Porgera gold mine. Photo: Richard Farbelini at English Wikipedia / Public domain
The long-awaited re-opening of the Porgera gold mine in Papua New Guinea's Enga Province is set to happen on Friday.
New Porgera Ltd was borne out of several years of fraught discussion over mining leases and will see the multi nationals involved, Barrick Gold and Zijin Mining, taking a minority stake, with the PNG government, the Enga government and landowners holding 51 percent of the shareholding.
The parties were in a stand-off from early 2020 after the PNG government refused to renew the company's mine lease, prompting the companies to suspend operations, laying off several thousand workers.
Now a new agreement has been agreed with Prime Minister James Marape saying it's an example of the government's new approach to negotiations with mining companies.
Marape said it "has been a long road we have travelled to the reopening of Porgera Mine, but it has been worth the effort".
The prime minister said New Porgera Ltd looks set to be a significant contributor to the economy, through a corporate tax of 32 percent and royalties rising from two to three percent.
Negotiations worked
The man heading Barrick Gold, Mark Bristow, told RNZ Pacific earlier this year he had no concerns that his company is now a minority shareholder.
He said the economics of the operation will work to different percentages.
"The PNG PM James Marape had advisors and we had advisors and every time we had a negotiation we worked through this economic split and eventually we settled on 47 percent of the economics goes to the investors - Barrick Gold Corporation and Zijin, and 53 percent goes to him, which is a fair deal. It is a fair deal anywhere in the world."
Bristow said there will be equal representation on the board.
'Huge amount of effort'
Professor of human geography at Massey University, Glenn Banks, did his PhD on Porgera when it opened more than 30 years ago.
Despite outstanding issues New Porgera to open this Friday
His contact with the region has continued right through and he has witnessed the mine's impact on society and the environment.
He said the re-opening is an impressive achievement.
"I think there's been a huge amount of effort, a huge amount of talk and negotiation carried out by the Mineral Resources Authority by some of the key actors involved in the new structure for the new programme. So, I think that's kind of the first thing to say," he said.
However, is concerned that issues around how landowners will be compensated are unresolved, after the PNG parliament rushed through changes to the country's mining laws earlier this month.
"The way in which the government got around the need to have compensation agreements in place before the issue of a special mining lease was to pass a piece of legislation, which basically said, 'look, the existing compensation agreements before the closure of the mine will allow us to continue in the interim, while New compensation agreements are relocated'."
Banks said there are also splits within the Porgera community, with older leaders being challenged by younger people coming through.
He said getting them to agree is difficult at the best of times, something that is exacerbated by the large numbers of migrants from other regions into Porgera.
Putting measures in place
A Papua New Guinea academic, who grew up in Porgera in the early years of the mine, Andrew Anton Mako, has called for structures to be put in place to ensure returns from the re-opened mine are not wasted.
The Australian National University staffer has written about what he calls the blessings and the curse the mine brought back in the 1990s.
He said with a bigger stake he hopes the community doesn't squander the money.
"In the past it was only 2.5 percent of the mine equity stake," Mako said.
"Now the landowners have been given ten percent, free carry, by the government. So, it will be a lot of money. It is estimated around 25 billion kina. That's a lot of money for the next 20 years.
"So even though the proceeds will increase, the main issue is in the governance, the use of that money, whether it will be used productively to improve the lives of the people or whether it will be used mostly on consumption."
Mako also wants some focus on what happens when the mine stops producing in 20 years or so.