Deal sealed to reopen mine

By PETER ESILA
PRIME Minister James Marape says the Government hopes to achieve greater benefits for Papua New Guinea through more resource projects.
He said this in Port Moresby on Friday after witnessing the signing of the framework agreement with Barrick to reopen the Porgera Mine in Enga.
PNG stakeholders (Kumul Minerals Holdings Ltd, Enga government and landowners) own 51 per cent of the mine.
“This announcement is a significant milestone in the Government’s effort to build strong frameworks in the resource sector which will benchmark future considerations for similar projects nationwide.
“In the old structure, State parties only had five per cent through Mineral Resources Enga (2.5 per cent Enga government and 2.5 per cent SML Landowners), while 95 per cent was held between Barrick Niugini Ltd (47.5 per cent and 47.5 per cent Zijin).
Under the new deal, the equity split is 51 per cent and 49 per cent in favour of PNG stakeholders.
He said there was opportunity for landowners to increase their equity beyond 15 per cent with the additional 10 per cent free equity paid for by Barrick.
The royalty paid was two per cent to the SML landowners and the Enga government but the new deal secured an additional one per cent to three per cent.
“Up to 2019, the economic split stood at around 25 per cent for the PNG stakeholders with equity and taxes,” Marape said.
“The new deal will see that move to around 53 per cent in favour of the PNG stakeholders over the full life of the mine. The new arrangement does not give away any tax concessions which means that the State is able to collect its taxes upfront.
“There is applicable 30 per cent corporate income tax to the project.
“An additional two per cent are paid for fiscal stability, previously conceded by the state.
“In terms of community obligations, Barrick will pay US$3 million (K10.6 million) annually for 10 years to Porgera Sustainably Development Fund, and a further US$15 million (K53 million) upfront to
appropriate categories of landowners.
“The biggest possibility in the agreement is that the State retains the right to acquire the full 49 per cent of the shares in 10 years’ time at fair value and that Barrick finance the required start-up of the mine.”
Marape added that other key benefits captured in the agreement included the immediate employment of citizens and significant personal income tax inflows and development of key leadership and technical capabilities for Kumul Mineral Holdings Ltd in view of their future involvement in mining projects in the country.