By Melisha Yafoi in Port Moresby
It will cost the Papua New Guinea state and Australian operator Barrick Niugini Ltd K630 million (US$180 million) to reopen the Porgera gold mine.
The reopening of the mine in early September will see Barrick paying out full benefits of all employees who were retrenched, including those in care and maintenance, and they will be recruited under the new Porgera mine structure.
Barrick chief executive officer Mark Bristow said the refinancing of the mine for a 10-year operation period will be done by Barrick and it will recoup its 36 percent of the state’s share under state-owned Kumul Mineral Holdings Limited for the restart during the mine’s operational life.
The 36 percent is from the 51 percent stake in the Porgera agreement framework with Barrick on 49 percent.
Landowners will get a 10 percent stake and Enga provincial government 5 percent under the new agreement.
Bristow said it had cost the company K420 million (US$120 million) for the care and maintenance of the mine since the closure in April last year.
“We estimate that to restart will be another K630 million but as discussed with the full state negotiating team last Wednesday the quicker we start the mine the lower that cost is because that cost is funded by everyone,” he said.
“We will fund it and offset that against the revenue so it’s in everyone’s interest to try and reduce that cost but again in the spirit of not forcing taxpayers’ money into this,” Bristow said.
“We fund and recoup the money so that equity will start delivering value once we’ve recoup all the cost, so it focuses on everyone’s mind that one, we are efficient and two we don’t waste any money and three we get this mine running as quickly as possible especially with the gold price as it is because we have the opportunity to fast track the return of some of that investment.”
He said as miners it was their responsibility to take the risk as they were qualified to evaluate and decide whether that risk was manageable.
“We’re starting to plan the prestart of the mine with reemployment programmes under a new Porgera company.
“One of the things we were not prepared to do was put people at risk when the mine is closed so we retrenched everyone that wasn’t required for care and maintenance and we paid them their full dues and those on care and maintenance will get the same,” Bristow said.
“Everyone will start with no service and as soon as we finalise the legal documents and create a new company and when we move people into the new company and those employees who did not get their dues will get their dues,” he said.
Mining.com reports that the operation has been closed for a year, after Barrick and its Chinese partner, Zijin Mining, became embroiled in a dispute with the PNG government, when Marape refused to renew the companies’ mining licence.
The companies temporarily halted operations in response.
They also served Marape with a dispute notice arguing the licence extension refusal violated a bilateral investment treaty between PNG and Australia.
PNG authorities cited environmental and social issues for denying the permit renewal then. Instead the government gave it to Kumul Minerals.
Melisha Yafoi is a PNG Post-Courier reporter.
This content originally appeared on Asia Pacific Report and was authored by APR editor.