Chinese company warns PNG not to refuse mine lease

1:06 pm on 30 April 2020

A Chinese state-owned company has warned Papua New Guinea against refusing to renew its mining lease in Enga province.

Zijin Mining Group Chairman Chen Jinghe (left) and Barrick Gold Corporation Chairman John L. Thornton (right) signed a strategic cooperation agreement at a ceremony at Zijin’s offices in Xiamen, China on May 26, 2015.

Zijin Mining's Chen Jinghe and Barrick Gold's John Thornton Photo: Supplied

Zijin, which jointly owns the Porgera gold mine lease with Canadian company Barrick Gold Ltd, issued the warning after PNG prime minister James Marape announced that extension of the lease was rejected.

Both companies have a 47.5 percent stake in the joint venture, Barrick Niugini Ltd, which Reuters reports suspended operations on Saturday.

BNL accused the government of not giving formal notification of its decision, nor details of a planned transition.

Zijin said PNG needed to negotiate to extend the mining lease in good faith, noting that a failure to resolve the issue could impair relations between the two countries.

Porgera mine.

Porgera mine. Photo: wikicommons / Richard Farbellini

The joint venture encountered deep opposition from local landowners and residents over nagging issues related to the long-running mine, including environmental and social problems, and minimal economic benefits for the local community.

The government said its refusal to renew the lease for a new 20-year tenure had been carefully considered and was "in the best interests of the State, especially in lieu of the environmental damages claims and resettlement issues".

The mining companies warned they were willing to pursue all legal avenues to challenge the government's decision and recover any costs that might occur as a result of the denial.

Demonstration against Barrick Niugini at the Porgera mine

Photo: Supplied

China has in recent years become a major influence in PNG where budget figures show Beijing is the country's biggest creditor.

Zijin said that it understood the need for greater benefits distribution among governments, landowners and stakeholders, but warned that ties between PNG and China could be hurt if it was to exit the mine.

Meanwhile, Mr Marape in a social media post on Monday said that government would take control of the mine if it closed during the transition period.

Yet if the special mining lease extension is not granted, the mine will be forced to close, the company said.