere. It’s rampant.
Why on earth does the Bank of PNG give licences for companies to export gold?
The bank should be buying the gold instead of relying on dollars alone. It should reserve both dollars and gold to stabilise the kina, starting with the artisanal gold market.
The East African nation of Tanzania had a prolonged spat with fully-owned Barrick subsidiary, Acacia, over a $US190 billion tax bill for its mining operations. Echoes of Porgera.
Eventually, the Tanzanian government found out and calculated the back tax owed to them. This is doable in PNG if the government is serious in recouping lost revenue.
In PNG when such laws are proposed to reform the mining sector, the industry, backed by the PNG Chamber of Mines, always complains they will be onerous and costly and bitterly contests them.
You may (or may not) be surprised that such protests are strongly supported by certain government agencies.
One day this will change and the people of PNG will take back their resources and develop them using decent companies so the benefits go to the people whose faint cries are always ignored by the greedy.
Don’t mess with God’s people. One day they will rise and the stealing will cease.
Thank you and God bless PNG.